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U.S. CEOs Are the Highest Paid in the World The typical British CEO get paid a little more than half what a U.S. CEO makes.* Why the difference? companies are required to put executive compensation packages to a shareholder vote every year; company directors are easier to get rid of in Britain than in the U.S. (each company's board of directors sets the pay for its executives); performance standards for bonuses and stock grants tend to be tougher in Britain than in the U.S., where directors often manipulate standards so the executive is almost guaranteed all or most of a bonus. Excerpts from "Poorer Relations," Wall Street Journal, April 10, 2006: The typical British CEO earns a little more than half what his or her U.S. counterpart makes, according to a Towers Perrin study completed this year that compared compensation packages for executives in 26 countries. The typical CEO at a large U.S. company receives almost $2.2 million a year, whereas a British CEO earns nearly $1.2 million. . . .  Bonuses and long-term incentives for the U.S. CEO also make up a larger proportion of the typical pay package, 62%, than they do in any other country in the study; in Britain, bonuses and long-term incentives make up 35% of the typical package.  * * * * . . . bonuses, stock grants and other long-term incentives tend to make up a smaller part of a British CEO's compensation than that of an American, such rewards for the British CEO are also more likely to depend on his or her performance. And performance standards in the U.K. can be far more demanding than in the U.S. For example, often a British company's shares will have to perform above the median share performance for its industry in order for executives' options or restricted shares to vest. Vicky Wright, a senior consultant in London at the consulting firm Watson Wyatt Worldwide, gives an example of a commodities firm that recently performed very well. Its shares rose about 75% over three years. But the whole U.K. commodities industry was booming, she says, so the company's total shareholder return was below the median in the sector. As a result, she says, the CEO's performance-linked restricted shares didn't vest. In the U.S., on the other hand, rich stock awards often accrue to the CEO just for staying in the job, and are sometimes even awarded despite relatively poor performance. For most U.S. executive-pay packages, company performance has a lower impact, Ms. Wright says. Restricted shares for U.S. executives, for example, typically vest after the person has stayed in his or her position for a certain length of time. *Report by compensation consultants Towers Perrin, reported in the Wall Street Journal, April 10, 2006.