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Business

Polls Finds Europeans Tired of Fat-Cat CEOs

70 percent of Europeans say chief executives are overpaid and overindulgent. German market research firm GfK and The Wall Street Journal Europe found that most think executives serve themselves rather than shareholders.

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A fleeting smile: Companies in Europe are tightening the reins on their executives, like Vivendi Chairman Jean-Marie Messier.

Europeans are fast tiring of fat-cat CEOs and a lack of transparency in corporations.

An astounding 70 percent of Europeans think that the top brass running European corporations are making way too much money. 83 percent of those surveyed also said that chairmen tend to be self-serving, taking care of their own needs rather than those of the company, shareholders and customers they represent.

The German market research group GfK and The Wall Street Journal Europe surveyed 12,657 residents of 14 European countries before drawing those conclusions.

Only one out of five surveyed said they believed top managers were doing a good job.

A crisis of confidence

Richard Hudson, managing editor of the Wall Street Journal Europe, says he believes the findings represent a serious confidence crisis in European corporate leadership.

"We learned that across Europe there is huge mistrust of business-leadership. I would call it a crisis of confidence," he said.

Very golden parachutes

ncreasingly, Europeans are angered by scenarios in which CEOs earn huge salaries, cost of living increases and create absurdly large golden parachutes in case they are fired or made redundant as a result of streamlining efforts.

Recently, two executives at the British firm Cable and Wireless were given £2 million ($3 million) termination packages despite the fact that the company had registered a loss of £4.7 billion ($7 billion) that year. An especially high percentage of Brits polled said that CEOs of British companies were paid excessively.

The Danish exception

Denmark proved to be the exception to the rule. One out of two Danes is convinced that top managers are being paid what they deserve. But Hudson said there are significant differences between the Danish corporate landscape and that of the rest of Europe.

"One is, of course, that in Denmark there often is not a big difference between a payment of a CEO and a worker because of the enormous taxation that happens there," he said. "But also it is a small country, mostly homogenious. The people on the shop-floor tend to know the people who are in the front office. And therefore there is more trust that goes on in Denmark than in most of the countries."

A push for greater transparency

Those polled across all of Europe called for greater transparency, saying they believe CEOs should be required to publicly state their full salaries - including benefits, stock options and other perks. In central and eastern European countries, many went so far as to say they believed there should be legal limits to executive salaries. Meanwhile, the rumbling is increasing among workers and shareholders.


"They do protest against it in the form of selling shares," Hudson said. "It also takes the form of the strikes you recently had in Germany. This all reflects a general feeling in Germany and most other European countries that, somehow, the pay structure is not fair," he said.

Next to the drastic differences in salaries, there is also growing criticism of the leadership of European CEOs.

"There is a perception that the economy is bad, that business leaders do not show leadership. It's easy to focus on the pay issue, but the main problem is that the economy has to get moving, sales have to start happening and leaders have to lead," Hudson said.

In other words, employees and shareholders are tightening the reins and are no longer allowing managers to get away with whatever they want. After Vivendi recently posted the largest single loss in French corporate history, shareholders voted against a plan that would have allowed the company to issue incentive stock options to its executives.

Regulators are also tightening their grip. Following the recent bankruptcy scandal of the energy behemoth Enron in the United States, the rules governing companies listed on Wall Street are being tightened. The new disclosure regulations will also apply to German companies that are listen on American stock exchanges - including DaimlerChrysler.

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