(Note: Please note that salaries can differ significantly based on industry, experience, and company policies. The above figures are based on estimates taken from glassdoor.co.uk)
Managing directors are the highest-paid corporate executives, bar none. They are the ultimate leaders responsible for the operations of the business and thus get paid more than anyone else in the company. In fact, some companies actually have policies that disallow junior executives to be paid more than senior executives and thus managing directors get paid more like a policy. However, even without such policies, managing directors actually command a very high compensation given the vast experience that they bring to the table and their track record.
Salaries for managing directors usually range between EUR 100,000 to several million Euros. The salary depends on the size of the company and how the business is doing. In some countries, the highest managing director compensation can even reach several hundred million Dollars. However, the catch is that it takes a lot of effort, skill, natural ability, and work experience to reach this level. For large companies, only one in several thousand employees will ever get to reach the managing director’s post. Getting to this level is easier in smaller companies but the pay is proportionally adjusted as well.
Managing director positions are almost always located at the business headquarters of the company. This means that these roles are concentrated in major business hubs across Europe. In addition to the fixed and variable component, managing directors also get other perks like a company car, club memberships, etc. which depend upon company policy.
There is a massive variable component applicable to managing directors. The only other executives who can even come close to managing directors in terms of variable compensation (as a percentage of total compensation) are probably the top-performing sales executives. The variable component for a managing director includes a cash component and performance-linked stock options or even profit-sharing in some cases. This variable component is often much higher than the fixed salary.
Providing stock options achieves a dual purpose. It not only rewards the employee for his or her performance but also links their actual compensation to the share price of the company. This is done to motivate the employee to make good, long-term decisions that will increase the share price of the company’s stock. Stock options are very popular in certain industries and in start-ups, they are almost considered mandatory. To get experienced managing directors to join a start-up, the founders have to often offer a nontrivial stake in the company to them or other top-level executives.
Learn more about what a Managing Director earns and how to become one by following the below links:
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