A new study from Copenhagen Business School has found that CEO pay in Denmark is heavily influenced by their position within professional networks—and that these huge salary gains don’t necessarily benefit employees across the organization.
CEOs’ Networks Play a Key Role in Salary Levels
New research from Copenhagen Business School (CBS) reveals that a CEO’s position within Denmark’s corporate network significantly impacts their compensation—sometimes at the expense of their employees. The study, recently published in the Socio-Economic Review, examined two decades of executive compensation data from all Danish companies with at least 250 employees. Who you know can sometimes matter just as much as what you do.
Researchers discovered that CEOs who are more centrally connected through interlocking board memberships can negotiate considerably higher salaries than peers in similar companies. The lucrative pay premium is largely reserved for the top 25 percent of executives, with the highest gains concentrated among the top one percent. Meanwhile, the rest of the executive population—roughly 75 percent—has seen virtually no increase in real wages over the past 20 years. So while a few at the top see big gains, most leaders, and their employees, aren’t feeling much of a difference in their paychecks.
The Wealth Gap Within Companies
While upper-tier CEOs have benefited from substantial wage growth, the rest of the organization hasn’t shared in these financial gains. CBS researchers found that, in firms where the CEO secured an unusually large compensation increase, pay in Denmark for employees often experienced stagnating or even declining real-wage growth in the following years.
This suggests that as CEOs take a larger share of the corporate profits, fewer resources remain for the broader workforce. According to the study, the “bigger slice of the pie” for top executives doesn’t necessarily mean a “bigger pie” for everyone else.
Impact of Strong Boards
The study also indicates that a strong, well-connected board of directors can act as a check on highly networked CEOs seeking outsized pay increases. Companies with boards that are themselves more centrally placed in the corporate network tend to limit or even eliminate a CEO’s ability to secure excessive pay in Denmark.
Despite director compensation being modest compared to top CEO salaries, investing in a robust board with extensive professional ties can yield substantial organizational benefits—both financially and strategically. However, attracting such board members is no simple task. Central figures in Denmark’s corporate landscape often hold multiple positions and have limited time to devote to new directorships.
The Role of Deregulation and Individualized Wage Bargaining
The findings also point to broader changes in Denmark’s traditionally regulated labor market. Although the country still has one of the highest rates of union participation and collective wage bargaining in Europe, the study suggests a shift toward more individualized compensation models—particularly for top executives.
Increased flexibility in wage negotiations allows for greater disparities between executives and the broader workforce. This trend reflects a partial erosion of collective agreements, which historically helped maintain wage equality across organizational hierarchies.
Global Relevance of Findings
Though the research was conducted within the pay in Denmark—a country known for its relatively egalitarian wage structures and strong labor protections—the implications are global. If such disparities are observable in a highly regulated labor market, they are likely even more pronounced in deregulated systems such as those found in the United States or the United Kingdom.
Given these findings, the researchers recommend continued monitoring of executive compensation practices, particularly by boards of directors. They advocate for strategies that fairly recognize executive performance while ensuring that broader employee compensation is not adversely affected.
About the Study
The research was led by accounting professor Thomas Poulsen and organizational scholar Lasse Folke Henriksen from CBS, in collaboration with American professor Dustin Avent-Holt from Augusta University. Their detailed analysis spans 20 years of salary data and aims to deepen understanding of how social structures influence wage formation at the top of the corporate ladder.
The full study is available through the Socio-Economic Review and can be accessed online for those interested in digging deeper into the numbers and methodology behind these findings.
Copenhagen Business School at a Glance
Located in Frederiksberg, Copenhagen Business School is one of Europe’s leading business universities, with approximately 20,000 students and a strong international presence. CBS combines research and teaching to address societal and business challenges relevant to the 21st century, rooted in the Nordic socio-economic tradition.
