Whether you're already an executive or just an aspiring big cheese, it's never too early to begin studying the sophisticated art of negotiating executive compensation. Only executives are eligible for many types of perks and benefits - if you disagree, try asking for your own jet. And executives often have access to data sources that are harder for other employees to use, or less relevant. But you may be surprised to learn that some of the methods for negotiating executive pay can work just as well for you as they do for the senior VP whose salary continues to rise while everyone else worries about getting a pink slip.
Pick your perks
In your research, don't neglect to find out about the typical perks and benefits associated with the job for which you are interviewing. A basic compensation package includes base pay, short-term incentives, long-term incentives, benefits, and perquisites.
In addition, executives often receive additional or supplemental benefits and perquisites, which may include a special retirement plan, a deferred compensation plan, extra insurance coverage, extra vacation, company cars, use of company plane, club memberships, financial and legal counseling, and so on.
Many executive compensation packages even include the kitchen sink - literally. A quick review of public filings reveals numerous executives with company-provided or subsidized housing, including America Online, Loews, Mattel, and many more.
All components of compensation are negotiable, including a number of items many of us may never think of considering as part of our pay packages. Remember, not everyone gets everything, and many of these benefits may not be important to you. Focus on those that are important to you and relevant to your job.
Find your best buyers
Research into market "comparables" - data on what comparable employers are paying for comparable people doing comparable jobs - is only part of the job of valuing your talent. Your worth is a matter of what the market will pay. That means it's a both what you bring to the table, and what an employer is willing to pay for your particular combination of skills and experiences. Before you negotiate a specific compensation package, you need to look for the buyer - the employer - who will put the most value on your work.
It's a challenge made more difficult at the executive level, because there is usually only one VP of marketing, VP of research and development, VP of finance, etc. Although all are VPs, their pay may be significantly different, depending on the needs of the organization and the strengths and weaknesses of the individual in the role.
At the executive level, pay is very much dependent on both the specific person and the specific jobs. Comparing two executives' pay almost always requires making adjustments to get something like an apples-to-apples comparison.
Although the relative uniqueness of executive jobs makes it difficult to find a clear direct comparison, it also opens the door for identifying major skills you bring to the job above and beyond the standard roles. These "extras" could enable you to command a pay premium. Some common leverageable strengths include extensive industry contacts, strong fundraising or partnership-forming skills, or experience with a unique type of opportunity that closely resembles the prospective employer's business, even if it is in a different industry.
For example, Jim Barksdale became President and CEO of Netscape Communications in 1995 after having set up the widely successful hub-and-spoke logistics and technology infrastructure that forms the backbone of FedEx, and then serving as CEO of McCaw Cellular Communications (now AT&T Wireless Services).
Remember your unique skills when developing your negotiation strategy. Whether you're looking for a new job or just a new pay package at your existing job, these strengths will help you get what you deserve.
Protect your back
Make sure you've taken care of your golden parachute - ideally, when you first start your job. A golden parachute should protect you from layoffs related to financial hardship as well as layoffs related to mergers and other restructuring events. Especially if you are asked to help shape the postmerger or post-restructuring company, you should insure yourself against the consequences of having to eliminate your own job.
Partial List of Executive Perks
- Base pay
- Signing bonus
- Annual incentive
- Guaranteed minimum annual incentive
- Stock options
- Discounted stock options
- Restricted stock
- Loan to purchase restricted stock
- Loan to pay taxes
- Loan to purchase home
- Forgiveness of loan(s)
- Normal employee benefits *
- Supplemental executive medical insurance
- Supplemental executive life insurance
- Supplemental executive retirement plan (SERP)
- Nonqualified deferred compensation plan
- Club memberships
- First-class air travel
- Financial/tax/estate planning services
- Legal planning services
- Use of company plane
- Company car
- College tuition for children
- Tax gross-ups for taxable benefits
- Golden parachute provisions
- Termination provisions
*Typically, employee benefits are not negotiable. However, companies will make adjustments via corresponding supplemental executive benefits.