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  1. Career Advice
  2. Pay & salary
  3. This is how and why you should be negotiating for executive compensation
This is how & why you should be negotiating for executive compensation

This is how and why you should be negotiating for executive compensation

Artwork by: Katya Simacheva

  • What is an executive compensation package?
  • 12 Types of executive compensation packages
  • Tips for negotiating an executive compensation package
  • Key takeaways

Negotiating an executive compensation package doesn’t have to be a laborious process. Knowing how to determine what you want and how to ask for it will ensure that you’re fairly compensated.

For most employees — at every level — salary will be an important factor in their careers. Negotiating a salary, as well as other compensation aspects, is a significant issue when contemplating a new position as is feeling valued in your current role. Salary and benefits are important in the hiring process, as all parties want to be fairly represented in the negotiation. Because those on the executive level provide additional value to the company and bear the mantle of added responsibility, the salary and benefits package will involve more than the general employee population and it’s important to ensure you’re compensated fairly and according to your worth.

In this article, we’ll discuss negotiating fairly for executive compensation, including

  • What is executive compensation?

  • Elements of executive compensation.

  • How to negotiate for an appropriate level of compensation.

What is an executive compensation package?

Executive compensation is more than just salary. It also includes health insurance, benefits, bonuses, and “perks'' not usually available to mid-level employees. “Executives'' include C-Suite employees (Chief Executive, Chief Information Officer, Chief Financial Officer, etc.) as well as Senior Vice President, Vice President, and Director titles. These positions require much skill and experience, so companies generally seek to compensate them handsomely so that they will work in the best interest of the company and its shareholders.

Expert Tip

According to Deloitte, salary makes up about 30% percent of the typical compensation package, with benefits accounting for approximately 10%, long-term incentives at 40%, and bonuses making up another 20%.

12 Types of executive compensation packages

There are several other areas to consider when negotiating an executive compensation package. Make sure you’ve determined what your priorities are before signing any contract or agreement.

  1. Annual salary. This is the first thing people usually think of, and is often the most negotiable aspect of the compensation package.

  2. Stock options. These allow executives to have a literal investment in the company’s performance and to gain equity.

  3. Bonuses. These are payments to the executive that is over and above their annual salary. They can take the form of investments, stock, or cash.

  4. Association memberships. Some companies pay for memberships in professional organizations, which offer executives educational opportunities, networking, and developing additional leadership skills.

  5. Company cars and travel. Some companies offer vehicles to executives, as well as plans for air travel, including first or business-class tickets, stipends, or even a company jet, depending on the size of the company.

  6. Financial Services. Companies may provide investment services, accounting, and financial advisors.

  7. Health Insurance. Most employees receive insurance packages, but top-level executives are privy to more encompassing packages that might include more inclusive plans. Insurance plans typically include health, disability, vision, dental, and life insurance plans that have higher dollar amounts that are offered to general employees.

  8. Legal Services. As an executive assumes a larger amount of risk inherent in his or her position, companies often offer legal representation and counsel as necessary. 

  9. Signing bonus. As an incentive to accept the position, a one-time payment may be offered.

  10. Relocation package. A stipend to cover moving costs might be provided to an executive if he or she needs to move.

  11. Wardrobe. If the executive is particularly public-facing, the company may provide a stipend to cover the costs of additional clothing and accessories.

  12. Severance. If the executive is laid off, a severance package eases the transition while searching for a new job.

Tips for negotiating an executive compensation package

No one expects to accept the first offer, so some level of negotiation is to be expected to end up with a compensation package that meets your wants and needs. Following these best practices can help you settle on a package that matches your value as an executive.

Determine your salary range

Before you start with the negotiation, make sure you’re clear on the minimum salary you’re willing to accept. Having a range is better than a concrete figure, as it allows for a little “wiggle room.” And if there are certain “perks” that are a deal-breaker for you, include them in your minimum salary requirements.

Wait before discussing salary and compensation

Make sure the company can see your worth before putting salary requirements on the table. Go over your education, background, experience, and all of the factors that make you special before diving into compensation talks. Put the focus on you, not the money. Make sure they understand why you are the best candidate for the position. When they understand your value, they will be more apt to come closer to your desired compensation package.

Don’t give them a hard and fast opening offer 

If they ask what you’re looking for, inquire what their opening offer is first to avoid lowballing yourself.  It’s not incumbent upon you to give the first number.

Expert Tip

“Demonstrate your value through contributions you've made throughout your career, especially in your current role. This should emphasize the experience and results you achieved driving revenue, savings, efficiency, and productivity, with examples relevant to the organization or role. The employer will find concrete evidence of business growth is difficult for an employer to ignore."

—Lela Reynolds, senior career consultant with Resume Strategists in New York City

Be prepared for a back-and-forth

You don’t want this to become a cumbersome negotiation, but if you’re not happy with their offer, you can make them a counteroffer that more closely aligns with your needs. If you’ve done your research, you should be able to determine your worth and what similar companies are equipped to pay for someone with similar background and experience. This way, you can back up your counteroffer with solid reasoning. If they decline, you can go ahead and make your decision on whether you can accept their offer or not, knowing both parties are informed of their boundaries.

Expert Tip

“Every gig has a fee range. Spend the time to discover it, and then don't be afraid to ask for more than the top. If [an employer] is asking for your help, that means they think you’re worth it. Asking for top dollar confirms that you’re a top player.”

Ted Leonhardt, Seattle-area negotiation consultant.

Be flexible and don’t forget the perks 

You may not get the salary you desire, but take a look at the other aspects of the compensation package and see if you can make adjustments there. Determine what’s most important to you in the long run, and negotiate for more stock options, higher bonuses, or even an education reimbursement program. In the current economic climate, companies may be more willing to be flexible in these areas and that can prove to be to your advantage in the long term.

A good compensation package is more than a salary. At the executive level, it's important to take all aspects of your life into account, and determine what additional benefits are necessary to ensure you can perform at your absolute best.

Get it in writing 

Once the compensation package has been settled, you'll probably sign documentation or a contract. Make sure you understand all aspects of the plan and ask for a copy of the documentation for your reference.

Negotiating for executive compensation can be challenging, but it's not impossible to get a package that works for you. Take a long, hard look at yourself, your background, and your long-term goals and make determinations on what you can and cannot accept in a financial compensation package.  With those determinations in mind, work with the prospective employer to reach an agreement that benefits both parties. Don’t fear leaving something on the table if it’s not a deal-breaker for you, but in the end, you should feel sure that you’re being fairly compensated for your worth, your talent, and the value you bring to the company.

Key takeaways

  1. Executive compensation includes salary, health insurance, benefits, bonuses, and “perks” not usually available to rank-and-file employees.

  2. Some level of negotiation is to be expected to end up with a compensation package that meets your wants and needs. 

  3. Know your value. When they understand your value, they will be more apt to come closer to your desired compensation package.

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