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It’s been widely reported that base salary increases for executives in the U.S. have stayed at a median of 3 percent for the past few years. But that doesn’t necessarily mean organizations aren’t finding ways to differentiate pay for their senior leaders.
Hay Group's database of insurance and financial-services companies reveals that over the past three years, base salary pay within the sector has not changed much, with base salary budgets increasing by a median of 3 percent each year. However, in reviewing selected executive positions in the financial-services sector, the data show an increase in total cash payouts. Total cash includes base salary plus any bonus, commission or other short-term incentive pay. These increases were an average of 7 percent from 2011 to 2012 and an average of 11.9 percent from 2012 to 2013.
2012-2013 Insurance/Financial Services Market
Annual Base Salary (median change)
Annual Total Cash Compensation (median change)
2013 Number of Organizations
2013 Number of Executives
Chief executive officer
Chief financial officer
VP of finance
Head of HR
2011-2012 Insurance/Financial-Services Market
2012Number of Organizations
2012 Number of Executives
VP of HR
Director of HR
Source: Hay Group
Hay Group’s data reveal these organizations’ preference to differentiate pay using incentive programs. Some financial organizations, especially those under more stringent regulatory review, have been shifting variable bonus dollars to fixed salary. "While this doesn’t sound like a logical thing to do in most circumstances, one needs to understand the history," Irv Becker, national practice leader of the U.S. executive compensation practice at Hay Group, told SHRM Online. "Many of these firms paid very low salaries, often fixed by level. Most all of the compensation delivered was in variable bonus. As the regulators have pushed back on the extent of the bonuses, due to risk concerns, firms have tried to align more closely with other industries and raise their salaries to more market-appropriate levels. This creates a better balance between fixed and variable pay."
Among other insights the data provide are:
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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