As executive search consultants, we often encounter misperceptions by both clients and candidates. Earlier this year, I found myself in a client meeting where the board was assembled with the SVP of HR and the company’s legal counsel in an attempt to reach consensus on an issue relative to their executive compensation. Armed with current data, the SVP of HR did a great job transitioning what started as a highly emotionally charged meeting into one that eventually arrived at consensus. The v
As executive search consultants, we often encounter misperceptions by both clients and candidates. Earlier this year, I found myself in a client meeting where the board was assembled with the SVP of HR and the company’s legal counsel in an attempt to reach consensus on an issue relative to their executive compensation. Armed with current data, the SVP of HR did a great job transitioning what started as a highly emotionally charged meeting into one that eventually arrived at consensus. The varied perceptions and misperceptions observed in that meeting along with a recent article in Chief Executive magazine inspired this blog post.
So many Director and VP-level executives strive to reach the C-suite for career and self actualization but also for the chance to attain the high six to low seven-figure comp package. The reality is that the most public of information about C-suite compensation is typically of executives in the largest public companies and little is known of the thousands of other companies big and small. Unless you have the latest comp survey report in hand, you may be tempted to guess what the comp for a given executive role would be. We find that speculation can run rampant with clients often speculating low and candidates going high.
We found some interesting data from the Chief Executive Group’s 2013-2014 CEO and Senior Executive Compensation in Private Companies Report to lend some validity to what we’ve been observing in the market. The report shows that there are substantial differences in compensation depending upon the type of ownership and it bears out that private equity-owned companies, on average, have the richest compensation packages among privately-owned companies. It goes on to show that private equity-backed CEOs also outperform their peers in terms of operational results.
So what does the average median private-company CEO make? If you’re thinking north of seven figures, you are wrong. Of the roughly 30 million businesses in the United States, less than 6,000 of them are publicly traded and only the largest 8 percent of these public companies make it into the S&P 500. The average annual pay package of CEOs of the largest 200 companies in 2012 was $15.1 million dollars. In terms of publicity, this 0.001 percent of companies gets the lion’s share of media coverage which plays some role in influencing expectations and motivations of the remaining 99+ percent of the leadership talent market. The facts show that the median private-company CEO earned cash compensation of $326,000 (base salary and bonus) in 2012 and total compensation of $360,000 including benefits, perks and equity gains, per the compensation report.
The pay differentials by type of ownership are even more striking when looked at within each size category. We encourage you to review the 2013-2014 CEO and Senior Executive Compensation in Private Companies Report which includes benchmarking data by quartile on base salaries, bonuses, benefits, perks and equity compensation for CEOs and nine other senior executive positions (President, COO/GM, CFO, CMO, VP Sales, VP R&D, VP HR). The types of ownership represented in the report include: family business, employee owned, partnership, private-equity owned, venture capital owned, sole proprietorship and other investor owned. The report conveys how these benchmarks vary by company size, industry, type of ownership and other key variables. For further information go to: chiefexecutive.net/compreport
Warren Carter is the founder and managing director of The QualiFind Group and the practice leader for the ExeQfind practice. As an executive search consultant, Warren is passionate about helping multinational clients find the talent they need to lead and manage their organizations in the US, Mexico and Latin America. He understands that the modern day search consultant must possess or have access to key market intelligence to aid clients in arriving at an informed decision when selecting leadership talent. Warren can be reached at (619) 921-1795
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