A top CEO could be making 300 times your salary, and it's not because she's a more productive employee; it's all thanks to her skills at the negotiating table before she even started the job.
A recent study by the Economic Policy Institute found that chief executive officers make 300 times more than the typical American worker. Compensation for CEOs of America's biggest companies has increased by 54.3 percent since the economic recovery began in 2009, while mid-to-low-level workers have seen a zero percent increase. The EPI attributes this growth not to higher productivity in the C-suite, but to CEOs' ability to more effectively negotiate for a higher salary.
So what are top executives doing before they even begin working to set themselves up for a more lucrative career? Here are a few tactics prospective CEOs might use.
Know your history.
Information is power, so get as much as you can before you even begin negotiating. You should research both the company's compensation structure as well as the position's value in the labor market. There's no doubt that a candidate for an executive position knows the previous CEO's salary and wouldn't accept anything less. A prospective CEO would also find out exactly how the company evaluates raises, bonuses, and other incentives, which would play into their base salary decision and influence negotiation. For example, you may feel comfortable accepting a slightly lower salary if you know there are outstanding benefits and room for a raise or performance-based bonus or options available. Based on your last job and the particulars of your benefits package, consider what you want to improve upon in your next contract.
Keep your cards close.
When an interviewer inevitably asks what you expect to get paid, don't commit too early. Discuss your current and past compensation and your financial needs, but emphasize that you're most concerned at the moment with making sure you and the company are a good fit before talking about compensation. You can also say you have more questions about the details of the position or the company's raise and bonus structure before finalizing your expectations--a good transition back to the conversation about your qualifications for the job.
Define your range.
You probably know going in that an employer, like any other customer for a product or service, will hope to pay the lowest acceptable price for your labor. Know what your lowest number would be and get a good feel for the highest reasonable amount you could expect to be paid so you don't destroy your credibility by demanding a ludicrous amount. Also identify the points in between and the acceptable mix of salary and benefits for each.
CEOs rarely settle for just a base salary and the usual benefits. If there's a perk that's a deal breaker or maker for you, don't be afraid to ask for it. Just stick to what's really important to you or relevant to the position, and prepare your response in case the answer is no. If it is, ask the company to explain the amount they offered. They may draw your attention to a perk you didn't notice before.
Use your leverage to the fullest.
If the company has decided that you're the best fit for the job, you should realize that you're worth more than anyone else they've interviewed. And as such, they may be more willing to pay what you're worth, or slightly more. Yes, you should feel grateful that they picked you, but they should also feel grateful that they found you--and they should show it. Remember, they've chosen you for this position, so you have some leverage.
Chief executives know that if they don't get one gig, they're likely to have other options. Remember that this is true for those who aren't at the top too. If you've made it far enough to be negotiating a salary, you will have other options. Settling for a lower salary out of desperation will ultimately hurt you, so exercise the power of walking away if it doesn't look like you're going to get a satisfying result. You never know, walking away might be the trump card that gets you to the salary you want. But it might not--don't pull this tactic unless you're truly prepared to leave this opportunity behind.