Market Competitive Executive Compensation

Companies conduct competitive compensation assessments in order to maintain market competitive pay ranges. Due to the variation in the compensation elements, surveys and internal audience, executive compensation assessments are conducted separately from the other jobs. Many organizations utilize the services of compensation consultants to ensure the independence that an outside consultant can bring in working with executives concerning their own compensation.

Sources of data for an executive compensation assessment can consist of:

  • Public company peer group data: data from public company documents (DEF 14A or 10-K) filed with the SEC provide executive philosophy, data by compensation component and the design of the short and long-term incentive programs for the top five named executive officers
  • Nonprofit company peer group data: provided W-2 cash compensation, deferred compensation, other compensation and non-taxable benefits for officers and other highly compensated employees
  • Published salary surveys by industry or general industry or compensation databases, with executive data broken down by size of company, such as revenue, assets or number of full-time employees. Some sources, such as Towers Watson or Mercer provide regression information to “predict” compensation for various company scope levels.

When there is more than one source of data for an executive role, it increases data reliability even though the data may be different. For example, a peer group and one or two survey sources is ideal. Unfortunately, many surveys that contain both executive and non-executive jobs do not report the long-term incentive data. Where there is long-term data, the data tends to be dominated by companies with larger scopes at $500M or above.

So, what’s a mid-size, for-profit, company supposed to do? As executive compensation consultants, we can either suggest a practice or we use a methodology to best replicate the value of long-term data granted to executives in order to arrive at target total direct compensation or prevalence data on executive benefits and perks.

How important is it to have a data source that surveyed just private companies and covers all elements of executive compensation? Although a private company may compete with public or larger companies for talent, solid private company data will provide important insights that can significantly impact a company’s design of its incentives and benefits/perks. Then the differences and similarities in the information can be weighed to help solidify the executive compensation philosophy and target total compensation.

You have an opportunity to have this hard to come by data: private company, mid-market compensation and benefit information covering executive base salaries, annual bonuses, long-term incentives, and key executive benefits. We have partnered with D.G. McDermott and Vivient Consulting to conduct a survey that will provide participants with current information and insights on executive compensation. The cost for the survey report is $1,500 (US) – a smart investment considering the strategic value of the customized data and insights you will receive.

When you participate and purchase the survey you will receive:

  • Easy to read, dashboard data that highlights pertinent results and top-line analysis
  • A comparison of YOUR Company’s data to other respondents by position, then by geographic area, revenue size, industry and ownership type
  • Detailed total compensation information on each of the positions that you matched to one of the 14 positions included in the survey

Learn More and Register for Survey here



AG Healey Issues Guidance for Employers on Equal Pay Law

Equal Pay Law to Keep Balance

Important information: Updated Law Goes Into Effect July 1, 2018; AG’s Office launching new website, webinar series to educate employers. Below is the news release from March 1, 2018:

BOSTON – To ensure that employers are prepared for the updated Massachusetts Equal Pay Act to go into effect this summer, Attorney General Maura Healey today issued new guidance with detailed information and online resources.

The amended law will go into effect on July 1. It provides greater clarity as to what constitutes gender-based wage discrimination, adds new protections for workers, and incentivizes employers to address gender-based pay disparities.

“More than 70 years after Massachusetts became the first state to pass an equal pay law, we still have not achieved equality in our state. We’ve now updated that law to be among the strongest in the country and taken an important step toward closing a gender pay gap that hurts Massachusetts women and families,” AG Healey said. “I thank our many partners for their help in drafting this guidance, which will assist employers in identifying and eliminating unlawful wage disparities. Working together, we can create a stronger and more equitable economy for everyone.”
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The Top Five Elements of a Strong Severance Pay Policy

This is a summary of the severance section of the full 2017 Severance and Paid-Time Off: Results from the Special Survey. Forty-five companies from a variety of industries including Technology, Manufacturing, Healthcare, Education, Financial Services, Retail and more provided information on their Severance and Paid-time-off policies and practices. The survey analyzed the data using the following employee/organizational level:

  • Executives
  • Senior Management
  • Directors
  • Managers
  • Individual Contributors
  • Services and Operations Employees (non-exempt)

To obtain the full report, please contact Tom Wilson ( or purchase from this link:

  1. Who is Eligible? Participants reported that virtually all executives (top levels) and employee groups are covered by such policies. Union employees who have severance benefits are covered by the union contracts.


  1. Under What Conditions Are Employees Eligible for Severance Payments? Employees are eligible to receive severance payments for any or all of the following reasons:
  • when there is a reorganization
  • their positions are eliminated
  • there are layoffs due to reductions in force
  • there is a change in control
  • for specific performance based terminations

Executives tend to have an employment contract or agreement that defines their severance program.


  1. How Much Severance is Paid? Practices and policies were found to vary significantly based on the information provided by participants. The greatest variance was found at senior levels of management.
  • The survey results provide an average number of minimum and maximum weeks of pay by employee/organizational level. Executives receive almost 6 times the number weeks as non-exempt employees at a minimum and 2 times as much as the average maximum. This difference typically takes into consideration that it takes longer for senior level talent to find new jobs. On average, there was no difference between Individual Contributors and Services and Operations Employees in the minimum and maximum weeks of severance. This may imply that these two categories of employees are covered by a consistent severance policy from which there is rarely much deviation.
  • The survey also provides number of weeks by years of service. Most typical severance policies base the amount of severance on years of service, with 2 to 4 weeks being the norm for those with less than 3 years of service.


  1. What Compensation is Included? For most employee groups, severance only includes base salary. In cases where incentives are a significant portion of an employee’s total compensation, the calculation of incentive is also included, the most common being target incentive. The survey also found that organizations negotiate with the employee at the time of termination what is included in the severance calculation.


In a 2015 Survey of Executive Severance, Meridian Partners from proxy data (, reported that Named Executive Officer Severance agreements typically include:

  • Cash severance
  • Current year bonus
  • Continuation of health care benefits
  • Perquisites/personal benefits
  • Vesting and settlement of long-term incentive compensation


  1. Are Agreements Required to Receive Severance? In most cases an agreement is required in exchange for the compensation received. These documents tend to include non-disclosure and non-disparagement statements, to confirm no legal action will follow as a result of the termination, but exclude non-compete and non-solicitation.

There are a variety of approaches organizations take with severance. For determining what should be your policy, ask what does your organization believe is fair, reasonable and competitive for the type of talent you attract. The challenge is to be fair, competitive, and fiscally responsible. Find the balance.