2016 U.S. CDB General Industry Executive Compensation Survey Results and Trends Webinar

Transcription

1 2016 U.S. CDB General Industry Executive Compensation Survey Results and Trends Webinar Please dial in using the following details: U.S. Attendee Dial-in: (855) International Toll Attendee Dial-in: (330) Conference ID: September 8, 2016 Willis Towers Watson Data Services Rachel Wiese, Tom Kelly, Lianne Cancellieri and Christina Ho 2016 Willis Towers Watson. All rights reserved.

2 Today s presentation Please dial in using the following details: U.S. Attendee Dial-in: (855) International Toll Attendee Dial-in: (330) Conference ID: Welcome and introductions 2016 survey results and trends Understanding and using executive data Understanding Comp Online TM Wrap up and Q&A Presenters Rachel Wiese Tom Kelly Lianne Cancellieri Christina Ho 2

3 Willis Towers Watson Data Services Extensive global network of local and regional survey experts and local consulting offices covering 100+ countries globally Best-in-class market data and interpretation reflecting unique local governance and cultural practices Compensation Surveys Local, regional and global Webbased compensation market data, analytics and reports Research & Publications Studies on benefits, employment terms and conditions, global publications written by a dedicated research team Customized Surveys Customized surveys and reports tailored to your organization s specific compensation data questions or needs Data & Consulting Practical and actionable advice on market competitiveness, ranging from single benchmark to company-wide pay practice review 3

4 Willis Towers Watson CDB General Industry Surveys At a glance Executive Compensation Survey More than 1,300 participants by year-end (over 480 in Published Report) NEW! Advanced Plus offering allows participants to blend disclosed (proxy) data of select S&P 500/Fortune 1000 companies with survey data More than 40 Functions common to all industries More than 160 jobs Benchmark job matching design Middle Management, Professional and Support (MMPS) Compensation Survey More than 1,000 participants by year-end (over 550 in Published Report) More than 46 Functions common to all industries Close to 400 Disciplines, more than 5,000 Discipline/Level combinations Career Level job matching design Data Elements Base salary Actual and target bonus Total cash compensation Long-term incentive values by job and salary level; plan design by award type; grant guidelines and process Total direct compensation Key Dates Data effective date: March 1 Results available to participants only Results available on Comp Online TM Discounts available for participants in both surveys CDB is the most comprehensive executive compensation survey in the country with over 1,000 participants and the most extensive database of long-term incentive company policies, practices and award values 4

5 Willis Towers Watson industry expertise Participation is required in CDB General Industry and industry surveys 8Global Industry Surveys Industry-specific reports available to participants only U.S. CDB General Industry reports available to participants only Dedicated functions/disciplines Dedicated report formats Local industry experts General Industry All sectors Energy Services Pharmaceutical and Health Sciences Additional Industry surveys in selected countries include: Automotive Banking Construction Fast Moving Consumer Goods Health Care Insurance Luxury Goods Manufacturing, Distribution and Services Professional Services Telecommunications Financial Services High Tech Media Long-term Incentive Retail 5

6 Breadth and depth of coverage 115+ countries General Industry All sectors Compensation Survey Reports 34 countries Retail Big Box (Specialty, Club, and General Merchandise) Department Stores E-Tail Home Furniture and Furnishing Discounters/Mass Merchandisers/ Off Price Retailers Grocers/Convenience Stores/Pharmacies/ Health and Beauty Luxury Goods Manufacturer Outlet Stores Specialty Apparel/Accessories/Footwear Specialty Retailing Vehicle Sales, Leasing and Parts Fast Food/Coffee Shops Electronics/Mobile Devices and Services 74 countries Pharmaceutical and Health Sciences Pharmaceutical (Including Human and Animal Health) Consumer Health Medical Technology Biotechnology Contract Research Nutritional Supplement 26 countries Media TV Network Radio Online/Digital Information Services 27 countries Energy and Natural Resources Upstream Exploration and Production Oilfield Engineering Services Mining Downstream Petrochemical Renewable Energy Power Generation and Utilities Marketing and Trading Information Services Newspaper Book Publishing TV/Internet Access 42 countries Financial Services Investment Banking Capital Markets Sales and Trading Hybrid/Corporate Banking Global Transaction Services Asset Management Private Banking Retail Banking Insurance Lloyd s Market Asset-Based Finance Real Estate Business/Commercial Banking Retail Securities Central Services and Operations 93 countries High Tech Hardware and Office Equipment E-Commerce Business and Technical Consulting Services Semiconductors Software Products and Services Telecommunications and Network Products and Services 6

7 Upcoming webinars Webinar 2016 CDB General Industry Middle Management, Professional and Support Compensation Survey - U.S. Date Thursday, September General Industry Compensation Survey - Canada Wednesday, September Financial Services Compensation Survey - U.S. Thursday, September CDB Energy Services Compensation Surveys - U.S. Thursday, October High Tech Compensation Surveys - U.S. Thursday, October Retail/Wholesale Compensation Surveys - North America Tuesday, October Pharmaceutical and Health Sciences Compensation Survey - U.S. Tuesday, October CDB Media Compensation Survey - U.S. Thursday, October Long-Term Incentives Policies and Practices Survey Tuesday, November 1 7

8 2016 General Industry Executive Compensation Survey 484 participants in the Published report Aug General Industry Compensation Survey results published $5.26 Billion median organization revenue 81% of the 2015 participating companies repeated in ,300+ participants expected by year end 28,580 incumbents reported (lines of data) 8

9 Participant overview Global corporate revenue Less than $1 Billion 15% 18% 7% 23% $1 Billion to $3 Billion $3 Billion to $6 Billion $6 Billion to $10 Billion $10 Billion to $20 Billion Greater than $20 Billion 16% 23% 82% organizations are publicly traded, of which 78% are US based, 22% are foreign owned. 9

10 2016 U.S. CDB Executive Compensation Survey Survey results and trends 10

11 CEO pay ratio the basics CEO pay has been disclosed in the proxy for years CEO total compensation Median-paid employee total compensation Pay for all employees globally (including part-time and contingent workers) is used to calculate median CEO pay is x times median-paid employee???:1 Employees will see the median pay in their company for the first time 11

12 CEO vs. Accounting Professional/Clerk Total direct compensation by global corporate revenue Chief Executive Officer Management Median Base Salary ($) Median Organization Revenue - $4.5 billion 100 Accounting Professional Total Direct ('000) 14,000 Total Direct ($'000) 13, ,000 10, ,000 8,000 6,669 8,895 0 Less than $1 Billion $1 - $3 Billion $3 - $6 Billion $6 - $10 Billion Accounting Clerk $10 - $20 Billion Greater than $20 Billion 6,000 4,000 2,845 4, Total Direct ('000) 2, Less than $1 Billion $1 - $3 Billion $3 - $6 Billion $6 - $10 Billion $10 - $20 Billion Greater than $20 Billion 0 Less than $1 Billion $1 - $3 Billion $3 - $6 Billion $6 - $10 Billion $10 - $20 Billion Greater than $20 Billion 12

13 What we need from stakeholders HR Employees CEO and Executive Leaders Know what the ratio means in comparison to other organizations Understand potential reactions from employees as well as external audiences Don t be defensive or dismissive Create communication to support leaders, managers and employees Provide education around the ratio Managers Help employees see that pay is only one element of total rewards; reinforce the total value proposition Communicate how the company ensures pay is competitive Understand their role and how to communicate messages about pay transparency and fairness See their pay as fair and competitive Understand how pay is only one element of the larger total rewards deal Understand how pay is set and why different positions have different pay 13

14 Compensation (in $000) Target total direct compensation - CEO Median Organization Revenue - $4.5 billion CEO s median target total direct compensation opportunity is $7.2M $8,000 $7,000 $7,235 Mix of Pay $6,000 14% $5,000 $4,925 $4,000 $3,000 68% 18% $2,000 $1,000 $0 $1,300 $1,010 86% variable pay Base Salary Target Annual Incentive ($) Long-term Incentive ($) 14

15 Compensation (in $000) Target total direct compensation - CEO CEO s Target TDC opportunity in 2016 ($7.2M) has continued to increase 2006 ($4.9M) with greater variable compensation ( % vs %) $8,000 $7,000 $7,235 Mix of Pay $6,000 $5,000 $4,000 $3,000 $4,977 $2,917 $4,925 59% 20% 21% 68% 14% 18% $2,000 $1,000 $0 $1,060 $1,300 $1,000 $1, Median Organization Revenue - $5.3 billion 15

16 Target total direct compensation - CEO The primary difference in CEO pay at larger companies is related to significantly larger LTI values $12,000 CEO Target Total Direct Compensation and Pay Mix $10,000 $8,000 $6,000 69% 72% $4,000 $2,000 $0 60% 18% 17% 20% 20% 13% 11% $1B - $3B $6B - $10B $10B - $20B Salary Bonus LTI 16

17 But global pay levels still vary Median CEO Total Direct Compensation ($5bn revenue) United States UK Canada France Germany Switzerland Spain Netherlands Italy Brazil Sweden Belgium Japan Hong Kong $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Salary Bonus Long-Term Incentives 17

18 Competitive pay mix top-level executives Pay levels and mix for other top-level executive positions also vary widely based on company size $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 $10B - $20B COMPANIES 56% $1B - $3B COMPANIES 56% 47% 51% 22% 44% 20% 22% 39% 20% 22% 22% 21% 31% 24% 35% 38% 29% CFO Top Legal Top HR CFO Top Legal Top HR Salary Bonus LTI Source 2016 CDB General Industry Executive Compensation Survey 18

19 Competitive pay mix 2nd-level executives Below the top executive levels, pay is less sensitive to company size and pay mix emphasizes salary more, LTI less $900 $800 $700 $10B - $20B COMPANIES $600 38% $500 $400 $300 24% 22% $1B - $3B COMPANIES 17% 19% 21% 22% 19% 28% 30% 21% 18% $200 $100 54% 62% 59% 43% 52% 52% $0 2nd Finance 2nd Legal 2nd HR 2nd Finance 2nd Legal 2nd HR Salary Bonus LTI Source 2016 CDB General Industry Executive Compensation Survey 19

20 Incentive opportunities by salary level Organization Revenue $3-6 billion 200% 180% 183% 160% 140% 120% 116% 100% 80% 60% 40% 28% 26% 34% 36% 40% 51% 45% 70% 64% 77% 20% 0% $180,000 $220,000 $270,000 $330,000 $430,000 $570,000 Target Bonus Long-term Incentive 20

21 Actual bonus paid as a percent of target bonus 128% Bonus Paid as % of Target 115% 106% 114% 94% 99% 107% 107% 101% 99% 100% 97% All Jobs (w/o CEO) CEO 21

22 What does 75 th percentile mean? A closer look The average difference between 50 th and 75 th percentile references had remained consistent for many years LTI grant values show significantly higher variation as compared to base salaries $500,000 $450,000 $400,000 $350,000 Pay Element 75th Percentile is above 50th by: Base Salary 17% Bonus Paid 50% Total Cash 25% LTI Value 63% Total Direct 34% $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Base Salary Bonus Paid LTI Value 50th 75th 22

23 Above market increase 2015 vs hot jobs Code Executive Benchmark % increase base salary 2015 vs AFT036-EX Top Investment Portfolio Management Executive 109.6% AFA006-EX Financial Shared Services Executive 109.4% ACD060-EX Top Strategic Alliance Executive 109.0% ACA020-EX Top Community Relations Executive 108.9% ACD020-EX Top Business/Corporate Development Executive 108.0% AMK020-EX Top Marketing Communication Executive 107.9% ASC000-EX Top Supply Chain Executive 107.6% 23

24 Total salary increases - percentage of salary 2015 salary increases 2016 salary increases 2017 salary increases Avg % granted No. of responses Avg % granted No. of responses Avg % granted No. of responses Executives 3.3% % % 634 Management, excluding executives 3.0% % % 690 Exempt, nonmanagement 3.0% % % 686 Nonexempt salaried 2.9% % % 482 Nonexempt hourly 2.9% % %

25 Performance ratings and average salary increases Average Salary Increase % Granted Performance Rating Highest possible rating 4.3% 4.5% 4.5% 4.6% 4.5% 4.0% 4.6% Above average rating 3.4% 3.4% 3.5% 3.6% 3.6% 3.0% 3.5% Average rating 2.5% 2.5% 3.0% 2.6% 2.6% 2.5% 2.6% Below average rating 1.3% 1.4% 1.3% 1.3% 0.7% 2.4% 0.6% # of Responses

26 2016 U.S. CDB Executive Compensation Survey Understanding CompOnline 26

27 Online delivery through Comp Online More than just a report delivery vehicle, Comp Online is the fully loaded data resource you need to create customized, meaningful and presentation-ready reports to support your compensation planning objectives. To access Comp Online, log into Published users can: Advanced users can: Published Published + Advanced Access to accurate, easy-to-use data Answers to your questions and needs Insight into year-on-year trends Export data in a variety of formats View, download and print reports Age data Segment data by industry, organization unit, size/revenue, geography (MMPS) Access all companies which participated by publishing-deadline Access the Published reports, plus... Create custom peer group reports by selecting participants based on name, size, performance measures or industry Access a much larger database of over 1,200 participants (including all companies from industry surveys and new participants who submit data after publishing -deadline) Download results in seconds showing your data for all positions vs. all participants or a custom peer group Choose from several LTI valuation methodologies Customize over 10 report templates to include your preferred remuneration and statistical elements, and regression Combine positions, functions and levels 27

28 Comp Online 28

29 Published analyses 29

30 Published analyses 30

31 Custom analyses 31

32 Custom analyses (continued) 32

33 Custom analyses (continued) 33

34 Custom analyses (continued) 34

35 Custom analyses (continued) 35

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37 Custom analyses (continued) 37

38 Sample report templates Position summary table View target and actual bonus as % of base or expressed in currency amount. View long-term incentives by plan type and select preferred valuation methodology. Reveal your company s data only to selected users. View your incumbents for each position individually or aggregated vs. the market. Prevalence detail: incentives (annual and long-term), geographic responsibility, board/officer status, other scopes. 38

39 Sample report templates LTI annualized value table View Incentives, annual and long-term, by salary range for any group of positions and peer groups. Annual incentives, actual and target, can be expressed as a % of base or currency amount. Combine all long-term plan types or run separate reports for each plan type (e.g., options, restricted); choose from multiple valuation methodologies; include # of shares granted. 39

40 Sample report templates Position summary for spreadsheets Export all position/levels/ functions in PDF and spreadsheet format. 40

41 Comp Online video tutorials Getting Started Published Analyses Express Analyses Custom Analyses: One-Step Report Custom Analyses: Fully Customized Report Custom Analyses: Creating a New Peer Group Custom Analyses: Customizing a Report Template 41

42 2016 U.S. CDB Executive Compensation Survey Wrap up and Q&A 42

43 Willis Towers Watson U.S. CDB General Industry survey offerings Surveys Results Include U.S. CDB General Industry Compensation Survey Reports Package Executive Compensation Survey MMPS Compensation Survey Participation required Total direct compensation (including LTI values) by position Bonus and LTI values by job and salary range Data segmented by industry, organization unit, revenue, geography (MMPS) Top 20 highest paid positions and regression modeling (Executive) Results available in Comp Online (Published or Advanced) No extra data submission required for CDB participants U.S. Long-Term Incentives Policies and Practices Report For U.S.-based employees: LTI plan design by award type, stock ownership guidelines, restrictive covenants LTI participation and grant process: determination of LTI grant values, award timing, individual participation/awards LTI values presented by salary range ( $80K and above) segmented by industry and revenue Results available in Comp Online 43

44 Willis Towers Watson additional survey offerings Surveys International General Industry Long-Term Incentive Policies and Practices Survey Report Results Include Participation required For local national employees of multinational companies: LTI grant values by salary range for 60 countries for employees outside the home country Plan design modifications for employees outside the home country Participation not required Salary Budget Surveys Actual and projected salary budget increases segmented by geography, industry, size, employee level Canada, U.S., and global reports available Participation not required U.S. Compensation Policies and Practices Actual and projected salary budget increases segmented by geography, industry, size, employee level Canada, U.S., and global reports available Participation not required Global Publications Global 50 Pay practices for 50+ countries. Country-specific information on economic and reward environment, statutory benefits, and salary structure Global Starting Salaries Starting salaries of graduates by education level and function. In the United States broken down by State/Region/ Metropolitan areas Global Geographic Salary Differential -Base salary differentials by region relative to the national average. Differentials for six employee categories. 44

45 2016 U.S. General Industry Survey results options Included with Advanced purchase Survey Advanced For custom peer groups and analytics with disclosed (proxy) data Advanced Plus With disclosed (proxy) data Published 2016 CDB General Industry Reports Package U.S. $9,800 $10,400 $7,200 CDB General Industry Executive $7,300 $7,900 $4,500 CDB General Industry Middle Management, Professional and Support Long-Term Incentive Policies and Practices Survey report $5,700 $4,300 N/A $2,900 General Industry International Long-Term Incentive Survey report N/A $6,700 45

46 2016 U.S. industry-specific surveys Purchasers of the Advanced Option for Industry-Specific surveys also receive General Industry surveys for free Advanced For Custom Peer Groups and Analytics Published CDB Energy Services Reports Package $9,800 $7,200 CDB Energy Services Executive $7,300 $5,000 CDB Energy Services Middle Management, Professional and Support $5,700 $4,300 CDB High Tech Reports Package $9,800 (includes GI)/ $5,800 (excludes GI) $7,200 (includes GI)/ $4,400 (excludes GI) CDB High Tech Executive $4,000 $3,000 CDB High Tech Middle Management, Professional and Support $3,500 $2,500 CDB Media Reports Package $9,800 $7,200 CDB Media Executive $6,800 Parent company with annual revenues with less than $500M $2,000 Parent company with annual revenues $500M to $1B $3,800 Parent company with annual revenues with over $1B $5,600 CDB Media Middle Management, Professional and Support $5,200 $3,100 CDB Pharmaceutical and Health Sciences Reports Package $9,800 $7,200 CDB Pharmaceutical and Health Sciences Executive $7,300 $5,200 CDB Pharmaceutical and Health Sciences Middle Management, Professional and Support $5,700 $3,000 If you participate in our Industry-Specific surveys, you should not participate in CDB General Industry surveys. 46

47 2016 U.S. industry-specific surveys (continued) Advanced For Custom Peer Groups and Analytics Published CDB Retail/Wholesale Reports Package $9,800 $6,200 CDB Retail/Wholesale Executive $7,300 $4,500 CDB Retail/Wholesale Middle Management, Professional and Support $5,700 $3,400 Financial Services Reports Package $9,800 Parent company with less than $2B in assets $4,200 Parent company with more than $2B in assets $5,200 Financial Services Executive $7,300 Parent company with less than $2B in assets $3,500 Parent company with more than $2B in assets $4,500 Financial Services Middle Management, Professional and Support $5,700 Parent company with less than $2B in assets $2,200 Parent company with more than $2B in assets $3,200 If you participate in our Industry-Specific surveys, you should not participate in CDB General Industry surveys. 47

48 What you should remember from today CDB General Industry Executive Survey Full coverage of Executive positions in your organization. Data for 100+ benchmarks including Base Salary, Total Cash Compensation, Total Direct Compensation Access Your Results Online Central online results through Comp Online (twdataservices.com) Key Points CDB LTI Policies and Practices Survey Deepest, most comprehensive data base on long-tem incentives. Available to organizations who submit LTI data to CDB Executive Decision Quality Data We have decision-quality data to support your compensation data needs. Align the results to your established talent markets or executive compensation peer group 48

49 Contact us Willis Towers Watson Data Services Client Care Center 44 South Broadway, 13th Floor White Plains, NY T F twusdata@willistowerswatson.com wtwdataservices.com Willis Towers Watson Executive Compensation Consultant For questions about Executive Compensation: Tom Kelly T thomas.kelly@willistowerswatson.com 49