2014 CEO Pay in The Eurotop 100

July 2014
CEO pay in the Eurotop 100

Insights on similarities and differences in CEO pay across Europe
Contents
Introduction, highlights and key pay trends
3-4
Regulatory and tax changes
5-9
Analysis of
Actual Total Direct Compensation (TDC)
1015
Pay for performance and analysis of

incentive design and shareholding guidelines
1621
Additional analysis and contact
2224
Appendices
2533
Our services
2 towerswatson.com
34
Introduction
t There is much talk of pay convergence across
Europe but the differences in pay levels and
practices for the chief executives of the
Eurotop 100 are as interesting as the similarities.
t The Shareholders Rights Directive will bring
more commonality of reporting and voting on
board pay (whatever the board structure
unitary or dual) for all companies incorporated in
European Union member states.
t Many institutional shareholders have regional if
not global reach and are calling for the similar
policies and practices in the jurisdictions in
which their investee companies operate in
search of the holy grail of alignment of interest.
t Nevertheless, while the components of pay
and some of their features may be similar, the
mix of pay continues to differ across Europe
and regulatory intervention in some markets is
driving more difference.
t Our 2014 report the second we have
published - provides a snapshot of
compensation levels, incentive design practices
and emerging remuneration trends for CEOs in
the Eurotop 100.
t We summarise key pay trends and
recent corporate governance developments
(with specific focus on the Shareholders
Rights Directive) as well as an analysis of
CEO remuneration levels and incentive design
practices observed in the last financial year in a
selection of markets.
t Our analysis covers 95 companies within
the Eurotop 100 which had published their
remuneration reports as at 10 June 2014.
Since our last report published in 2013, three
companies have joined the index (Associated
British Foods, Continental and Credit Agricole)
and three companies have left the index
(Centrica, Rolls-Royce and Tenaris).
The median market capitalisation of the
Eurotop100 companies increased by 19.5% from
36,144 million to 43,210 million.
t This list and composition of companies
is included in the appendix together with
details of the LTI valuation methodology
supporting our analysis.
t If you have any questions or would like to
know more, please contact your usual
Towers Watson consultant.
Pay at a glance
CEO pay remains stable
Base salary
t The median base salary level for the
last financial year was approximately
1.277 million for the CEO. We observe
limited change compared to last year of
1.279 million.
t The majority (60%) of companies did not
increase base salary levels for the CEO in
the last financial year.
Annual bonus
t The median actual bonus received for
performance in the last financial year was
115% of base salary for the CEO, similar to
the level reported in the previous year (111%).
t Median target and maximum bonus
opportunity levels for the CEO, where
disclosed, were 100% and 180%
respectively for the last financial year and
remain unchanged from the previous year.
t Deferral of bonus continued to be prevalent.
Getting on for half (43%) of companies
required the executive to compulsorily defer
bonus, typically, 50% of bonus paid.
t Profit/ income, non-financial and individual
measures continued to be the most
prevalent performance measures on shortterm incentive plans.
Long-term incentives
t Most companies made awards of
performance shares with relative TSR being
the most common performance metric
attached to long-term incentive plans.
t For awards granted in the last financial year,
the median long-term incentive expected
value for the CEO was 135% of base salary.
Actual Total Direct Compensation (TDC)
t The median actual TDC level for the
last financial year was approximately
5.4 million for the CEO, a slight increase
from 5.1 million reported last year.
Shareholding guidelines
t Almost half of companies have shareholding
policies. At median, the guideline level was
275% of base salary for the CEO (unchanged).
CEO pay in the Eurotop 100 3
Key pay trends for selected countries

Pay levels remain stable, but incentives have been adjusted to create stronger alignment
with business strategy and shareholders.
France - CAC40
Base pay
Short-term
incentives
Long-term
incentives
4 towerswatson.com
Germany - DAX
UK - FTSE 100
Netherlands - AEX
Spain - IBEX 35
r;FSPCBTFQBZ
increase at median
r;FSPCBTFQBZ
increase at median
r.FEJBOCBTFQBZ
increase of 2.5%
r;FSPCBTFQBZ
increase at median
r;FSPCBTFQBZ
increase at median
r-FWFMTSFNBJO
stable
r'FXDPNQBOJFT
have increased
maximum
opportunity levels
r*ODSFBTFEGPDVTPO
financial metrics
r*NQMFNFOUBUJPOPG
CSR metrics
r-FWFMTSFNBJO
stable
r4USFOHUIFOJOH
of rules and
performance
conditions/metrics
r*ODSFBTFE
introduction of caps
on overall variable
compensation, as
well as lower STI
maximum pay out
opportunities
r*ODSFBTJOHVTFPG
clawback provisions
r-FWFMTSFNBJO
stable
r*ODSFBTFE
prevalence of malus
and/or clawback
provisions
r-FWFMTSFNBJO
stable
r$PNQBOJFTTUBSUJOH
to consider design
changes
r*ODSFBTJOHVTFPG
clawback provisions
r*ODSFBTJOHVTF
of non-financial
measures
r-FWFMTSFNBJO
stable
r-JNJUFEDIBOHFT
to design
r'PSNBMJTBUJPOPG
qualitative factors
r/FXNFUSJDTBOE
performance scales
r-FWFMTTUBCMFJO
terms of number of
shares but higher in
terms of face value
r*OUSPEVDUJPOPG
supplementary
performance
conditions
r*ODSFBTJOHTUSFUDI
in performance
conditions
r7FIJDMFNJYDIBOHFT
towards shares or
cash-based plans
r-FWFMTSFNBJO
stable
r'VSUIFS
implementation of
4-year performance
periods
r/FXQFSGPSNBODF
metrics
r*ODSFBTFE
introduction of caps
on overall variable
compensation
r-FWFMTSFNBJO
stable
r%FDMJOFPGTIBSF
matching plans
r*ODSFBTFE
prevalence of
extended holding
periods
r-FWFMTSFNBJO
stable
r.PSFTUSJOHFOU
performance
conditions
r%FDSFBTFE
weighting on
TSR or change
in measurement
methodology
r'VSUIFS
implementation
of qualitative
performance
criteria
r-FWFMTSFNBJO
stable
rPGDPNQBOJFT
have implemented
changes to plan
design
r*ODMVTJPOPG543
conditions mixed
with operational
metrics
r.PSFTIBSFCBTFE
plans
Regulatory change continues across Europe

The focus is on improved disclosure and increased shareholder power.
General industry: disclosure and voting reforms proposed

Financial services: share-based and pay caps
Increased disclosure and

binding vote on policy
Financial services: 20% variable
pay cap for all FS employees
Changes on disclosure, pay

limits and differentials
Disclosure, voting
and fiscal changes
Cap on CEO pay for

state-owned companies
Pay practice restrictions; binding

votes on fixed and variable pay
Improved disclosure
and binding vote on
policy proposed
Cap on CEO/Chairman pay for

state-owned companies
Regulatory and tax changes by country

France
r%JTDMPTF
standardised tables
for: pay realised,
showing minimum,
target and
maximum pay-out
levels
Disclosure
Say on pay
Pay caps
Tax
Other
6 towerswatson.com
Germany
r/POCJOEJOH
shareholder votes
on remuneration
awarded to the
CEO and other
corporate officers
(mandataires
sociaux and
administrateurs)
r$BQPG
p.a. on base pay
and bonus of
corporate officers
of state-controlled
businesses
UK
Netherlands
r/FXSFQPSUJOH
framework
r5ISFFZFBS
forward-looking
binding vote on
remuneration
policy and annual,
advisory vote on
all remuneration
realised over
the year
r$PNQBOJFTTIPVME
define absolute pay
caps for short- and
long-term and total
compensation
Spain
r/FXUFNQMBUFT
have to be used
for remuneration
reports
r.BOEBUPSZ
discussion of
remuneration
policy during AGM
binding vote on
policy changes
already in place
r1SPQPTFE
binding vote on
remuneration
policy at least
every three years
r4IBSFIPMEFS
approval of
maximum total
remuneration as
well as of fixed
and variable
remuneration
r$BQPOHBJO
on share price
increase as a result
of a corporate
events - applicable
to shares received
as compensation
r$BQPOOBODJBM
entities that
have received
money from the
Government
r-FHBM
implementation of
clawback and test
of reasonableness
r-JNJUBUJPOPG
(tax facilitated)
pension accrual
(as per 2015)
r1SPQPTBMUPSFEVDF
NEDs appointment
to four years
r$PNCJOFE$&0
Chairman to be
approved by two
thirds of the Board
r5BSHFUHFOEFS
balance
r4VQFSUBYPO
remuneration
package over 1m
with the employer
paying 50%, along
with social taxes
r$POTJEFSBUJPO
of relationship
between pay
development of
executive board vs.
staff generally
r$POTJEFSBUJPO
of relationship
between pay
development of
executive board vs.
staff generally
EU Shareholders Rights Directive

Increasing shareholder information and rights to be applied in countries registered and
listed in an EU member-state.
t Aim: Increase shareholder information and rights, and encourage long-term shareholder
engagement as well as creating a better link between pay and performance.
t Timing: Subject to negotiation with the European Parliament and the European Council in early
2015. The final provisions may not be agreed until later in 2015.
Remuneration Policy
Remuneration Report
t A binding vote at least every three years

t Companies will only be able to pay
remuneration to directors in line with
the policy
t Policy to cover:
t Linkage to long-term interests
of the company
t Maximum amounts that can be awarded
and proportion of fixed and variable pay
t Details on each remuneration element
including performance criteria for
variable pay
t Main contract terms, including notice
periods and termination payments
t The ratio between average director and
average full time employee remuneration
t Decisionmaking process including
significant policy changes
t Annual advisory vote

t The report shall include:
t Total remuneration received by each
director; the amount by component;
proportion of fixed and variable; the
linkage to long-term performance and
how performance criteria were applied
t The relative change in director pay, share
price and employee pay over three years
t Information on any reclaim of
variable pay
t The Commission has been empowered
to provide standardised templates for
the report

Companies should consider the following based on experience from the new UK regime.
REVIEW
ACT
Business
Strategy
Alignment
Governance
Record
ENGAGE
VOTE
N
Historic
View
Lens
1
Lens
5
Lens
2
Lens
4
Stakeholder
View
DRAFT
Lens
3
E
S
Future
View
Review current
arrangements from
new perspectives
Amend policies,
practices, plans
as relevant
Draft report text

and design lay out
Engage investors,
directors and other
stakeholders
AGM

Good remuneration committee practices.
Pay and performance
1. Ensure the performance for which executives are

being rewarded is aligned with the companys
strategic objectives
2. Monitor total remuneration received by executives year by
year to understand its sensitivity to company performance
8 towerswatson.com
Long-term pay
3. Check whether the time horizons of executive

pay are aligned with the key time periods for
company performance
Disclosure
4. Ensure there is a clear narrative on (i) why executive pay is

structured as it is and (ii) how executives have earned the
remuneration received
Say on pay
5. Engage with key institutional investors so there are

no surprises
Differentials
6. Avoid executive pay decisions being made in isolation

by monitoring the relationship between the pay policies
and levels for executives and other key employee groups
to avoid
Termination
7. Regularly review the total costs of a termination of

each director
Governance
8. Robust decision-making processes
CRD IV
AIFMD
UCITS V
2016/17
Implementation Schedule
2014
EU regulatory landscape for financial services

Focus on pay mix, variable pay ratio, deferrals and pay caps.
Solvency II
t Applies to regulated staff at EEA organisation (globally)

and non-EEA organisations local subsidiaries
t Defined quantitative and qualitative criteria for
identification of staff
t 1:1 fixed to variable ratio with possibility to increase to 1:2
t At least 40% of variable remuneration must be deferred
t Disclosure of the number of individuals earning more than
1 million
t EU based alternative investment (AI) funds marketed or
managed within the EU (regardless of fund location)
t Applicable to a defined list of staff without
qualification criteria
t No cap on incentive compensation
t At least 40% of variable remuneration should be deferred
for three to five years
t Incentive payments should be subject to ex-ante and
ex-post reviews
t EU and non EU organisations that market or manage
UCITS (collective securities funds) in the EU (regardless
of regulated staffs location)
t Applicable to a defined list of staff without
qualification criteria
t No cap on incentive compensation
t At least 40% of variable remuneration should be deferred
into the fund
t Disclosure of remuneration practices to all stakeholders
t There is likely to be requirement (based on the Level 2 text
now under preparation) for insurance companies to adopt a
written remuneration policy
t The fixed component shall constitute a sufficiently high
portion of the total remuneration (no formal cap)
t Deferral period of no less than 3 years
t Remuneration shall be clear, transparent and
governed effectively
Analysis of Actual Total Direct Compensation (TDC)
Eurotop 100 CEO pay levels

The table below shows pay levels for the CEO in the Eurotop 100 for the last financial year.
Chief Executive Officer
Average
LQ
Median
UQ
1,451,686
1,150,000
1,277,285
1,505,818
Actual Bonus
(% of base)
128%
51%
115%
155%
Target Bonus
(% of base)
115%
76%
100%
135%
Maximum Bonus
(% of base)
205%
140%
180%
230%
Actual Total Cash
3,225,285
1,988,938
2,852,375
3,742,813
173%
58%
135%
241%
5,558,642
3,561,165
5,395,740
6,926,587
Base Salary
LTI Expected Value

(% of base)
Actual TDC
t Statistics are company weighted and independently arrayed

t Not all companies have disclosed target bonus, maximum bonus and LTI awards. The above
analysis is only based on information where disclosed
t The analysis of actual TDC includes only those incumbents that have served in position for
the full financial year
t Definitions for each of the elements in the table and details of our LTI valuation methodology
are included in the appendix
10 towerswatson.com
CEO actual TDC levels by sector

CEO actual TDC levels are differentiated by sector and remain generally stable.
7,840
7,910
Health Care (n=6)
6,610
6,630
Consumer Goods/Services (n=23)
5,860
6,235
Oil and Gas (n=7)
4,800
Utilities (n=4)
4,715
5,210
4,995
Banks/Insurance (n=18)
5,280
Technology/Telecoms (n=6)
4,090
4,685
4,645
Basic Materials (n=5)
3,500
Industrials (n=7)
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
2,550
Median actual TDC (thousands)
Median actual TDC 2013
The above analysis of actual TDC includes only those

CEOs that have served in position for the full financial
year and where information is disclosed in order to
derive actual TDC.
Median actual TDC 2012
NB: Changes in the index and/or incumbent might

lead to higher deviations in year-to-year comparisons
as well as changes in variable pay levels.
CEO actual TDC levels by country

The highest pay levels are found in Switzerland, UK and Spain.
7,018 (n=7)
7,635 (n=8)
Switzerland
6,100 (n=17)
5,705 (n=21)
UK
6,071 (n=5)
Spain
7,215 (n=5)
5,720 (n=3)
Benelux
3,965 (n=5)
5,665 (n=15)
6,305 (n=15)
Germany
4,878 (n=2)
4,130 (n=4)
Italy
3,950 (n=16)
3,785 (n=14)
France
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
2,106 (n=7)
1,910 (n=7)
Nordics
Median actual TDC (thousands)
Median actual TDC in 2013
Median actual TDC in 2012

derive actual TDC.
12 towerswatson.com
NB: Changes in the index and/or incumbent might

lead to higher deviations in year-to-year comparisons
as well as changes in variable pay levels.
Actual TDC (thousands)
CEO actual TDC versus market capitalisation

Market capitalisation has some influence on actual TDC levels.
16,000
14,000
y = 2594.7ln(x) - 22552
2
R = 0.24787
12,000
10,000
8,000
6,000
4,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
2,000
Market capitalisation (millions)
UK
Spain
Italy
Germany
France
Switzerland
Benelux
Nordics

derive actual TDC. Market capitalisation figures are as
at 5 June 2014 and sourced from Datastream.
Summary of median CEO actual TDC

Market capitalisation and pay are better correlated by sector than market.
Statistics by Sector (sorted by market cap)
Utilities
Banks/
Insurance
Consumer
Goods/
Services
Basic
Materials
Technology/
Telecoms
Oil & Gas
Health
Care
Median
market
capitalisation
(millions)
32,891
35,908
43,463
45,463
53,045
55,324
70,860
98,854
Median CEO
actual TDC
(thousands)
3,500
4,800
5,210
6,610
4,685
5,280
5,860
7,840
Median CEO actual TDC
Industrials
Health Care
Consumer
Goods/Ser.
Oil & Gas
Technology/
Telecoms
Banks/Ins.
Utilities
Basic
Materials
Industrials
Median Market Cap
Statistics by Country (sorted by market cap)
Median
market
capitalisation
(millions)
Median CEO actual TDC
Median CEO
actual TDC
(thousands)
Benelux
France
Italy
Nordics
Switzerland
UK
Germany
Spain
29,722
37,495
39,118
44,448
48,022
53,045
55,239
55,310
5,720
3,950
3,220
2,106
7,169
6,100
5,665
6,071
Switzerland
UK
Spain
Benelux
Germany
France
Italy
Nordics
Median Market Cap
The above analysis of actual TDC includes only

those CEOs that have served in position for the full
financial year and where information is disclosed in
order to derive actual TDC.
14 towerswatson.com
100
57% 49%
27% 31%
52% 50%
50% 42%
35% 31%
38% 34%
18% 17%
17% 19%
90
37%
80
46%
19%
12%
48%
70
36%
45%
60
69%
25%
32%
64%
28%
30%
50
13%
22%
40
22%
22%
45%
23%
41%
38%
37%
33% 33%
30
20
25% 24%
26%
28%
34%
28% 28%
20%
Benelux
Base salary %
Germany
UK
Actual bonus %
Switzerland
France
Italy
Spain
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
10
2013
CEO average pay mix by country

Incentive pay is most significant in the German, UK and Swiss companies.
Nordics
LTI expected value %
Pay for performance and analysis of incentive design and shareholding guidelines
STI performance measures

Profit/income continues to be the most prevalent measure on STI plans.
STI performance measures % of 86 companies
59%
Profit/Income Measure
52%
Other Non-Financial Measure
49%
Individual
38%
Other Financial Measure

Sales/Revenue
31%
Cashflow
31%
24%
EPS
Operating Margin
19%
Other Return on Measure
19%
15%
Health & Safety

10%
Customer Service
8%
Return on Capital Employed

Dividend Growth
5%
TSR
5%
3%
EVA/Company Value Measure
2%
Net Asset Value
1%
Share Price
0%
10%
20%
91 out of the 95 Eurotop companies analysed

operate an STI plan. The above analysis is based
on 86 out of the 91 Eurotop companies that have
disclosed performance measures for the primary STI
plan in operation.
16 towerswatson.com
These cover
a wide range
of strategic
measures.
30%
40%
50%
60%
70%
Actual bonus (% tile rank)
Change in actual bonus levels vs. change in performance

Bonus pay outs in most companies vary with changes in operating income but some are
outside the corridor.
120
100
80
60
40
20
0
0
20
40
60
80
100
120
Operating income (% tile rank)
UK
Spain
Italy
Germany
France
Switzerland
Benelux
Nordics
The above analysis of actual bonus changes includes

only those CEOs that have served in position for
the full financial year in 2012 and 2013. Operating
income figures for 2012 and 2013 are sourced
from Datastream.
Long-term incentive design

Consistent with last year, most companies operate at least one LTI plan with more than
one performance measure to be met for awards to vest.
Number of LTI plans in operation % of 95 companies
Many companies in
Switzerland and
Benelux operate 2
or more plans
17% No plan
16 companies do
not operate an
LTI plan
52% One plan
24% Two plans
7% Three or more plans
Number of performance measures on LTI plans % of 116 plans
These include
restricted shares,
share matching plans,
stock options and plans
with pre-grant
performance conditions.
26% None
15% Three measures
21% One measure

9% Four measures
The above analysis is based on 79 out of the 95

Eurotop companies that operate an LTI plan for
executives. A total of 116 LTI plans are operated
across the 79 companies.
18 towerswatson.com
27% Two measures

2% Six measures
Changes in long-term incentive design

Performance share plans continue to be the most common LTI vehicle.
LTI plan types in operation % of 79 companies

90
80
78%
70
60
50
These are
most common
in UK, Switzerland
and Nordics.
40
30
20
These are most

common in France
and Switzerland.
These are most

common in
Germany and Italy.
23%
19%
Typically operated
in Switzerland,
Nordic and Benelux.
18%
10
11%
0
Performance
shares/units
Share matching
plans
Stock options/
units
Long-term
cash
Restricted shares/
units
The above analysis is based on 79 out of

the 95 Eurotop companies that operate an
LTI plan for executives.
Top 3 LTI plan types per country

Combination of vehicles are country-specific and often driven by accounting and taxation
rules or corporate governance requirements.
LTI plans sorted by prevalence
Country
Restricted shares/units
Benelux
Performance shares/units
Share matching plans

Stock option/units
France
Stock option/units
Long-term cash
Stock option/units
Germany
Long-term cash
Italy
Long-term cash
Nordics
Stock option/units

Spain
Switzerland
While share
matching plans are
gaining prevalence
in Germany, they are
declining in the UK.
Long-term cash
Stock option/units
Long-term cash
UK

Stock option/units
The above analysis is based on 79 out of the 95

Eurotop companies that operate an LTI plan for
executives. A total of 116 LTI plans are operated
across the 79 companies.
20 towerswatson.com
Shareholding guidelines
Almost half of companies impose shareholding guidelines.
t Shareholding guidelines are most common in
UK and French Eurotop 100 companies.
t Guidelines are typically expressed as a
percentage of base salary. At median,
guideline levels are 275% of base salary for

the CEO.
t Where disclosed the time permitted to reach
the guideline is typically 5 years.
Prevalence of shareholding guidelines % of 95 companies
51% Yes
49% No/not disclosed
Prevalence of shareholding guidelines by country % of 48 companies

50
40
44%
30
Shareholding
guidelines are not
common in Spain.
27%
20
13%
10
8%
4%
0
UK
France
Switzerland
Germany
Nordics
2%
Italy
2%
0%
Benelux
Spain
Our database covers over 1000 companies across 14 countries in Europe

We can provide you with analysis for pan-European sectors or bespoke peer groups tailored to your specific
requirements on a line-by-line and/or aggregate basis (for example, by industry, by different markets and/or
by company size).
Executive Directors
Compensation
Incentive Design and

Shareholding Guidelines
t Financial year and/or

forward-looking base
salary increases
t Actual and/or target total
direct compensation levels*
t Actual and/or target total
remuneration levels*
t Realised pay levels
t Analysis of realised pay
versus target/maximum
pay opportunity
t Analysis of pay mix*
t Pay differentials by sector
and/or country*
t Leverage analysis*
t Pay versus performance
analysis*
t Short-term incentive
performance measures and
relative weightings
t Short-term incentive
deferral analysis
t Long-term incentive vehicles
t Long-term incentive
performance measures,
relative weightings and
performance targets
t Long-term incentive
performance periods,
vesting arrangements and
holding periods
t Analysis of forward-looking
amendments to short and
long-term incentive plans
and details of new plans
t Analysis of shareholding
guidelines
Chairmens and
Non-Executive Directors
Compensation
t Base/fixed fee levels
t Chairmanship and
membership fees for board
committees (e.g. audit,
remuneration, nomination)
t Attendance fees and
travel allowances
t Other incentives
and benefits
Analysis can be conducted

by role e.g. CEO, CFO, COO**
* This analysis includes long-term incentive
expected values based on the Towers Watson
valuation methodology
22 towerswatson.com
** Note that in some countries a role-specific

analysis is not possible as only highest-paid executive
director is individually disclosed.
Our database covers constituents of the following indices in the

respective European countries
Belgium
BEL20
BELMID
France
CAC 40
SBF 80
Ireland
ISEQ 20
Italy
MIB 40
Germany
DAX 30
MDAX
SDAX
Nordics
OMX Sweden
OMX Denmark
OBX Norway
AEX
AMX
AScX
IBEX 35
IBEX Medium
Cap
SMI
SMI MID
FTSE 100
FTSE 250
Netherlands
Spain
Switzerland
UK
TecDAX
Towers Watsons contacts

Country
Contact name
Email
Phone
UK and Ireland
Richard Belfield
[email protected]
+44 20 7170 2147
Sonia Padda
[email protected]
+44 20 7170 2927
Laurent Nguyen
[email protected]
+33 1 53 93 13 14
Gerald Joliy
[email protected]
+33 1 53 93 13 38
Helmuth L. Uder
[email protected]
+49 89 51 657 4800
Stephanie Schmelter
[email protected]
+49 69 1505 5168
Hans Muench
[email protected]
+41 43 488 4466
Maike Wehage
[email protected]
+41 43 488 4409
Bram van Oenen
[email protected]
+31 88 543 3037
Sven Slavenburg
[email protected]
+31 88 543 3183
Manuel Montecelos
[email protected]
+34 91 590 3986
Cristina Martin
[email protected]
+34 91 590 3087
Edoardo Cesarini
[email protected]
+39 06 367361
Leonardo Mansueto
[email protected]
+39 02 6378 0190
Anders Tapper
[email protected]
+46 8 506 417 10
Mikael Ullen
[email protected]
+46 8 506 417 23
Bram van Oenen
[email protected]
+31 88 543 3037
Noemie Tack
[email protected]
+32 2 678 1511
France
Germany
Switzerland
Netherlands
Spain
Italy
Nordics
Belgium
24 towerswatson.com
Appendices
Eurotop 100 Company List

Company
Country
Market Capitalisation
( m)
Sector
A P MOLLER - MAERSK A/S
Nordics
40,521
Industrials
ABB LIMITED
Switzerland
39,880
Industrials
AIR LIQUIDE
France
33,514
Basic Materials
AIRBUS GROUP
France
41,183
Industrials
"--*"/;
Germany
56,492
Banks/Insurance
ANGLO AMERICAN
UK
25,096
Basic Materials
"/)&64&3#64$)*/#&7
Benelux
129,801
Consumer Goods/Services
ASML HOLDING
Benelux
28,436
Technology/Telecoms
ASSOCIATED BRITISH FOODS
UK
29,679
"453";&/&$"
UK
67,523
Health Care
ATLAS COPCO AB
Nordics
25,840
Industrials
AXA
France
43,717
Banks/Insurance
#"/$0#*-#"07*;$":""3(&/5"3*" Spain
55,310
Banks/Insurance
BANCO SANTANDER
Spain
88,712
Banks/Insurance
#"3$-":4
UK
48,981
Banks/Insurance
BASF
Germany
78,328
Basic Materials
#":&3
Germany
87,301
Basic Materials
BG GROUP
UK
51,300
Oil & Gas
BHP BILLITON*
UK
127,951
Basic Materials
BMW
Germany
58,752
BNP PARIBAS
France
64,126
Banks/Insurance
BP
UK
112,846
Oil & Gas
BRITISH AMERICAN TOBACCO
UK
82,186
BT GROUP
UK
38,718
Technology/Telecoms
CHRISTIAN DIOR*
France
27,205
CONTINENTAL
Germany
34,721
CREDIT AGRICOLE
France
28,893
Banks/Insurance
CREDIT SUISSE
Switzerland
35,165
Banks/Insurance
DAIMLER
Germany
74,235
DANONE
France
34,932
DEUTSCHE BANK
Germany
30,366
Banks/Insurance
DEUTSCHE POST
Germany
32,891
Industrials
DEUTSCHE TELEKOM
Germany
55,239
Technology/Telecoms
DIAGEO*
UK
58,914
BHP Billiton, Christian Dior and Diageo have

been excluded from the analysis as the 2013/14
remuneration report was not published at the time of
this analysis.
Market capitalisation figures are as at 5 June 2014
and sourced from Datastream.
Appendices

Company
Country
( m)
Sector
E ON
Germany
28,586
Utilities
ELECTRICITE DE FRANCE
France
47,449
Utilities
ENEL
Italy
39,118
Utilities
ENI
Italy
67,668
Oil & Gas
ERICSSON B
Nordics
29,904
Technology/Telecoms
(%'46&;
France
49,523
Utilities
"44*$63";*0/*(&/&3"-*
Italy
25,829
Banks/Insurance
GLAXOSMITHKLINE
UK
94,403
Health Care
GLENCORE XSTRATA*
UK
53,045
Basic Materials
).)&//&4."63*5;"#
Nordics
51,945
HEINEKEN
Benelux
29,722
)&/,&-"($0.1"/:,(""
Germany
34,625
HERMES INTERNATIONAL
France
27,448
HSBC HOLDINGS
UK
146,125
Banks/Insurance
IBERDROLA
Spain
33,665
Utilities
IMPERIAL TOBACCO GROUP
UK
31,571
INDITEX
Spain
65,792
ING GROEP
Benelux
40,175
Banks/Insurance
INTESA SANPAOLO
Italy
40,011
Banks/Insurance
KONINKLIJKE PHILIPS
ELECTRONICS NA
Benelux
22,190
Industrials
LINDE
Germany
28,881
Basic Materials
--0:%4#"/,*/((3061
UK
68,508
Banks/Insurance
LOREAL
France
77,677
-7.)
France
73,826
.6/$)&/&336&$,7&34*$)&36/(4
GESELLSCHAFT
Germany
27,803
Banks/Insurance
NATIONAL GRID
UK
38,150
Utilities
NESTLE
Switzerland
185,549
NORDEA BANK
Nordics
44,448
Banks/Insurance
/07"35*4
Switzerland
175,672
Health Care
/070/03%*4,
Nordics
83,762
Health Care
ORANGE
France
31,641
Technology/Telecoms
PERNOD-RICARD
France
23,516

and sourced from Datastream.
26 towerswatson.com
Appendices

Company
Country
( m)
Sector
PRUDENTIAL
UK
43,210
Banks/Insurance
RECKITT BENCKISER
UK
45,463
3&140-:1'
Spain
26,636
Oil & Gas
COMPAGNIE FINANCIERE RICHEMONT Switzerland
39,811
RIO TINTO
UK
72,038
Basic Materials
ROCHE HOLDING
Switzerland
188,873
Health Care
30:"-#"/,0'4$05-"/%(3061
UK
47,278
Banks/Insurance
30:"-%65$)4)&--
UK
186,655
Oil & Gas
SABMILLER*
UK
64,342
SANOFI
France
103,305
Health Care
SAP
Germany
68,280
Technology/Telecoms
SCHNEIDER ELECTRIC
France
40,058
Industrials
SIEMENS
Germany
86,250
Industrials
SOCIETE GENERALE
France
33,573
Banks/Insurance
STANDARD CHARTERED
UK
40,552
Banks/Insurance
STATOIL
Nordics
70,860
Oil & Gas
SWISS RE
Switzerland
23,806
Banks/Insurance
4:/(&/5"
Switzerland
26,555
Basic Materials
TELEFONICA
Spain
55,409
Technology/Telecoms
TELENOR
Nordics
26,926
Technology/Telecoms
TELIASONERA
Nordics
23,338
Technology/Telecoms
TESCO
UK
29,308
THE SWATCH GROUP
Switzerland
23,553
TOTAL
France
120,263
Oil & Gas
UBS
Switzerland
56,233
Banks/Insurance
UNICREDIT
Italy
38,129
Banks/Insurance
6/*-&7&3
UK
91,994
7*/$*
France
32,998
Industrials
7*7&/%*
France
25,953
70%"'0/&(3061
UK
66,702
Technology/Telecoms
70-,48"(&/
Germany
88,696
70-70
Nordics
22,720
Industrials
;63*$)*/463"/$&(3061
Switzerland
32,483
Banks/Insurance
SABMiller has been excluded from the analysis as the

2013/14 remuneration report was not published at the
time of this analysis.
Market capitalisation figures are as at 5 June 2014 and
sourced from Datastream.
Appendices
Composition of the Eurotop 100

The majority of constituents in the Eurotop 100 are headquartered in UK, France and Germany.
A broad array of sectors are represented.
Composition by country
20% France
16% Germany
5% Italy
6% Spain
11% Switzerland
27% UK
10% Nordics
5% Benelux
Composition by industry
9% Basic Materials
28% Consumer Goods/Services
6% Health Care
10% Industrials
7% Oil and Gas
10% Technology/Telecoms
6% Utilities
24% Banks/Insurance
Market capitalisation ( m)
Revenues ( m)
Lower Quartile
30,969
17,028
Median
43,210
32,031
Upper Quartile
68,394
58,707

and sourced from Datastream. Revenue figures
are sourced from annual reports and Datastream.
28 towerswatson.com
Statistics only include those 95 Eurotop companies

that published annual reports until June, 10. Revenue
figures exclude financial institutions.
Appendices
Points to consider when interpreting the analysis

t As a result we have excluded 19 CEOs from the
analysis of actual TDC. These are listed on the
slide overleaf with reasons for exclusion.
t :FBSPOZFBSBOBMZTFTNBZCFJNQBDUFE
by changes to the Eurotop 100 index
and incumbents.
t Actual TDC derived using the Towers Watson
-5*7BMVBUJPONFUIPEPMPHZXJMMEJGGFSGSPNUIF
figures disclosed by the companies in their
remuneration reports.
t Compensation data is presented in Euros.
The exchange rates used to convert data are
outlined below:
t The analysis covers a total of 95 companies that

have published the remuneration report as at 10
June 2014.
t Due to the differing regulatory and governance
environments across countries, disclosures on
compensation arrangements differ widely, in
particular with respect to long-term incentive
awards. As such we are unable to derive the
actual TDC figures for all executives covered
in the Eurotop 100.
t Furthermore, the analyses of actual TDC includes
only those incumbents that have served in
position for the full financial year.
2013 average conversion rates to Euros

EUR
CHF
GBP
USD
AUD
HKD
SEK
DKK
NOK
0.8125
1.1777
0.7533
0.727
0.097
0.1156
0.1341
0.1283
Appendices
CEOs that were excluded from analysis of actual TDC
30 towerswatson.com
Company
Incumbent
Reason for exclusion
ABB Limited
Ulrich Spiesshofer
New appointment, data pro-rated
Anglo American
Mark Cutifani
AP Moller - Maersk
Nils S. Andersen
Data needed to derive actual TDC

not disclosed
ASML Holding
Peter T.F.M. Wennink
Assicurazioni Generali
Mario Greco
Banco Santander
Javier Marn Romano
BT Group
Ian Livingston
EDF
Henri Proglio
Only eligible for base in 2013.
GDF Suez
Grard Mestrallet
Data needed to derive actual TDC not

disclosed
Hermes International
Patrick Thomas
Data not comparable; remuneration

package based on percentage of
groups consolidated income before
tax and revenues
ING Groep
Ralph A.J.G. Hamers
Intesa Sanpaolo
Carlo Messina
Rio Tinto
Tom Albanese
Royal Bank of Scotland Group
Ross McEwan
Siemens
Joe Kaeser
Swiss Re
Michel M. Lis
Data needed to derive actual

TDC not disclosed
Syngenta
Michael Mack

TDC not disclosed
Telenor
Jon Fredrik Baksaas

TDC not disclosed
Teliasonera
Johan Dennelind
Appendices
Definition of elements covered by this report

Pay element
Definition
Base salary
The annual base salary received for the last financial year, as reported
in the emoluments table
Base salary % increase
The percent increase in the annual base salary reported for the last
financial year
Actual bonus
The total annual bonus earned for the last financial year (including
bonus deferred without additional performance conditions)
Actual bonus (% of base)
Actual bonus (as defined above) expressed as a percent of annual base

salary received for the last financial year
Target bonus (% of base)
The percent of annual base salary paid as an annual bonus/incentive

for target/on-budget or expected performance under the annual bonus/
incentive plan in operation for the last financial year
(including deferrals)
Maximum bonus (% of base)
The maximum percent of annual base salary paid as an annual bonus/

incentive under the annual bonus/incentive plan in operation for the
last financial year (including deferrals)
Actual total cash
The sum of base salary (as defined above), actual bonus (as defined
above) and amount received under a profit sharing plan. The analysis
excludes fees received for membership of board
LTI expected value
The total expected value of all forms of long-term incentives awarded

in the last financial year (including deferred bonuses with an additional
performance condition), calculated at the time of grant using the
Towers Watson LTI valuation methodology
LTI expected value (% of base)
The LTI expected value (as defined above) expressed as a percent of

annual base salary received for the last financial year
Actual total direct compensation (TDC)
The sum of actual total cash (as defined above) and LTI expected value
(as defined above)
Appendices
Towers Watsons LTI valuation methodology

In general terms, the reported LTI value represents
the fair/expected value of an award as at the
date of grant, taking into account the specific
characteristics of the vehicle awarded (for example,
share price volatility, dividend yield) and any
applicable performance vesting conditions. The
reported value represents the sum of the values of
all types of LTI award made to an individual in the
year, including performance/restricted shares, stock
options, deferred bonus matching shares and longterm cash awards.
Stock options
t The value of stock options is calculated using
a binomial lattice model, based on a number of
input assumptions (as set out below). A discount
is then applied to this value to take account of any
applicable performance vesting conditions.
t Our valuations are based on an expected life
approach when computing the binomial value of
the option. This expected life is taken as the midpoint between the vesting period and the term of
the option (for example, for an option with a 3 year
vesting period and a 10 year life, the expected life
is 6.5 years).
t Where applicable, the relevant performance
condition discount factor is determined by the
type of the applicable condition:
t Relative Total Shareholder Return tests:
A country-specific discount is applied to the
binomial lattice value.
t Absolute share price/Total Shareholder Return
tests: We value such awards by incorporating
the absolute share price target into the binomial
valuation model. For absolute TSR tests,
an equivalent absolute share price target is
calculated using a company specific dividend
yield assumption.
t Internal/non-market tests: We apply a single
discount factor to take account of such
performance conditions. This discount factor is
country-specific, based on our experience of the
average proportion of shares that might typically
be expected to vest, based on typical local
performance condition calibration.
32 towerswatson.com
Performance/restricted shares
t The value of performance / restricted shares
represents the face value of shares (i.e. the
number of shares multiplied by share price) as
at the date of grant, less the value of dividends
paid during the vesting period if participants do
not receive the benefit of these, with a discount
applied to take any applicable performance
vesting conditions into account.
t Where applicable, the relevant performance
condition discount factor is determined by the
type of the applicable condition:
t Relative Total Shareholder Return tests:
We consider the awards specific vesting
schedule and calculate the expected
proportion of shares due to vest, assuming
that all percentile ranks are equally likely to
be achieved. We apply an uplift factor to this
value to take into account the strong correlation
between relative TSR performance and share
price growth. This adjustment factor is 20% if
the comparator group is made up of selected
sector peers, 25% if the company uses a broad
index. For tests comparing the companys
TSR performance to that of an index, we apply
the above methodology, assuming that the
condition is calibrated such that threshold
vesting is achieved for the equivalent of median
performance, and maximum vesting achieved for
the equivalent of upper quartile performance.
t Absolute share price/Total Shareholder Return
tests: We value such awards as nil-cost
options with the performance condition
incorporated into the binomial valuation model
as described above.
t Internal/non-market tests: We apply a single
discount factor to take account of such
performance conditions. This discount factor is
country-specific, based on our experience of the
average proportion of shares that might typically
be expected to vest, based on typical local
performance condition calibration.
t Where there is no defined maximum award size
and awards are expressed as a target number
of shares with the potential for the actual
vesting number to be higher or lower based on
performance levels, the value is more simply the
face value of this target number of shares as at
the date of grant.
Appendices
Deferred bonus matching shares
Input assumptions
t We assume that executives seek to maximise

their reward opportunity and will therefore elect to
defer the maximum amount of bonus allowable.
Deferred bonus matching share awards are then
valued as performance share awards (see above).
t Please note that deferrals not subject to further
performance conditions are included as part of
the annual bonus and are not valued as part of
long-term incentives.
t Some plans have a feature (sometimes known as
malus) under which deferred shares can be clawed
back in the event of a downturn in business
performance. Typically, this malus condition is only
likely to be applied in extreme circumstances and
we do not take this into account in the valuation.
However, in cases where a malus condition can
be considered a true long-term performance
condition, the deferred award is valued as
performance shares and included in long-term
incentive value.
t In order to calculate values for long-term incentive

awards, it is necessary to make a number of input
assumptions. These assumptions are based on a
consistent approach for all companies in order to
result in valuations which can be compared on a
like for like basis. The principal assumptions and
the methodology to derive them are set out below.
Co-investment plans
t Similar to deferred bonus matching plans, we
assume that executives seek to maximise their
reward opportunity and will therefore elect to
co-invest the maximum amount. Co-investment
matching share awards are then valued as
performance share awards (see above).
Long-term cash bonus

t Consistent with other types of long-term incentive
award, long-term cash bonuses are valued at date
of grant (not payout). The value represents the
target/expected payout level.
Share price volatility

t Share price volatility assumptions have been
calculated based on the average actual volatility
experienced by each company over the threeyear period to 1 January 2013. Where this
historic average is likely to be unrepresentative
of future volatility levels (for example, a business
restructuring), an assumption based on more
detailed analysis is used.
Dividend yield
t Dividend yield assumptions have been calculated
based on the average actual dividend yield for
each company over the one-year period to
1 January 2013. Where this historic average is
likely to be unrepresentative of future dividend
yield levels, an assumption based on more
detailed analysis is used.
Risk-free rate
t Risk-free rate assumptions have been calculated
based on the yield on a zero-coupon government
bond for the country in which the company is listed
over the vesting period/expected share option
term as at 1 January 2013.
Other award types

t For complex or unusual plan types which do
not fit into the categories described above, a
bespoke valuation will be applied, using consistent
principles and assumption setting methodology.
Our services
Our services
Towers Watson is a
full service consulting
company, providing a
comprehensive array of
services in the areas of
talent and rewards, benefits,
and risk and financial
services. Our Executive
Compensation consulting
services include:
Towers Watsons Executive Compensation services
Policy
Analysis
Communication
t Executive pay philosophy

and structure
t Aligning pay with strategy and culture
t Annual bonus and long-term
incentive plan design
t Performance measure selection
and calibration
t Executive pensions
t Share ownership guidelines
t Recruitment and termination
t IPO and transaction
related awards
t Total executive pay

benchmarking
t Pay scenario analysis
t Realised pay analysis
t The dynamics of pay and
risk reviews
t IFRS2 valuations
t Total shareholder return
performance monitoring
t Global pay trends
t Directors Remuneration
Reports
t Assistance on investor
consultations
t Total reward statements
t Training and materials for
non-executive directors
Many clients retain Towers Watson for a broad

spectrum of services to gain the benefits that come
from a deep consulting relationship. Others use our
services selectively to meet specific business needs.
However you prefer to work with a consultant, Towers
Watsons flexible clients-first approach can work for you.
34 towerswatson.com
The remuneration landscape

is constantly changing we
can use our insight to identify
features of your remuneration
packages, which may not be
compliant with future best
practice, and proactively
address these.
About Towers Watson

Towers Watson is a leading global professional services
company that helps organisations improve performance
through effective people, risk and financial management.
With more than 14,000 associates around the world, we
offer consulting, technology and solutions in the areas
of benefits, talent management, rewards, and risk and
capital management.
Towers Watson
71 High Holborn
London
WC1V 6TP
Towers Watson is represented in the UK by Towers Watson Limited.

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July 2014

CEO pay in the Eurotop 100

Regulatory and tax changes

Pay for performance and analysis of

Additional analysis and contact

CEO pay in the Eurotop 100

CEO pay in the Eurotop 100 3

CEO pay in the Eurotop 100

Key pay trends for selected countries

Regulatory and tax changes

Regulatory change continues across Europe

General industry: disclosure and voting reforms proposed

Increased disclosure and

Changes on disclosure, pay

Cap on CEO pay for

Pay practice restrictions; binding

Cap on CEO/Chairman pay for

CEO pay in the Eurotop 100 5

Regulatory and tax changes

Regulatory and tax changes by country

Regulatory and tax changes

EU Shareholders Rights Directive

t A binding vote at least every three years

t Annual advisory vote

CEO pay in the Eurotop 100 7

Regulatory and tax changes

EU Shareholders Rights Directive

Draft report text

EU Shareholders Rights Directive

Pay and performance

1. Ensure the performance for which executives are

3. Check whether the time horizons of executive

4. Ensure there is a clear narrative on (i) why executive pay is

5. Engage with key institutional investors so there are

6. Avoid executive pay decisions being made in isolation

7. Regularly review the total costs of a termination of

8. Robust decision-making processes

Regulatory and tax changes

EU regulatory landscape for financial services

t Applies to regulated staff at EEA organisation (globally)

CEO pay in the Eurotop 100 9

Analysis of Actual Total Direct Compensation (TDC)

Eurotop 100 CEO pay levels

Actual Total Cash

LTI Expected Value

t Statistics are company weighted and independently arrayed

Analysis of Actual Total Direct Compensation (TDC)

CEO actual TDC levels by sector

Health Care (n=6)

Consumer Goods/Services (n=23)

Oil and Gas (n=7)

Basic Materials (n=5)

Median actual TDC (thousands)

Median actual TDC 2013

The above analysis of actual TDC includes only those

Median actual TDC 2012

NB: Changes in the index and/or incumbent might

CEO pay in the Eurotop 100 11

Analysis of Actual Total Direct Compensation (TDC)