Top Management & Executive Compensation Survey - ERI Economic ...
2015 Top Management & Executive Compensation Survey Executive Summary
111 Academy Drive, Suite 270 Irvine, CA 92617 877-210-6563 http://[email protected]
ERI Economic Research Institute Top Management & Executive Compensation Survey ERI’s Top Management and Executive Compensation Survey provides market-based pay data for 57 executive benchmark jobs. Input for the survey is received from both public and private organizations located all over the United States. For 2015, 4,037 organizations were surveyed in over 400 U.S. cities. Two pages of information are reported for each benchmark position in this report. Every position will include a description of responsibilities, as well as estimates for reasonable base salary and annual discretionary variable cash. For top executive positions, survey results for stock and option awards, and payouts pursuant to performance-based cash plans are provided as well. For some positions in this report, fewer than 5 executive incumbents were surveyed for 2015. For these positions, no survey participation data will be displayed, but compensation estimates from ERI’s Assessor Series database will be provided. These estimates are the result of more than 20 years of time series analysis of survey and public source executive pay data.
Executive Summary
Data from the Top Management and Executive Compensation Survey is separated into four groups by the most recent annual revenue of the participating companies. The revenue groups are defined as follows: • • • •
Small Business - Annual revenue less than $25 million Medium Business - Annual revenue between $25 million and $250 million Large Business - Annual revenue between $250 million and $1 billion Enterprise - Annual revenue greater than $1 billion
2015 Stylized Facts The median total revenue for medium-sized companies rose more than 14% to $343,864,000 in 2014. The median CEO salary rose 8% to $543,000. Every component of CEO pay increased, led by a 25% increase in the median full-value stock awards. Just 22% of top executives received a discretionary cash bonus in 2014, down from 25% in 2013. More than 87% of executive pay packages included some form of equity or value-sharing compensation. Equity pay shifted away from appreciation awards (47% of packages) and toward full-value awards (76%).
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Annual Cash Incentives 86% of top executives received some sort of annual cash incentive in 2014. This is roughly the same as it was a year ago. CEOs at mid-sized companies saw a year-over-year increase in median annual cash incentive of 6.0%. The median CEO cash incentive in 2013 was $458,795. The existence of reactive discretionary cash bonuses decreased again in 2014. Cash bonuses not tied to predetermined objective performance measures were included in only 22.3% of top executive pay packages in 2014. This is down from 25% in 2013. These subjective payments are slowly being replaced by what this survey refers to as non-equity incentives, or proactive cash payouts made according to the achievement of specific performance targets. More than 70% of CEO pay packages included these plans in 2014, up 2 percentage points over 2013. Annual Equity Grants Public company executives tend to earn the majority of their total pay in the form of either full-value or appreciation equity awards. Private companies will often simulate equity awards with cash payment plans tied to increases in company value. The percentage of top executives receiving equity awards, or equity-like cash, rose slightly to 87.6% in 2014. Full-value awards like restricted stock and restricted units were part 76% of executive pay packages surveyed, up almost five percentage points from 2013. Appreciation awards like stock options decreased in prevalence, however, with only 47% of executives receiving option grants for the fiscal year. For CEOs at mid-sized companies, the median option award was valued at $465,973 at the time of grant. This represents almost no change to the median award granted in 2013. The median CEO full-value award, however, increased more than 25% in fiscal 2014, reaching almost $510,000. The main takeaway for equity pay in this report is that full-value equity awards tend to be more valuable at the grant date, and are twice as likely to exist in executive pay packages in 2014. The figure below illustrates changes to the mix of CEO pay since 2006. As of this report, the typical CEO tends to earn about a quarter of his/her pay in the form of a base salary. Equity or equity-like instruments still dominate variable pay, with full-value stock awards leading the way at 35% of total direct compensation.
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Table of Contents
Methodology
Page 4
Sources
Page 4
Definition of Terms
Page 5
Administrative Engineering Director
Page 7
Top Government Sales Officer
Page 65
Chief Executive Officer
Page 9
Top Human Resources Officer
Page 67
Chief Financial Officer
Page 11
Top Industrial Plant Officer
Page 69
Chief Operating Officer
Page 13
Top Information Technology Officer
Page 71
Corporate Secretary
Page 15
Top Investor Relations Officer
Page 73
Director of Financial Reporting
Page 17
Top Legal Officer
Page 75
Executive Vice President
Page 19
Top Manufacturing Officer
Page 77
Medical Practice Administrator
Page 21
Top Marketing & Sales Officer
Page 79
Non-Executive Board Chair
Page 23
Top Marketing Officer
Page 81
Non-Executive Board Vice Chair
Page 25
Top Materials Officer
Page 83
Top Accounting Officer
Page 27
Top Medical Officer
Page 85
Top Administrative Officer
Page 29
Top Medical Services Executive
Page 87
Top Advertising Officer
Page 31
Top Merchandising Officer
Page 89
Top Auditor
Page 33
Top Mergers & Acquisitions Executive
Page 91
Top Circulation Officer
Page 35
Top Nursing Executive
Page 93
Top Compensation Officer
Page 37
Top Property Management Officer
Page 95
Top Construction Officer
Page 39
Top Public Relations Officer
Page 97
Top Contracts Executive
Page 41
Top Purchasing Officer
Page 99
Top Corporate Development Officer
Page 43
Top Quality Control Officer
Page 101
Top Corporate Tax Officer
Page 45
Top Real Estate Development Officer
Page 103
Top Credit Officer
Page 47
Top Regulatory Affairs Officer
Page 105
Top Customer Service Officer
Page 49
Top Research Officer
Page 107
Top E-Commerce Officer
Page 51
Top Risk Management Officer
Page 109
Top Editorial Officer
Page 53
Top Sales Officer
Page 111
Top Engineering Officer
Page 55
Top Security Officer
Page 113
Top Environmental Officer
Page 57
Top Telecommunications
Page 115
Top Estimating Officer
Page 59
Top Treasurer
Page 117
Top Ethics Officer
Page 61
Top Underwriting Officer
Page 119
Top Government Relations Officer
Page 63
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111 Academy Drive, Suite 270 Irvine, CA 92617 877-210-6563 http://[email protected]
ERI Economic Research Institute Top Management & Executive Compensation Survey ERI’s Top Management and Executive Compensation Survey provides market-based pay data for 57 executive benchmark jobs. Input for the survey is received from both public and private organizations located all over the United States. For 2015, 4,037 organizations were surveyed in over 400 U.S. cities. Two pages of information are reported for each benchmark position in this report. Every position will include a description of responsibilities, as well as estimates for reasonable base salary and annual discretionary variable cash. For top executive positions, survey results for stock and option awards, and payouts pursuant to performance-based cash plans are provided as well. For some positions in this report, fewer than 5 executive incumbents were surveyed for 2015. For these positions, no survey participation data will be displayed, but compensation estimates from ERI’s Assessor Series database will be provided. These estimates are the result of more than 20 years of time series analysis of survey and public source executive pay data.
Executive Summary
Data from the Top Management and Executive Compensation Survey is separated into four groups by the most recent annual revenue of the participating companies. The revenue groups are defined as follows: • • • •
Small Business - Annual revenue less than $25 million Medium Business - Annual revenue between $25 million and $250 million Large Business - Annual revenue between $250 million and $1 billion Enterprise - Annual revenue greater than $1 billion
2015 Stylized Facts The median total revenue for medium-sized companies rose more than 14% to $343,864,000 in 2014. The median CEO salary rose 8% to $543,000. Every component of CEO pay increased, led by a 25% increase in the median full-value stock awards. Just 22% of top executives received a discretionary cash bonus in 2014, down from 25% in 2013. More than 87% of executive pay packages included some form of equity or value-sharing compensation. Equity pay shifted away from appreciation awards (47% of packages) and toward full-value awards (76%).
1
Annual Cash Incentives 86% of top executives received some sort of annual cash incentive in 2014. This is roughly the same as it was a year ago. CEOs at mid-sized companies saw a year-over-year increase in median annual cash incentive of 6.0%. The median CEO cash incentive in 2013 was $458,795. The existence of reactive discretionary cash bonuses decreased again in 2014. Cash bonuses not tied to predetermined objective performance measures were included in only 22.3% of top executive pay packages in 2014. This is down from 25% in 2013. These subjective payments are slowly being replaced by what this survey refers to as non-equity incentives, or proactive cash payouts made according to the achievement of specific performance targets. More than 70% of CEO pay packages included these plans in 2014, up 2 percentage points over 2013. Annual Equity Grants Public company executives tend to earn the majority of their total pay in the form of either full-value or appreciation equity awards. Private companies will often simulate equity awards with cash payment plans tied to increases in company value. The percentage of top executives receiving equity awards, or equity-like cash, rose slightly to 87.6% in 2014. Full-value awards like restricted stock and restricted units were part 76% of executive pay packages surveyed, up almost five percentage points from 2013. Appreciation awards like stock options decreased in prevalence, however, with only 47% of executives receiving option grants for the fiscal year. For CEOs at mid-sized companies, the median option award was valued at $465,973 at the time of grant. This represents almost no change to the median award granted in 2013. The median CEO full-value award, however, increased more than 25% in fiscal 2014, reaching almost $510,000. The main takeaway for equity pay in this report is that full-value equity awards tend to be more valuable at the grant date, and are twice as likely to exist in executive pay packages in 2014. The figure below illustrates changes to the mix of CEO pay since 2006. As of this report, the typical CEO tends to earn about a quarter of his/her pay in the form of a base salary. Equity or equity-like instruments still dominate variable pay, with full-value stock awards leading the way at 35% of total direct compensation.
2
Table of Contents
Methodology
Page 4
Sources
Page 4
Definition of Terms
Page 5
Administrative Engineering Director
Page 7
Top Government Sales Officer
Page 65
Chief Executive Officer
Page 9
Top Human Resources Officer
Page 67
Chief Financial Officer
Page 11
Top Industrial Plant Officer
Page 69
Chief Operating Officer
Page 13
Top Information Technology Officer
Page 71
Corporate Secretary
Page 15
Top Investor Relations Officer
Page 73
Director of Financial Reporting
Page 17
Top Legal Officer
Page 75
Executive Vice President
Page 19
Top Manufacturing Officer
Page 77
Medical Practice Administrator
Page 21
Top Marketing & Sales Officer
Page 79
Non-Executive Board Chair
Page 23
Top Marketing Officer
Page 81
Non-Executive Board Vice Chair
Page 25
Top Materials Officer
Page 83
Top Accounting Officer
Page 27
Top Medical Officer
Page 85
Top Administrative Officer
Page 29
Top Medical Services Executive
Page 87
Top Advertising Officer
Page 31
Top Merchandising Officer
Page 89
Top Auditor
Page 33
Top Mergers & Acquisitions Executive
Page 91
Top Circulation Officer
Page 35
Top Nursing Executive
Page 93
Top Compensation Officer
Page 37
Top Property Management Officer
Page 95
Top Construction Officer
Page 39
Top Public Relations Officer
Page 97
Top Contracts Executive
Page 41
Top Purchasing Officer
Page 99
Top Corporate Development Officer
Page 43
Top Quality Control Officer
Page 101
Top Corporate Tax Officer
Page 45
Top Real Estate Development Officer
Page 103
Top Credit Officer
Page 47
Top Regulatory Affairs Officer
Page 105
Top Customer Service Officer
Page 49
Top Research Officer
Page 107
Top E-Commerce Officer
Page 51
Top Risk Management Officer
Page 109
Top Editorial Officer
Page 53
Top Sales Officer
Page 111
Top Engineering Officer
Page 55
Top Security Officer
Page 113
Top Environmental Officer
Page 57
Top Telecommunications
Page 115
Top Estimating Officer
Page 59
Top Treasurer
Page 117
Top Ethics Officer
Page 61
Top Underwriting Officer
Page 119
Top Government Relations Officer
Page 63
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