According to the 2018 Global Top 250 Compensation Survey of CEOs and CFOs, base salaries of CEOs and CFOs in Asia are often significantly below the global average level.
“Annual bonus levels are lower than in the other regions for both the CEO and CFO, as bonuses are regulated in China and some senior executives in family-run businesses are also major shareholders of the company,” May Poon, managing partner at Pretium Partners, explained. Since base salaries and bonuses at these companies are not market driven, long-term incentives are generally not provided.
Total cash compensation is usually significantly below the global average level when adjusting for company size. The pay gap between state-owned enterprises and the pure market is more significant at the CEO level. At median, a CFO’s base salary is 90% of the CEO’s and a CFO’s total direct compensation is 82% of the CEO’s, largely influenced by the prevalence of state-owned enterprises.
For companies in Asia with long-term incentive plans, they are granted less frequently than other regions as long-term incentives are typically awarded in association with strategic events such as pending initial public offering, shift in business strategies, or change of leadership team. The current form of long-term incentives is stock options.
Meanwhile, CEOs and CFOs of the largest US global companies are paid more than counterparts around the world due to a bigger incentive compensation based on performance.
According to John Lee of FIT, at the median, a significant portion of the total compensation package (69% for the CEO and 68% for the CFO in Europe & Australia) is tied to annual bonus and long-term incentives. This represents a smaller proportion than is the case in the Americas, with pay at median split almost evenly between base salary, annual bonus and long-term incentives in Europe & Australia.