Executive Compensation Negotiation Dos and Don’ts

Let’s face it.  Times are tough.  Even in a tight economy, however, there’s still room for executive compensation negotiation.  But with both companies and executives facing increased pressure to justify their executive compensation packages, it’s important that you come to the table ready and willing to negotiate.

The following dos and don’ts of executive compensation negotiation – based on the advice of executive recruiters and compensation consultants – will help you plan your negotiation strategy and improve your odds of negotiating the executive compensation package you want.

DO: Create a detailed three-year history of your executive compensation

This document should include salary and bonus (often called “total cash compensation”); equity (e.g., stock options, restricted stock, stock grants); other long-term or deferred compensation; and special perquisites (e.g., auto allowance, club memberships).

This detailed snapshot of your executive compensation history gives the hiring company a better understanding of your expectations without requiring you to state your current compensation objectives. Which brings us to. . .

DON’T: Share your executive compensation objectives

When possible, avoid sharing your executive compensation objectives before an offer is made. Your negotiating position will be stronger if you allow the hiring company to show their hand first. However, if pressed, you must always be prepared to offer a competitive and well-researched compensation range, along with supporting rationale.

Whether you’re stating your compensation requirements as a first move or in response to an offer that’s lower than you’d hoped for, be sure to make it about the value you bring to the company – not about your kids going to college, your late mortgage payments, or other personal reasons for needing the income.

DO: Research your target industry and position

Be prepared. When you come to your salary negotiations with a strong understanding of typical market compensation in your field and your position, it not only shows the hiring company that you’ve done your research; it also reassures you that the executive compensation you are asking for is both reasonable and justifiable.

An executive coaching firm or compensation consultant can help you track down current figures for your industry and experience level, allowing you to negotiate from a position of confidence.

DON’T: Say yes to an initial offer

Never accept an offer until you have clarified and understood everything in the offer letter and asked about any terms of your employment that might not be included (e.g., severance policy, non-compete agreements, guaranteed and pro-rata bonuses, or vesting schedules for stock options).

Remember, too, that a verbal offer is only worth the paper it’s written on. Insist (politely, of course) that any verbal offer extended by the company be expressed in writing, and request that the letter include all the details of the compensation package, not just salary.

When you receive the initial offer, thank the hiring managers for the opportunity, and commit to giving them your response within a specific time frame. For complex executive compensation packages, consider having an employment attorney and/or a career coach review the initial offer letter before you make your decision.

DO: Make a counteroffer

They’ve offered you the job. They like you. And at this level, they expect you to make a counteroffer. You get one good shot to make a counteroffer that will ensure that your compensation package both reflects your value to the hiring company and makes you excited about going to work every day.

Before you counter, know what you’re willing to accept. If the numbers are everything you hoped for, be sure the other details of the compensation package meet your expectations as well. And if the job is everything you’d hoped for but the salary leaves something to be desired, clearly state the range you were expecting, back it up with your well-researched figures, and be prepared to negotiate other areas of the compensation package, such as performance-based bonuses, stock options, vacation time, or other benefits. Here again, be sure to get any accommodations in writing, and have the final offer letter or employment contract reviewed by your attorney before you sign.

Throughout your salary negotiations, it’s important to show that you’re interested in the organization and enthusiastic about the role you’ll play. Leaving a positive impression at every step of the interview and salary discussion process will go a long way toward getting you the outcome you want from your executive compensation negotiations.

Ready to learn more about executive compensation negotiation? Call 610-293-1115 or speak with an Executive Specialist at Kelleher Associates.