Wondering how top business executives negotiate compensation packages that reflect their value and help them achieve their personal and professional goals?
We’re here to demystify the world of executive compensation with a clear, digestible definition of executive compensation, followed by effective tips for negotiating the executive compensation package you want.
Whether you aspire to reach the coveted C-suite or you’re simply curious about the inner workings of executive compensation, this overview of the subject will leave you more informed and prepared for the process.
What is executive compensation?
Also known as “executive pay,” executive compensation is a comprehensive package of financial and non-financial rewards—including salary, benefits, bonuses, and more—that executives and high-ranking senior management receive as payment for their job role.
Financial elements of executive compensation include the obvious—salary—as well as stocks and bonuses, while non-financial elements include healthcare coverage, vacation time, and other perks.
What are the goals of executive compensation?
The central goals of executive compensation are to attract, motivate, and retain top-level executives.
Executive compensation can be particularly motivating when it is contingent on the achievement of company performance goals. When high-level employees know that they must hit specific targets to receive a certain bonus, they are incentivized to put more effort into their work and help the company succeed.
Which aspects of executive compensation can you negotiate?
Most aspects of an executive compensation package can be negotiated, including:
- Base salary
- Stock options
- Relocation stipend
- Legal representation
- 401(k) plan
- Annual and long-term incentive plan
- Deferred compensation plan
- Employee benefits, such as medical, dental, vision, disability, and parental leave
- Vesting schedules
- Company vehicles and air travel
- Education funding
- Wardrobe stipend
- Severance package
How to negotiate executive compensation packages
Now that you know what can be negotiated (read: just about everything), here are our top tips for negotiating your own executive compensation package.
(Feeling nervous? Remember that negotiation doesn’t have to be intimidating if you enter the process from a place of adequate preparation. Legal counsel with experience in executive compensation negotiations can help you understand what to expect and how to best position yourself for said negotiations.)
Identify your goals
Before you can ask for anything, you need to know what it is you’re asking for, so the first step in the process is to set the specific goals that you’d like to achieve through your compensation negotiations.
Take stock of your personal and professional goals as well as your financial objectives. Are you hoping to receive a higher base salary, bonuses based on your performance, stock options, or specific perks like more flexible working arrangements?
Once you know what you want, contextualize your goals based on the industry and region where you work to determine what kinds of asks are realistic. For instance, when it comes to assessing your goal for base salary, you might want to ask yourself: what is the market rate/average salary for similar positions, both nationally and in your region?
Find the right time
Timing can make or break a successful negotiation. Find the right time to initiate negotiations, which is often after an initial offer has been extended to you, but before you’ve accepted it. This can give you a little more leverage.
Another aspect of timing to consider is the state of the broader economic landscape. Negotiating during periods of uncertainty or financial turbulence, either for your company or in the industry as a whole, could be an advantage or a disadvantage, depending on broader trends.
Know your value
Don’t underestimate what you bring to the table. Starting off with a clear-eyed, realistic sense of your skills, experience, successes and contributions to the company can help you initiate compensation-related negotiations from a strategic position. Stay open to compromise, but don’t undervalue your expertise.
Remember that confidence is key to successful negotiation.
According to workplace coach Bonnie Low-Kramen, “Confidence is serious business, and the single most important differentiator in the workplace.”
Use that reality to your advantage by presenting a confident, assured front that communicates your value to the company.
Let the company make the first offer
Staying silent can be a power move in negotiations.
Letting the company make the first offer for an executive compensation package puts you in a better negotiating position. That’s because it helps you gain a clearer understanding of their valuation of your skills and experience. Companies usually have a range in mind for executive compensation, and their initial offer typically falls within that range.
When you allow the company to initiate the discussion, you can use their initial offer as a starting point for negotiating upward. This strategy can help you avoid the pitfalls of either:
- Undervaluing yourself by naming a figure that’s too low, OR
- Overshooting what they had in mind
Consider professional support
Executives who are negotiating complex compensation packages or who don’t feel 100% confident in their ability to advocate for themselves can seek guidance from experienced professionals, such as attorneys who specialize in executive contracts.
Attorneys know everything there is to know about this process, including the minutiae of industry standards and trends as well as legal complexities, which means they’re ideally suited to guide you toward that C-suite “Holy Grail”: a competitive compensation package that aligns with your professional and financial goals.
Not only does professional support help you secure the most favorable possible terms for your compensation plan, but it also minimizes the likelihood of disputes or legal complications that could derail the process (and your professional goals) entirely.
Consult our New Jersey executive compensation attorneys
If you’re in search of professional support—and specifically, a client-focused, boutique law firm that offers personalized support for executive compensation negotiations—consider The Law Offices of Andrew Dressel LLC.
Our New Jersey-based team of attorneys assists clients with the development of competitive executive compensation plans, successfully representing clients across numerous industries.
To assess whether our proactive, problem-solving approach is a good fit for you in your search for the compensation you deserve, contact The Law Offices of Andrew Dressel LLC today to schedule a free virtual consultation with their team.
DISCLAIMER
The content in this article is for general informational purposes only. It should not be construed as legal advice or a substitute for legal advice. The information above does not create an attorney-client relationship, nor do prior results guarantee future outcomes. Any reliance you place on such information is therefore strictly at your own risk.