First Year Executive Compensation Down 7.3 percent | SalesAndMarketing.com
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First Year Executive Compensation Down 7.3 percent

Compensation for first year top-level executives dropped 7.3 percent this year according to the "Executive Compensation Index." The study analyzed executive firm Korn/Ferry clients over a five-year period beginning in 2005, in the three main geographical areas of North America, Asia and Europe. It found that first-year executive compensation reached its five-year peak in 2008 before it experienced its first decline in 2009.

Regionally, while North American executive compensation had experienced the largest increase in 2008 reaching an index of 138. The 2009 decline (to 127.5) has left executives in Asia with the current highest index of 136.2, which is a slight increase from last year. European executives have experienced the lowest increase of the three regions with their highest index for all first year executive compensation being 114.7 last year.

Frederick Lipman co-author of Executive Compensation Best Practices said “these changes are a reflection that parts of Asia, in particular China and India haven't done quite as badly, the stimulus is working much better for them. Still, salaries are going to remain depressed as long as there are more executives looking for jobs than there are positions."

North American CEO's experienced their greatest increases in 2007 (index reached 129) and in Asia in 2008 (122.8). For first year CFO's, compensation has increased in North America over the past year (121.2 to 138.4), while in Asia it has decreased significantly (170 in 2008 to 97.7 in 2009). Last year, Asia's CFO's experienced the highest increase in CFO compensation over the five year period while for North Americans this peak was in 2009.

This year is also a good year for CIO/CTO's as compensation has increased 35.7 percent since 2005. European CIO/CTO's have experienced the highest compensation increase over the 5 year period with a current index of 159.2. North America and Asia's indices are 128.4 (up from 144.2 in 2008) and 140.5 (down from 150.1 in 2008) respectively.

"Ultimately," said Dan Gugler senior director of marketing and communications for Korn/Ferry International, "talent is still key. Regardless of where the economic cycles go, good companies are going to find good talent."