The typical executives
Profiles of the top four officers based on survey averages
CEO COO CFO CMO
Total compensation $90,362 $69,743 $52,773 $59,799
Base salary $71,134 $55,803 $45,317 $50,356
Percentage receiving
bonus 56% 65% 54% 62%
Bonus as a percentage
of base salary 50% 35% 29% 34%
Percentage change in
total compensation +25% +23% +20% +17%
1984-85
Age 45 41 42 41
Years with company 11 8 8 7
Percentage who are
also founders 69% - - -
Average equity position 67% 27% 27% 17%
The typical company
A profile based on survey averages
Total revenues $12,645,000
Employees 119
1985 payroll $1,741,000
Payroll as a percentage of revenues 13.8%
Percentage that are privately owned 92%
Executive benefits and perks
What benefits and perquisites
companies provided top officers
CEO COO CFO CMO
Company car & expenses 81% 70% 58% 72%
Supplemental life insurance * 74 69 66 61
Supplemental medical insurance * 52 51 52 46
Tax return preparation 51 34 29 21
Club dues & expenses 48 33 27 29
Personal tax & financial planning 34 25 22 16
Annual physical examination 31 27 30 27
Low-or no-interest loan 26 21 17 17
Supplemental retirement benefits * 22 23 22 20
Deferred compensation 17 15 16 17
First-class air travel 14 9 8 9
* Beyond customary companywide benefits
The executive bonus
How companies provided bonuses to top officers
Companies paying bonuses 78%
Type of bonus *
Cash 99%
Stock 7%
Other 2%
Basis for allocation of bonuses *
Discretionary 56%
Achievement of sales goals 21%
Achievement of profit goals 32%
Percentage of sales 6%
Percentage of profits 25%
Return on equity/assets/sales 8%
Companies with a bonus pool 25%
Basis for establishing bonus pool *
Discretionary 39%
By a fixed formula 36%
By a formula set annually 25%
* Totals may exceed 100% because of multiple responses.
Changes in executive compensation policies
What programs companies added or cut this year
Percentage of companies that made changes 22%
Added Cut
Short-term incentive plan 42% 30%
Long-term incentive plan 25 13
Health/retirement benefits 29 44
Perquisites 13 26
Special recognition/awards 24 9
Performance appraisal system 33 4
The most difficult issues
What compensation questions were found to be of greatest concern, in order of difficulty
1. Determining worth of job; setting pay levels
2. Determining appropriate long-term incentives or equity participation plans
3. Developing annual incentives/bonuses
4. Controlling benefit costs
* 5. Keeping abreast of tax law changes (developing tax-effective compensation plans)
* 5. Obtaining competitive compensation information
* Tied for least concern
THE FACTS BEHIND THE FIGURES
This is the eighth consecutive year that INC. has conducted an executive compensation survey. In late February, we mailed a four-page questionnaire covering executive salaries, benefits, bonuses, and policies to a random sample of nearly 23,000 subscribers. Data Tabulation Services Inc., of Stoneham, Mass., compiled the 853 returns under the direction of special projects editor Sara Baer-Sinnott. To expand on issues covered in the survey, INC. hosted a roundtable discussion in April. Among those attending the session were five of the chief executive officers who responded to the survey; Peter T. Chingos, practice director of Peat Marwick Mitchell & Co.'s Executive Compensation and Personnel Consulting division; and Bruce Hanson, a Boston-based compensation expert with Towers, Perrin, Forster & Crosby, a management consultant firm.
Complete results of the survey, in which the confidentiality of all responses is protected, are available. To obtain a copy, send a written request and a check for $65 to INC. Executive Compensation Study, Attn: John Titus, 38 Commercial Wharf, Boston, MA 02110, or call (800) 372-0018. In Massachusetts, call (617) 227-4700.
CORRECTION-DATE: October, 1986
CORRECTION:
A chart in "INC.'s Annual Compensation Survey," (September, page 52) incorrectly shows executive compensation by company revenue. The revenue ranges "$5 million to $9.9 million" and "$10 million or more" were inadvertently reversed, as were the ranges of "$250,000 to $499,000" and "$500,000 to $999,999."
