According to the survey of 120 search firms and corporate recruiters, an increasing number of organizations are turning to employment contracts, guaranteed bonuses and severance, and stock options to recruit executive candidates as the supply of top talent tightens.
Compensation Data for Executive Hires
2005 compared to 2006 (as of 6/30/06)
Element |
Percent of Packages 2005 |
Percent of Packages 2006 |
Percent Change |
Guaranteed First-Year Bonus |
27% |
45% |
+18% |
Employment Contract |
21% |
36% |
+15% |
Guaranteed Severance |
29% |
39% |
+10% |
Stock Options/Equity |
42% |
50% |
+8% |
Performance Bonus |
76% |
82% |
+6% |
Sign-On Bonus |
34% |
39% |
+5% |
While competing for candidates solely on the basis of bigger paychecks isn't completely effective at the executive level, there's no question that companies must raise the stakes in order to win the war for talent in this expanding market. Demand is very strong for the best executive talent in the market, which is reflected in the more than 20% increase in recruiter activity in the ExecuNet network this year.
A separate survey of 1,805 executives conducted earlier this year revealed that compensation expectations have reached their highest level since 2002. According to the survey, employed executives would expect a 15% increase in total compensation if they were to change jobs in 2006.