Executive excess need not be etched in stone. Just look at the Nordic region, where an egalitarian tradition and a high quality of life leave top managers content with lower paychecks.
Though corporate pay scandals do occur, and the gap between executive and average salaries has risen, company bosses in Sweden, Denmark, Finland and Norway earn lower wages on average than in the US and elsewhere in Europe.
Yet there is little sign of Nordic executives and top talent manning the long-boats in search of better pay abroad.
“There’s more to life than money,” said Leif Borge, chief financial officer at Aker Solutions, Norway’s biggest oil services company, who made about US$862,000 in 2011. “I’m happy with my salary, it covers my needs. I have a cabin in the mountains and that is a quality of life I wouldn’t have in Houston.”
Total pay for top executives in Sweden and Denmark is about 75 percent of the European average, and lower in Norway and Finland, data from management consultancy Hay Group shows, a gap compounded by some of the world’s highest taxes.
Moreover, Oslo, Stockholm and Copenhagen often figure among the top 10 most expensive cities, although luxury homes are cheaper there than in London, Zurich or Geneva.
Borge’s opposite number as chief financial officer of FMC Technologies, a US counterpart, earns US$2 million a year.
Nordic pay is even further below that of big economies like Germany, Britain and Switzerland, which this month voted to impose strict controls on executive rewards.
The Swiss vote was part of a general attack on corporate largesse in Europe, where government austerity has fed a desire to limit Wall Street-style excess in corporate boardrooms.
Borge at Aker is not an isolated example.
A Novus poll of about 1,300 managers and executives in Sweden last year showed only 4 percent wanted to move abroad.
In Denmark, only 2 percent of people aged between 25 and 49 with bachelors degrees emigrated last year, mostly for brief studies.
Novo Nordisk, the Danish company which is the world’s biggest insulin maker, sees no brain drain.
“We have a goal that we will not have a staff turnover of more than five percent among our best-performing employees and we are far below that,” human resources executive Lars Christian Lassen said.
Among those who venture abroad for a career, the benefits of quality state-funded education, good public services and health care, and a comprehensive social safety net exert a strong homeward pull.
Anssi Rantanen, a 23-year-old student at Helsinki’s top-flight Hanken business school, is hoping to get his masters degree in London and work a few years abroad before going home.
“Once you get used to the standard of living here, I find it hard to see myself working for the rest of my life in the US,” he said.
In the Better Life Index of living standards calculated by the Organisation for Economic Cooperation and Development (OECD), Nordic countries clinch three of the top five spots.
“There is fantastic quality of living in the Nordic areas, there are many parameters stacking up to why you want to work, so we are very competitive,” said Christian Clausen, chief executive of Nordea, the region’s biggest bank.
Clausen received in total 1.9 million euros (US$2.49 million) last year, making him one of the best paid people in the region.