Under Increased Scrutiny, Executive Compensation Is Simplified

A recent survey conducted by ExecuNet, the executive job search and recruiting network, reveals an increasing number of companies are eliminating unearned bonuses and stock options and relying on performance-based incentives when creating executive compensation packages.



According to the survey of 223 search firms and corporate recruiters, companies are trimming excess compensation components despite a 12% increase in executive demand last year:

Executive Level Positions Filled Where Compensation Packages Included the Following Features

Stock Options/Equity
Percent of Packages 2005: 25%
Percent of Packages 2004: 47%
Percent Change: -22%

Guaranteed Severance
Percent of Packages 2005: 14%
Percent of Packages 2004: 36%
Percent Change: -22%

Guaranteed First Year Bonus
Percent of Packages 2005: 19%
Percent of Packages 2004: 36%
Percent Change: -17%

Employment Contract
Percent of Packages 2005: 21%
Percent of Packages 2004: 36%
Percent Change: -15%

Six-Month Performance Review
Percent of Packages 2005: 32%
Percent of Packages 2004: 40%
Percent Change: -8%

Sign-On Bonus
Percent of Packages 2005: 25%
Percent of Packages 2004: 32%
Percent Change: -7%

Performance Bonus
Percent of Packages 2005: 70%
Percent of Packages 2004: 75%
Percent Change: -5%

ìNew accounting rules and increased shareholder scrutiny have many companies changing the way they reward their executives,î says Dave Opton, CEO and Founder of ExecuNet. ìAs more companies look to align the pay of their executives to performance, guaranteed severance and bonuses are quickly disappearing.î

To help executives negotiate the best packages in this changing marketplace, ExecuNet suggest avoiding these three common mistakes:

1. Poor preparation

Successful negotiation is ultimately about preparation. Before engaging in a discussion about compensation, obtain as much relevant salary information as possible for your company, industry, job title, and region. Entering a negotiation with just one data point, your current salary, is not enough to accurately determine your value in the marketplace.

2. Overlooking the interests and potential objections of the employer

To avoid confrontation and make the discussion a win-win process, itís important to carefully consider the needs of the company and how the employer is likely to respond to your requests. Match these needs and concerns with what you bring to the table, including your skills and any specific accomplishments that illustrate your value.

3. Giving in too soon

If youíre not willing to walk away from a negotiation, youíll be at a disadvantage from the start. Before discussing compensation, identify your best alternative option. Itís much easier to negotiate for the job you want, and not give in to the first offer thatís extended, when you have a solid ìfallback position.î

ExecuNet, a career management and recruiting network for executives and recruiters, is a recognized authority in executive hiring and recruiting trends. ExecuNet helps members identify career opportunities and attain professional success by providing exclusive job postings, opportunities and tactics designed to expand personal and professional networks, and career advancement strategies.

Founded in 1988, ExecuNet also serves recruiters and corporations as a leading source of top-tier executive talent and proprietary research. For more information on ExecuNet visit