CEOs of privately held firms eye modest compensation boost

GREENWICH, Conn. (Jan. 5, 2015) — As the lid closed on another year, CEOs of privately held companies expected to see their total cash compensation bump up slightly.

CEOs received a median total compensation package of $360,000 in 2014 — including base salary, bonus, benefits, new equity grants and equity gains. That total cash compensation figure was expected to increase 3.1 percent in 2015, according to Chief Executive Research's latest “CEO and Senior Executive Compensation Report for Private Companies.”

The median base salary was $250,000, a 2.8-percent increase for this cohort over the prior year, while the median bonus was $75,000, a 3.3-percent increase over the same year-ago period. Median cash compensation increased 2.9 percent, while CEOs in the 75th percentile saw a 4.8-percent increase, according to the study.

Top quartile total CEO compensation was 81 percent above the median, while bottom quartile total compensation was 57 percent of the median.

CEOs, HR executives, boards of directors and investors/owners use Chief Executive Research's private company executive compensation report to negotiate and support executive compensation packages and ensure that they are remaining competitive in the marketplace.

The report noted that, as expected, a CEO's compensation is largely correlated to the size of the enterprise he or she leads. CEOs who run private companies with revenue between $1 billion and $10 billion earn nearly 10 times more than CEOs of companies with revenue under $2 million. The ratios vary, however, by compensation component.

For instance, the median base salary for the larger company CEOs was 4.5 times greater than the CEOs of the companies with revenues under $2 million, while the gap in bonuses was 12 times greater.

“Lately, the pay packages of CEOs of large public companies have been getting a lot of attention from politicians, regulators and the media,” said Wayne Cooper, managing director of Chief Executive Group. “However, little has been said about how the vast majority of CEOs are paid.

“There are more than 5.7 million companies in the U.S., but only 5,292 of them are publicly listed on the NYSE and NASDAQ exchanges — just 0.09 percent. So the data we present on private company compensation is far more relevant to the vast majority of CEOs and senior executives.”

Industry pay practices for CEOs varied significantly as well. Among companies with under $10 million in revenue, financial industry CEOs had the highest median compensation packages.

Among companies with over $100 million in revenue, tech firm CEOs had the highest median compensation packages.

Regional differences were also a factor — senior executive talent is more competitive (and portable) across markets than other positions — but CEOs and senior executives in major metro markets enjoyed richer median compensation packages than their colleagues in small and rural markets.

The report provides details on the salaries, bonuses, equity gains, benefits and perks of CEOs, chairmen, presidents, COOs, CFOs, CIOs and heads of sales, marketing, human resources and R&D. It also scopes out how they vary by quartile along multiple dimensions including: company size, industry, type of ownership, geography, growth rate and level of profitability.

For more information on the report, click here.

Chief Executive Group has published since 1977 Chief Executive magazine, which claims to offer CEOs insight and ideas to help increase their effectiveness and grow their business. The company also has a website that includes e-newsletters and online content, as well as conferences, roundtables and a peer network to enable top corporate officers to discuss key subjects and share their experiences within a community of peers.

The Group publishes the CEO and Senior Executive Compensation Report annually, and facilitates the annual “CEO of the Year,” an honor bestowed on an outstanding corporate leader, nominated and selected by a group of peers.