By Tom Bergin
LONDON, March 23 The chief executive squeezed along the row to a cramped economy-class window seat on an aging 737 flown by one of Italy's less popular airlines.
He spent the previous hour scanning emails on his BlackBerry in an airport cafe where all the food came wrapped in cellophane. The regional airport's budget doesn't stretch to the hospitality lounges usually associated with executive travel.
"People think the life of a chief executive, the international travel, is glamorous. It's not," he told the Reuters reporter sharing the flight, adding that the perpetual globe-trotting often kept him from his wife and children for weeks on end.
"Something has to give in this job, and it's usually the family," he said. "People need to be compensated for that."
In Europe, headlines about "fat cats" no longer refer only to bankers, as popular disdain for bountiful bonuses spreads to other industries.
CEO's are increasingly feeling the heat from a public resistant to the argument that big companies need to pay big salaries if they wish to generate big profits.
A sign of the frustration CEOs feel is their increasing tendency, when quizzed on the subject, to refer to personal sacrifice rather than economic argument.
"I work every day ... seven days a week," oil company BP's boss Bob Dudley said, a little plaintively, when asked if it was fair that CEOs' pay should rise much faster than average wages. He made no mention of BP's financial performance.
Both CEOs earned over $6 million last year, modest by U.S. standards but contentious in a continent uneasy with yawning gaps between rich and poor.
The tone of the pay debate has grown so poisonous, corporate leaders say, it is tarnishing Europe's image as a place to do business.
"The initial, and in some cases justified, attack on bank bonuses is now infecting the public perception of big business," Roger Carr, president of lobby group the Confederation of British Industry, wrote in a recent newspaper editorial.
"Damaged businesses run by demoralised managers are not a firm foundation for encouraging vital inward investment," he added.
BOSSES V WORKERS
European bosses still earn much less than their U.S. peers. Thomson Reuters ASSET4 data shows median pay for companies' highest earners, usually the CEO, was $2.5 million in Europe in 2010, against $9.8 million in the U.S. and Canada.
But eight and even nine-figure pay deals, driven by share awards that are a multiple of base salary, are becoming more common in Europe, and raising public hackles.
Volkswagen, Europe's biggest carmaker, said last week it had paid its boss, Martin Winterkorn, 17 million euros ($22 million) last year, prompting headlines such as "Yet more millions for the bosses" in German newspapers.
The British press scoffed at the idea that GlaxoSmithKline CEO Andrew Witty had been underpaid before its board almost doubled his pay to just under 7 million pounds ($11 million), having found a "competitiveness gap" between his compensation and that of his peers.
As a lifetime company man, he was "probably the FTSE 100 chief executive least likely to quit to join a rival", an article in The Guardian observed.
News that Carlos Brito, CEO of Belgium-based brewer Anheuser-Busch InBev, was in line for a bonus of more than 100 million euros brought protesters onto the street, under banners saying the boss was "drunk on his bonus".
Unusually, the bonus was tied to a single criterion, a debt reduction target that reflected anxiety about overstretched balance sheets when markets took fright after the 2008 collapse of investment bank Lehman Brothers.
What irks many in an era of austerity is that bosses' pay is rising sharply as low level workers' real incomes are falling.
Directors of the 100 biggest listed companies in the UK enjoyed a 49 percent increase in pay last year, according to data from Income Data Services. Average wage rates across the economy rose only around 3 percent, which didn't even keep up with the cost of living, which rose 5.2 percent.
This all means a growing gap between bosses' and employees' pay. In 2010, the average European CEO earned 149 times the pay of his or her employees' average wage, up from 105 times in 2009, according to Thomson Reuters ASSET4 data.
This trend is mirrored in the United States, though the gap there is much larger.
Even some industry leaders say CEO pay has got out of control; the head of the British bosses' own lobby group, the Institute of Directors, concedes that some large pay deals are "corrosive" to the economy.
Just as some bankers gave up their bonuses to calm or head off public criticism, some companies are now cutting payouts.
British oil explorer Cairn Energy dropped plans to award chairman and founder Bill Gammell share options worth 2.5 million pounds in January, following pressure from investors.
The CEO and chief financial office of miner Rio Tinto waived their rights to bonuses for 2011, after the group swung to a loss in the second half of the year, and Nick Buckles, the chief executive of security group G4S, waived his bonus entitlement after the failed takeover of a rival last year.
But this isn't enough to satisfy European governments and politicians from both sides of the left-right divide.
The UK's Conservative Prime Minister David Cameron has described the rising gap between pay at the top and bottom as "concerning", and his government is planning measures to make it easier for investors to block payouts.
Right-leaning French President Nicolas Sarkozy and his Socialist Party challenger in upcoming elections Francois Hollande have both proposed measures to curb executive payouts. Poll-leader Hollande has promised to tax income of more than 1 million euros at 75 percent.
PAY FOR PERFORMANCE?
Underpinning much public anger is a suspicion that CEOs' appoint cronies, or at least like-minded people, to their boards, who then scratch the CEO's back on matters of pay.
DeAnne Julius, who has sat on the boards of drug company Roche, Lloyds Banking Group, property firm Jones Lang LaSalle, services group Serco and BP, said there used to be some truth to this view, and noted that former CEOs were often not the most demanding members of remuneration committees.
However, she said companies were increasingly recruiting directors other than former top-tier executives of the corporate world, minimising the risk of such cronyism.
Julius's own background was as an economist with Shell, British Airways, the World Bank and the U.S. Central Intelligence Agency. She also sat on the Bank of England's interest rate-setting committee.
She said globalisation was leading to greater pay disparities in all professions, including entertainment and sport, as was a desire to align directors' interests with shareholders', which had led to pay structures with highly variable outcomes.
Those structures don't always produce an obvious correlation between pay and performance. The big rise in executive pay last year was in spite of a fall in European share prices. It also exceeded the average 6 percent year-on-year growth in earnings reported so far this year by Euro STOXX 50 companies.
Even where weak earnings have led to cuts in CEO pay, the bosses seem to take a smaller hit than shareholders. Swiss food maker Nestle cut Chief Executive Paul Bulcke's pay 7.3 percent last year after profits dropped 72 percent.
Companies counter that focusing on short-term share price movements and earnings alone is misleading because it is better for managers to be rated on longer-term performance and on measures that reflect the underlying health of the organisation.
Whatever the measure, some question whether a CEO deserves the credit for the outcomes for which he or she is rewarded.
Peter Voser, CEO of Royal Dutch Shell, Europe's largest company by market capitalisation, enjoyed a doubling in his pay in 2011 to 11.7 million euros, largely thanks to a three-year bonus scheme linked to cashflow.
However, the rise in cashflow was tied to three giant projects sanctioned by Voser's predecessor, Jeroen van der Veer - who famously declared that he would not have performed any better or worse had he been paid more or less - and devised by van der Veer's predecessor, Phil Watts.
Julius said it would be better if CEOs received a higher base salary and a bonus capped at 50 percent of that. And if they underperform, they should be sacked.
Other senior business figures believe that Europeans are hardwired to bridle at high pay, even if there were an irrefutable commercial justification.
The problem, they say, is a culture that is suspicious of enterprise and personal wealth, which augurs ill for the continent's ability to compete in a globalised world.
"The business of America is business. Making money is respected," said the former chairman of one of Europe's largest companies, who has served on boards across the continent.
"In Europe, money is toxic."