Pearson Partners International

Tag: salary

  • TweetChat: Compensation Negotiation – March 22, 2016

    TweetChat: Compensation Negotiation – March 22, 2016

    A recent BlueSteps Executive Career Insider TweetChat featuring Pearson Partners’ Frank Morogiello (@Morogiello) and our team.

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    TweetChat: Executive Compensation Negotiation – March 22, 2016

  • Salary Questions and Answers

    Salary Questions and Answers

    Tips from the Leadership Coach

    Salary Questions and Answers

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    There comes a point in most interviews when the question of compensation comes up. It is best to avoid this discussion for as long as possible in the interview process, but if it comes up, try to deflect the question and turn it back to the interviewer. The objective is to have the interviewer state a salary before you do. Here are some tips from our leadership coach on how to respond to the salary question.

     Potential Salary Questions

    • What salary do you want?
    • What salary do you have in mind?
    • What salary are you looking for?
    • What is it going to take to take to get you on board?
    • What are you making now?
    • What is your currently salary?
    • What are your past earnings?
    • What did you make in your last position?

     Possible Responses: Practice these until you find something that sounds natural and comfortable for you.

    • I’m sure you have a figure in mind. What have you budgeted for the position?
    • I believe, and I’m sure you agree, that salary should be based on the responsibilities of the position and what I can contribute. I would like to learn more about the responsibilities of the position so I can discuss better what this job is worth. What do you see the job being worth based on the responsibilities you know of the job?
    • Salary is not the most important thing to me. The quality of the company and the responsibilities of the position are very important to me. It is more important to me to be sure the position is the right match for my skills and interests. (Stress that you are looking to make a long-term commitment in a company and a career, and to find that optimal niche you are willing to be somewhat flexible if necessary regarding compensation).
    • Compensation is an important issue, however, my goal is to pursue positions that will allow me to maximize my strengths and solve significant challenges within an organization, with a strong fit between my skills and the company’s needs. When that happens, I’m sure the compensation will fall into place.
    • I hesitate to disclose compensation figures because the position we are discussing contains elements that differ from my most recent position. We may be comparing apples to oranges in terms of size of organization, location of company and the cost of living in the location. My goal is to arrive at a salary level that reflects the breadth of the responsibility of the position.
    • Perhaps it is too early to discuss salary. Let’s see if I’m what you need and if your company is what I am looking for. Could we discuss salary a little later? (Are you making me an offer?)
    • I’m sure we can come to a salary agreement if we both agree I am the right person for this job. So, can we agree to table salary until later? (Then redirect the conversation with a question regarding skills, responsibilities. For example, are you saying that _________ experience is needed for this position?)
    • Let’s talk about how I can make you money or save you money and then I’m sure you will be willing to make an investment in me that we can both agree to.
    • I won’t require a salary that’s outside the industry market. This could throw us off focus on important issues of what I can do. Can we discuss salary later?
    • I have no upper limits. What did you have in mind?
    • I believe an employee’s worth is measured by his or her contribution to an employer. I expect to contribute and be paid a salary commensurate with that contribution. I would not have come to this interview or have been interested in your company if I had not felt you would be fair and the range you pay would not fit me.
    • Frankly, salary is not so much a concern to me as knowing if I can meet your needs. If I understand, you need ___________ to do this job. Is that right?
    • I am pleased that you are prepared to discuss money at this point. What is the salary range for this position?
    • Well, I am sure you have something fair and reasonable in mind. May I ask you what you have budgeted for this position?
    • I am certainly prepared to discuss money in specific terms after we have mutually agreed on job requirements and scope.
    • (If forced to respond): I understand the market is paying $_______ to $_______ range. (When you do state a range, you must then state why you believe you are worth what you want. Negotiate from a position of strength and not greed.) What range are you thinking for this position?
    • I am interested in finding the position that has the challenge, growth possibilities, and people I enjoy working with. So far this position seems to have it all: commitment, the people, and my role in contributing to the goals of the company. While money is important, I am not locked into a set figure. However, since you have brought the subject up, what kind of range did you have in mind for this position?
    • Salary won’t be a problem. But I’m not fully clear on the job scope, so maybe we can talk more about that. I’m very flexible, and I’m sure that when we come to some agreement on the job, we can work out the salary.
    • I’m making very good money right now, and I deserve it. But I know that salary will not be a problem. I’m a fair person and I’m sure you are too. I know we will come to an agreement.
    • I am being paid very well, and I’m worth it. But I am very interested in your company and I am willing to make an investment in this if you are. As far as I’m concerned, salary won’t be a problem.
    • Well, if what I earned was higher than what you wanted to pay, you might think that I’m overqualified. If it is under, you might think me under-qualified. I would prefer to be judged on my ability to do the job. What did you have in mind?

    If you are forced to give an answer:

    • My current compensation package is in the range of $_______ to $_______ , and my research indicates that your firm’s salary philosophy is competitive. Am I correct?
    • I am earning very good money right now in the $_______ to $_______ range, depending on bonuses. And I am certainly worth it. But I am very interested in your company, and I know we can work something out.
    • I made in the (high or low) $_______.
    • My current position is worth $_______. However, it seems that positions like mine in the marketplace are worth a base salary of $_______.

    What would you like to be earning (two, five or ten years from now)?

    • At any point in my career, I’d like my salary to keep pace with inflation and be competitive with what similar positions pay.
    • However, I don’t see myself as an average employee. I always strive for excellence and never settle for anything less that above average. My income should reflect that.
    • I believe that my compensation is an investment by the company that earns a return on my work. The higher the rate of return, the more the company should invest. If I’m not performing at anytime, I should not be here. I have no illusions about employment as a value for the value relationship.

    What is your salary history?

    • I would be happy to give you specific numbers and percentages of increase from year to year, but I am not able to recite them from memory now. Salary is not as important to me as opportunity.
    • At every salary review, I received merit increases. My salary has always been reflection of my work progress and contribution to my employer’s success.

    Have you ever been turned down for a salary increase?

    • I have not had to ask for a raise. My performance evaluations have always been positive and my salary reviews have consistently resulted in increases. I have never been refused a raise because of inadequate performance.

    Do you expect to be rewarded with salary increases for the work you consider to be well done?

    • Not necessarily. Financial rewards don’t always follow the effort, and there are many other ways to feel like I am making a contribution and being successful.
    • Like most people, I want my income to increase. But I realize that there are other considerations. Recognition in the form of monetary reward is always gratifying, but it can be more fulfilling to meet a challenge with success and see the results of my efforts on the job. That is a personal type of reward no amount of money can buy.
  • Compensation and Benefits Trends

    Compensation and Benefits Trends

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    Linda Wilkins
    Wilkins Finston Friedman Law Group, LLP

    Our March 2010 meeting of the Pearson Partners DFW HR Roundtable featured a lively and informative discussion of trends in executive compensation and benefits. Our guest speaker was Linda Wilkins, a board certified tax attorney with over 25 years of experience in executive compensation strategies, benefit plans, employment contracts and long-term incentive plans. We later sat down with Linda for an in-depth discussion of some of the trends she and her peers are seeing in executive compensation and benefits.

    What trends are you seeing in executive compensation and benefit packages? What do you foresee as we climb out of the recession and funds are loosened up?

    It has become apparent, especially in the financial services industry, that short-term incentives can definitely increase risk to a company’s financial survival so companies are looking more towards long-term incentives. There’s a move toward tying executives to owning stock for an extended holding period; often until retirement. Thus the executives have “skin in the game” and can then focus on longer term performance for the company. Furthermore, companies are implementing “clawback” policies which require an executive to repay short-term bonuses that were earned based on financial performance if at a later time financial statements are found to have been erroneous or need to be restated.

    For example, we had a whole spate of backdating of stock options which resulted in a lot of public companies having to restate their financials; with a lot of additional financial accounting charges. So we are seeing clawbacks now incorporated into compensation programs.

    Many of my clients have eliminated their 401(k) matching contributions. I see companies starting to think about a timeline for re-implementing a match. Most have not reached that point yet, but I think in the recovery we will get there.

    Increasing costs of group medical plans have led more employers to look at cost containment strategies like wellness programs, encouraging employees to have better management of their chronic health conditions. Companies are starting to put in some corresponding penalties, so if employees don’t comply with the recommended medical management, they face higher deductibles and higher premiums.

    How do you boost morale and retain employees when business performance is such that bonuses aren’t being paid and stock is at a low point?

    You might award stock options. If your share price is really depressed, there’s a lot of potential upside there that can be a good retention tool. I think stock appreciation rights are better than stock options because they don’t dilute your equity pool in your plan as much.

    What are companies doing today in their severance packages?

    Public companies are under pressure to justify every element of post-termination pay because of new SEC disclosure rules. There is a trend toward employment agreements with sunset provisions. Rich severance packages are no longer going to be offered on an evergreen basis.
    For a recruited executive, he or she may have limited severance protection for, say, two years but after that the contract would be renegotiated and there would be no guarantee of ongoing severance. By that point, the individual should have begun to accumulate some value through long- term incentives and wouldn’t really need the protection of the severance pay.

    How are board members being compensated for the big increase in work and risk today in the face of declining compensation budgets?

    Often a significant amount of directors’ pay is in the form of restricted stock awards with a very short vesting schedule. Audit and Compensation committee chairs take on considerable additional work and risk, so we are seeing significant cash retainers for them.

    What trends do you see with private companies?

    There’s a significant difference in equity opportunities in private companies. A lot of private companies will compensate based on appreciation in business value, which is like synthetic equity. Frequently these arrangements are tied to an exit strategy for the company where the payments are triggered on a liquidity event.

    Often, the top executives are given significant equity and are asked to invest their own funds in an acquisition, so private equity firms are really a different animal when it comes to equity participation. Often a percentage, say 4-10%, of the business is allocated to key management executives. This gives them a huge performance incentive and golden handcuffs as well.

    I think many private companies do not recognize the need for good corporate governance and formalized documentation of their executive compensation programs. For example, private companies frequently recruit key people through offer letters, which are often the only written document to describe the individual’s compensation and equity sharing arrangement. When stock options are not properly documented and formally granted, there is significant risk of tax liabilities and unrecognized compensation expense. There should be a stronger focus on governance and thorough documentation just like there has been in public companies.

    How do human resources executives stay current on all of these issues, in the face of so many economic, political and legislation changes, and protect themselves and their organization?

    Staying current is a huge challenge. The HR function oversees so many areas that are not only highly technical and costly, but fraught with potential liability. HR executives should have outside advisors, participate in trade associations and staff adequately with individuals who have expertise in recruiting, compensation and employee benefits. In today’s world you have to take advantage of all kinds of opportunities for learning experiences. Attending educational events such as this DFW HR Roundtable and other trade association meetings is a great way to stay on top of all of that. You can focus on current trends and be alert to areas where you’re going to incur risks and liabilities for your organization.

    How would you advise individual executives on negotiating employment and severance agreements?

    If it’s a public company, they should look at (or ask to see) current executive contracts, which are publicly available, to see what is in the realm of possibility. They should tally what they’re walking away from with their current employer. The new employer needs to compensate for the loss of that package.

    Many companies do not have employment agreements, but have severance or change-of-control agreements. Executives should review the terms regarding termination “for cause” and “not for cause.” There should be a clear definition of cause so the executive can’t be terminated based on some subjective performance issue. There should be no section 409A rules violations with regard to the design of severance pay. If an employment is for a fixed term with renewal clauses, it should specify whether the company’s non-renewal of the contract allows the executive to terminate for good reason and be paid severance.

    First and foremost, executives should get good legal advice. It’s important to work with counsel that knows what’s typical in these agreements.