Tips for Negotiating A Better Pay Package
Executives may feel they're at a disadvantage when negotiating the details of a pay package with a new employer. But you can level the playing ground by knowing your priorities and a few facts.
1. Determine what's most important.
What are your deal-breakers? Before you begin discussions, be clear about areas where you won't budge. Mr. McAllister, who had been a vice president and general manager for Gateway Inc., wanted Autodesk to agree to a higher salary than it first offered before he accepted his position. Ultimately, the company offered him a salary that exceeded his minimum requirement.
2. Know what you earn and how your offer compares to other executives' pay.
Many executives don't know what they're making. Typically, the higher they are up the food chain, the less they know what their compensation is.
Bone up by writing down the value of your annual salary and any cash bonuses you're due to receive. Know when your next salary increase is due and what you'd make after receiving it. Salary increases for executives are expected to average 3.8% in 2006, reports Mercer Human Resource Consulting.
Find out what other executives in your function and industry are earning. Many Web sites provide data on cash pay in various functions and industries.
Place a value on each item in your benefits package, such as your medical, dental and other insurance plans. If you receive a company car, country-club membership or other perk, put a value on it.
The best you can do is determine the current value based on the exercise price and your best guess of a company's future prospects.
3. Understand a new employer's long-term incentives and the size of probable payouts.
Employers are moving away from stock options as incentives due to new accounting rules. A long-term incentive package for executives now might include stock options, restricted stock grants (shares that vest after a certain period of time) or another type of stock grant based on performance.
The mix of pay on the equity side is changing rapidly. Since long-term incentives are typically linked to company performance, knowing a company's past history of incentive payouts can help you calculate the potential value of any long-term incentives you're offered.
1. Determine what's most important.
What are your deal-breakers? Before you begin discussions, be clear about areas where you won't budge. Mr. McAllister, who had been a vice president and general manager for Gateway Inc., wanted Autodesk to agree to a higher salary than it first offered before he accepted his position. Ultimately, the company offered him a salary that exceeded his minimum requirement.
2. Know what you earn and how your offer compares to other executives' pay.
Many executives don't know what they're making. Typically, the higher they are up the food chain, the less they know what their compensation is.
Bone up by writing down the value of your annual salary and any cash bonuses you're due to receive. Know when your next salary increase is due and what you'd make after receiving it. Salary increases for executives are expected to average 3.8% in 2006, reports Mercer Human Resource Consulting.
Find out what other executives in your function and industry are earning. Many Web sites provide data on cash pay in various functions and industries.
Place a value on each item in your benefits package, such as your medical, dental and other insurance plans. If you receive a company car, country-club membership or other perk, put a value on it.
The best you can do is determine the current value based on the exercise price and your best guess of a company's future prospects.
3. Understand a new employer's long-term incentives and the size of probable payouts.
Employers are moving away from stock options as incentives due to new accounting rules. A long-term incentive package for executives now might include stock options, restricted stock grants (shares that vest after a certain period of time) or another type of stock grant based on performance.
The mix of pay on the equity side is changing rapidly. Since long-term incentives are typically linked to company performance, knowing a company's past history of incentive payouts can help you calculate the potential value of any long-term incentives you're offered.
posted by James at 2:56 PM
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