Industry means everything when it comes to salaries for executives. The primary factor depending on the amount of money an executive makes is how well the industry is doing. For example, an industry like website design and globalization may pay a million dollars a year for a top executive. An industry such as a grocery store chain may not pay even close to as much. The pay may be around $80,000 a year. However, industry is a leading factor in how well the pay is but there are more things to be considered.
Location can be everything. Location means population. This also means there are more consumers to buy a product. If you are a CEO for a company in a big city like Phoenix, Arizona, you might be making close to $200k annually as an executive. However, if you are in a rural town and a CEO for the same company the pay will be lower and could even be under six figures. The pay scale is often set and geared toward the cost of living in the city or town the company is based. The job in a big city will require much more work and intensity than it will in a small town. Chances are good there will be hundreds of employees working under you in a big city and maybe only a handful in a smaller town. The workload is much different when a business is based in a small town.
There is one factor that can be an exception to the rule of location. There are towns that thrive or exist primarily because of certain companies building or setting up shop there. When this happens the company may employ everyone for miles and miles. The company may be large and employ a lot of people. A good example of a company like this would be BF Goodrich in Louisiana. It is in the middle of nowhere and there are tons of homes surrounding this huge facility. There are no other businesses for miles and miles except for gas stations. A CEO for a company like this will be making a good salary.
Another leading factor that determines executive salaries is the status of a company – whether it is in the private sector or in the public sector. Private companies pay more and the salaries are often negotiable. Executives have the ability to negotiate cars, golf course memberships, extra vacation time, stock options and more. A public entity like a local government does not have the freedom of negotiating additional benefits with a salaried position as an executive. This is because the money used to pay the salary comes from taxpayers within the community.
An executive working for a private copany can make millions of dollars a year. This number does not have to be disclosed. Public companies are required by federal law to disclose all salaries paid to executives. An executive in a government job also makes from $50k to $75k annually.
A public company is required to file many documents which include its annual proxy statement, the annual report, registration statements, and the current report. The annual proxy statement is the easiest way to look up what the executive salaries are for a public company. Inside of the proxy statement a company must disclose the type of compensation that is being paid to top executives and the amount of money being paid also.
A company also must state their reasoning behind why they pay a certain amount of money to an executive position. They must justify and disclose the criteria for decisions based on compensation and the degree of relationship with the practices of pay and the performance of the corporation.
A summary compensation table is where you will find a public company's executive salaries. Here you will see a comprehensive overview of the executive pay scales. You will see the total salary for the chief executive officer, chief financial officer, chief information officer, and other various executive positions. Additional tables below the summary compensation table will provide details about the components of why pay is what it is. These components might also include stock options given to these positions, pension plans, employment contractual agreements, a long-term incentive plan, and any other related agreements to the position.
The reason public businesses must disclose executive salaries are because it provides protection to the investing public. This allows people to make fair decisions with the materials provided to them. It also allows people to make decisions on voting for certain positions and more. The federal securities law is set forth to provide protection to the public, which is why public companies must disclose what they pay to all of their top executive officers.
Executive salaries in the same company are not all the same also. In most cases, the chief executive officer is the highest paid officer in the company. This is because this position is required to run the entire company and work with other departmental heads to ensure smooth operations. However, the CEO will take full responsibility if something goes wrong. All employees look to the CEO. The chief financial officer is usually the second highest position for a company. This position will make all financial decisions for the business, including accounting, payroll, accounts receivables and payables, inventory, and more. The chief information officer may make as much as the CEO or less than the CFO. It usually depends on the industry. If the business is a thriving Internet company like Google, the CIO may be the most important position.
Executive salaries vary by the thousands. There are many factors when considering what the pay of a certain position will be. These factors include the location, type of business, industry, and if the company is private or public. You do have the right to know what the executive salaries are for any public company before you make a decision to make an investment on the business.
