Talkback: Have you negotiated pay lately?
ExecuNet's report paints a detailed picture of how the recession has battered executive pay packages. While bloated Wall Street paychecks have grabbed headlines, compensation for senior managers in other industries has been quietly stagnating -- or shrinking. Indeed, it seems the higher up the corporate ladder you go, the more pay has declined.
Consider: Since 2007, vice presidents have seen an 11% decrease in overall compensation, while the highest-ranking executives (a category that includes president, CEO, COO, and chairman) have seen their pay drop by 16%, the poll of 2,939 executives and 579 headhunters found.
The main reason: At the highest levels of many companies, performance bonuses and other incentives linked to corporate profits make up a big chunk of total compensation. So as earnings tumbled during the downturn, pay fell too.
0:00/2:37Meaningful compensation reformMeanwhile, recruiters in the ExecuNet survey describe a marked tightening of the purse strings: 56% say their corporate clients "are offering fewer incentives" to new hires than before the downturn, and 51% say employers "are less flexible" and willing to haggle than they used to be. As a result, even in this squeaky-tight job market, 30% of executives in the survey turned down job offers because the pay packages on the table just weren't attractive enough.
Since you ask about sign-on bonuses and stock options, here's the skinny on those: 23% of companies are still paying sign-on bonuses, down from 36% in 2007, and one-third (33%) are offering stock options or other forms of equity, down from slightly more than half (51%) three years ago.
Meanwhile, perks like company cars and club memberships have been hit pretty hard: 51% of employers sweetened the deal with such goodies in 2007, but only 28% still do. Rather ominously, the percentage of companies offering guaranteed severance pay to executives has dropped by half, from 44% in 2007 to 22% today.
Just about the only bright spot in all this is that non-competes have also become less common: In 2007, 65% of executive hires had to sign an agreement not to work for a competitor within a specified period after leaving their jobs. These days, employers require that of only 37% of new senior managers.
"This came as a surprise to us, because these agreements had been on the rise from 2004 to 2007," notes Mark Anderson, ExecuNet's president. "But companies aren't as concerned with that now. It may be because non-competes have proven to be tough to defend in court, especially when unemployment is high."
Against this backdrop, you'd be wise to proceed with caution, but Anderson says it's still possible to work out a good deal. ExecuNet is hearing from both executives and recruiters that "the most negotiable item is an early performance review," he says, even though a review within the first 6 months on the job is guaranteed in just 34% of contracts now, down from 56% in 2007. "Be ready to set goals right away in the new job, and then meet them," he suggests.
Even before that, "you need to establish during these negotiations what you are going to contribute," Anderson says. "If you focus the discussions on how you are going to solve the company's problems, that will give you the leverage to bargain for a package that will work for you." Good luck.
Talkback: Have you negotiated pay lately? Are companies offering less than in the past? Tell us on Facebook, below.
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