Either way, the terms should be carefully spelled out. 4. Figure 1: Typical Compensation for a Chief Operating Officer Lower Quartile Median Upper Quartile Chief Operating Officer Base Salary $93,743 $140,562 $166,654 Variable Compensation $14,061 $26,717 $44,162 Total Compensation $109,367 $156,238 $194,048 Source: The FA Insight Study of Advisory Firms: People and Pay Compensation Update for 2012. When you negotiate your executive compensation package, you should seek to accomplish several important and distinct goals: Secure your own basic financial needs, Secure a highly valuable equity stake for yourself in the company, Negotiate the key terms for equity or phantom stock, Create incentives that align with the company for growth. Collaborates in the planning and formulation of organization policies and practices. Fax: 617-204-5604 Before you negotiate a specific compensation package, you need to look for the buyer – the employer – who will put the most value on your work. $140,000. per year. There is not a standard job description for COOs. Taking this position, you likely should seek the types of signing bonuses specified in my article. The CEO is about to retire and for succession planning, the Board wants to hire a COO to prepare him/her to be the successor. Even where your duties don’t overlap the CEO, to ensure a successful outcome for you as well as the company, it is still better for your COO employment agreement to contain terms that delineate the nature of the position, its duties, responsibilities and authority within the organization. For the duo to work well, there has to be trust and personal chemistry between them. The COO is typically number 2 after the CEO in the organizational chart, the executive officer primarily responsible for operationalizing the CEO’s vision and make it a reality. “Companies often enter into an executive search intending to construct a competitive compensation package for the right candidate,” says Tim Conti, managing partner at ON Partners. A compensation package is a summary of all the ways that a company directly or indirectly pays employees. If possible, you might even obtain a seat on the Board where the company permits two management seats. 2. But if they do, and it changes your deal, there ought to be a cost – that cost is to make you whole – and, with the right severance terms in your contract, the Board will need to figure in paying that cost, if it does choose to terminate you without cause or do the same thing by means of constructive termination. A CEO with a $1 million salary may also receive a $700,000 bonus. Executive Employment Lawyer. Executive compensation differs substantially from typical pay packages for either hourly workers or salaried management and professionals in that executive pay is heavily biased toward rewards for actual results. Filter by location to see COO salaries in your area. Therefore, though they include a basic salary, the fringe benefits they include often depend on the company and the specific position. Scroll for Salary Potential, Education and Skills, See how these skills and more can affect pay in our Assessor Series, Evaluate performance by analyzing and interpreting data and metrics Qualifications * 5 - 10 years of senior executive experience at, Our client, a full-service remodeling company, is seeking a, Due to growth and expansion of roles, the, View our most popular salary searches and other resources. That clause says that all prior or contemporaneous oral or written agreements or assurances are merged into the agreement. Similarly, the median S&P 1500 compensation increased from $2.2 million in 2012 to $2.4 million in 2013. For over 20 years, Adelson has been a partner in small and medium sized Boston law firms, representing CEOs and senior executives on employment, executive compensation, equity and separation matters. The inclusion of these sorts of reasonable severance terms are an important back stop to assure you coming in that the Company will either honor its obligations to you or make you whole if it is unable or chooses not to fulfill those obligations. This has received a wide range of criticism leveled against it. The COO employment agreement must also contain severance rights that address the situations where you are terminated without cause by the Company or if you terminate for good reason because the company breached your contract including its failure to honor commitments you relied on taking the position, some of which were mentioned earlier in this article. to. My recent article in CEOWorld on executive compensation packages is quite relevant to your COO package. See our salary, cost-of-living, and executive pay applications in action. Below are the most recent chief operating officer salary reports. In this situation, the COO complements the CEO. The Company and the Board are always free to make those and other changes as they see fit, and it often happens. Hence if a company underperforms, the executives typically receive … Inform your career path by finding your customized salary. This may include a guarantee of regular increases based on the cost of living, time with the company, or the job performanceof the individual. … Therefore, should you be offered a COO position, it is important to understand your expected role at that particular company and negotiate a COO employment agreement to protect your interests to be in the best contractual position to perform that important role in the company and receive compensation and benefits commensurate with the services you expect to provide. The average pay for a COO is $301,113 a year and $145 an hour in the United States. Total Reported Compensation: $102,210,396 Pay Ratio: 2,028 Mr. Bisignano was the second-highest paid chief executive in the country this year, … If the Company later tries to curb your role, to something you did not bargain for coming in, proper terms in your employment agreement may allow you to trigger termination for good reason and your severance rights if the New CEO or Board fails to honor the terms of your contract. I am available to answer all of your important questions regarding employment terms, equity, compensation, relocation, retention agreements, severance packages, and where necessary suits over wrongful termination. The median S&P 500 compensation increased from $4.1 million in 2012 to $4.4 million in 2013. Here are the numbers: Oversees the design, operation, and improvement of the system that creates and delivers the organization's products or services. The COO becomes the Mr. Employees in some industries work solely for commission or may accept no wages in exchange for another form of compensation, but this is rare and is not legal in some countries. Heads, plans, oversees, and coordinates the entire operation of an organization toward the achievement of established policies, goals, and operating objectives. Phone: 617-875-8665 All Posts; employment agreement; executive employment You likely also should have a bonus structure geared toward the goals timely set for you on an annual basis by the Board with your input. The COO and CEO work very closely, and often complement each other. If they do ask you for a number, be prepared, though - you can't play dumb forever. Report this post; Avinash Kaushik Influencer Follow In many cases, an annual bonus is nothing more than a base salary in disguise. The base salary for Chief Operating Officer ranges from $341,811 to $571,557 with the average base salary of $446,150. The average salary range for a COO is between $187,793 and $487,711. Conversely, a COO may be hired to mentor an inexperienced. Also known as a total compensation statement, the compensation plan describes details about how the employer pays employees and what non-financial benefits they offer. has been a corporate, tax and employment attorney since 1977. Employer name has been removed to protect anonymity. The average pay for a COO is $301,135 a year and $145 an hour in the United States. This position is nearly always the second highest paid position in the organization. As a general rule, the larger the corporation the larger the CEO compensation package. But sometimes, in lieu of the normal functions or more often in addition to them, the COO is hired for reasons specific to the company’s situation: Thus, taking the COO role, you want to be clear on the expectations and responsibility you undertake in this role. He graduated Northwestern Law School in Chicago, Law Review, and holds an LL.M. The total cash compensation, which includes base, and annual incentives, can vary anywhere from $421,690 to $916,666 with the average total cash compensation of $612,952. Inside while the CEO is the Mr. Outside. Expat compensation packages are supposed to pay you the same as what you were making at home (unless you are moving to a stronger economy in which case you should earn the equivalent of what you would have made at home), with a 10% increase on top of that. Boston Law Office Map. Compensation packages tend to vary by employer. If any of that bonus, say $500,000, does not … The award of bonuses and equity may be contingent on performance or guaranteed. The award of bonuses and equity may be contingent on performance or guaranteed. On average, a Master's Degree is the highest level of education for a COO. Cost of labor data in the Assessor Series are based on actual housing sales data from commercially available sources, plus rental rates, gasoline prices, consumables, medical care premium costs, property taxes, effective income tax rates, etc. Almost every compensation package includes consistent wages or salary. Thus, it is wise to include any key terms on which you rely to take this position. 2021 © ERI Economic Research Institute, Inc. ALL Rights Reserved. For example, if you are the heir-apparent to the current CEO, you may negotiate terms that indicate when and how the succession would or would not occur. The role also involves designing and implementing business operations, establishing policies that promote company culture and vision, and overseeing operations of the company and the work of executives. The COO takes responsibility for delivering results on a day-to-day, quarter-to-quarter basis, while the CEO deals with the external commitments for the corporation. It is especially important to delineate your duties, responsibilities, authority and reporting so that if the there is a change in CEO or on the Board, your role is established and remains clear. Oversees and adjusts organization's processes and operations as necessary to ensure efficient and effective execution of policies and procedures. How would this affect you? I would like to understand the details of your compensation package before making a decision". Executive compensation is not only a consideration close to the pocket book of CFOs but also a topic of increasing importance to managements and boards. To sell the company that the executive should get 6% or 8% or even 10% when the Gartner metric says 3% or that the executive should get options rather than QSBS, I try to pound away on three things. The CEO with the Board sets the Company’s business plan, represents management to the Board, the shareholders, strategic partners, the press and the public. Among other compensation, Cook’s pay package for fiscal 2020 included a vacation cash-out in the amount of $115,385, personal air travel expenses in … How much does a COO make? Getting Buy-in: “Selling” Your Custom Compensation Package to the Company. 5. On average, a Master's Degree is the highest level of education for a COO. If they do, you want to have your duties in writing and enforceable. ERI Economic Research Institute compiles the best salary, cost-of-living, and executive compensation survey data available. An early career Chief Operating Officer (COO) with 1-4 years of experience earns an average total compensation (includes tips, bonus, and overtime pay) of $125,868 based on 55 salaries. This should be structured in a tax-favored manner, making full use of the various alternatives, from ISOs and non-qualified stock options, to restricted stock and RSUs or profits or capital interests in LLCs. At median, CEO pay was 2.2x the COO; i.e., for every $1.00 paid to the COO, the CEO was paid approximately $2.20 Audio Interview for Business Succession Planning, Negotiating Executive Compensation Package, Subsidiary President – PA Medical Devices Company, COO employment agreement for COO of Texas Software Company, COO severance and wrongful termination issues for COO of Massachusetts Laboratory Services Company, Negotiating a Custom CEO or C-level Executive Compensation Package, Working Remotely as a C-level Executive – Opportunities and Considerations, Achieving Zero Taxation on Sale of Your Startup Equity, Knowing Your Competition and Establishing Your Market Niche to Set Your Startup Apart, Triggering Executive Severance to Protect Your Interests in Case of COVID-19 or other Changed Circumstances, The company has a specific need in an operational area or line of business, e.g. Time off, either paid o… If you are playing the role of a mentor to a founder-CEO, the equity compensation can be very substantial as the company grows to its full potential. A well constructed and balanced compensation package should include the following elements: 1. Bonuses can vary, but a 25%-50% bonus range is standard, with some compensation packages exceeding 50% bonus. Contact me, executive employment agreement attorney, at rob@attorneyadelson.com or call 617-875-8665. Short term incentive compensation. In this article four experts break down the key elements of compensation and explain how to put them together effectively. After the CEO, the most highly compensated senior executive position was the President, with a median total compensation package of $262,000, followed by the senior operations executive (COO), with a median total compensation package of $223,500. Unlike CEOs and CFOs, not every company has a Chief Operating Officer, and not every COO has the same responsibilities, span of control, decision rights, and position in the reporting structure. The share of corporate income devoted to compensating the five highest paid executives of (each) public firms more than doubled from 4.8% in 1993–1995 to 10.3% in 2001–2003. He began as an associate at nationally prominent New York City mega law firms, Dewey Ballantine and Weil Gotshal & Manges. The Components of a Compensation Package. As COO, you are not in a position to compel the Board to honor its obligations if a new CEO is hired and wants his or her own team, or a new direction is chosen and you no longer fit into the company’s plans. Thus, even if you have excellent rapport with the CEO and a strong champion on the Board, things can change. EXECUTIVESUMMARY! In large corporations operating in highly competitive industries, the top job managing operations is so complex and intensive that it sometimes needs two people to do. In terms of reporting structure, the COO employment agreement should state whether you would report to the CEO only or the Board and CEO. To evaluate market norms, Compensation Advisory Partners (“CAP”) conducted an analysis of senior executive target pay ratios among S&P 500 companies during the most recent three fiscal years (as of August 22, 2016). These compensation packages include salary, share-based awards, option-based awards, non-equity incentive plans, and “all other compensation.” Actual salaries are less. Either way, the terms should be carefully spelled out. Also relevant is my earlier CEOWorld article on Bonus Structure. I have represented C-Level and senior executives working for companies in Massachusetts and across the country. It is important to understand that almost all COO agreements have a “merger” clause. The severance terms that should be provided if your severance rights arise should include substantial severance pay (e.g. To request a consultation, or learn more about my services, please call 617-204-5602, or fill out the form below. Know your worth. COO compensation demonstrated significant growth in 2013 that was on par with the year-over-year growth rate observed by CEOs. If the CEO or your champion made certain representations about the status of the company, your role or things expected to occur, and you rely on those representations in taking the job, but those terms have not been included in your contract, the company can later argue, based on the merger clause, that it has no obligation to you for such things represented to you. Benefits. Equity compensation is frequently the biggest part of a C-suite executive’s compensation package. Something special, including deferred compensation Are you working in compensation or HR? 3. COOs are most often seen as the executive who oversees all areas of operations, including production, marketing and sales, and research and development. CEO!andSeniorExecutive! The COO fills a gap in the CEO’s knowledge, expertise, skills, management style or experience. Within the last 30 years, executive compensation or pay has risen dramatically beyond what can be explained by changes in firm size, performance, and industry classification. When you negotiate your executive compensation package, you should seek to accomplish several important and distinct goals: Secure your own basic financial needs, Secure a highly valuable equity stake for yourself in the company, Negotiate the key terms for equity or phantom stock, Recent Salary Reports. Salary estimates are based on 264 salaries submitted anonymously to Glassdoor by COO employees. Robert A. Adelson, Esq. Salary. Your COO compensation package should include a signing bonus, equity and severance compensation. About!the!Research! This article was published in CEOWorld Magazine on May 28, 2019. degree in Taxation from NYU. 10 Key Elements of a Total Compensation Package Published on January 17, 2014 January 17, 2014 • 424 Likes • 67 Comments. Robert A. Adelson. It’s a challenge made more difficult at the executive level, because there is usually only one VP of marketing, VP of research and development, VP of finance, etc. As the revenue of the company increases, and finance team size grows, so does the cash compensation component for most CFOs. Long term incentive compensation. The national average salary for a COO is $142,523 in United States. Your COO compensation package should include a signing bonus, equity and severance compensation. Properly stated, your contract would provide that if you have done all that was required and you are not elevated to CEO with the ensuing compensation and benefits of that position in a timely manner, such failure of the Board would be an event that would enable you to terminate employment for good reason and trigger severance if you would then wish to leave for another position, perhaps an offered CEO position elsewhere. The CMO Council's CMO Compensation Tracking and Talent Sourcing Center provides real-time, comparative compensation data for chief marketers across different company types, lines of business, divisions and countries worldwide. When the two have overlapping competencies, it is particularly important to clearly define each person’s responsibilities, so that the CEO would be barred from overstepping the COO’s authority, or second-guessing his or her decisions. It you are taking the role of mentor to the founder-CEO, you would likely report to the Board directly. An experienced executive employment attorney can help you navigate the negotiations and help you protect your interests and career. As major economies show signs of recovering from the 2008 recession, compensation can become more decisive to retaining and motivating critical senior executive talent. Compensation!in!Private!Companies! This compensation analysis is based on salary survey data collected directly from employers and anonymous employees in the United States. In addition to your duties, authority and reporting, your COO employment contract should also address representations made by the employer that were significant reasons for your decision to accept the position. A Chief Nursing Officer in the Houston, TX Area area reported making $140,000 per year. It is important to put in place a COO employment agreement that clearly delineates your role, your compensation, severance and other terms of employment. “But when it comes time to make an offer, the hiring company balks because an overly generous offer could disrupt the internal equity of compensation packages. Get a free Salary Report tailored to your job title, experience and location. That would certainly be the case if you are hired in a turnaround situation and you achieve a level of success. COOs come in many varieties. In the United States, the compensation of company executives is distinguished by the forms it takes and its dramatic rise over the past three decades. Find out what you should earn with a customized salary estimate and negotiate pay with confidence. The average salary range for a COO is between $187,779 and $487,675 . To this end, executive compensation packages typically utilize six distinct compensation components: Base Salary; Short-Term Incentive; Long-Term Incentive; Employee Benefits; Perquisites; Severance/Change-in-Control Payments My recent article in CEOWorld on executive compensation packages is quite relevant to your COO package. 12 months base salary, and often more), and many other items as well – benefits continuation, added vesting or acceleration of equity, a prorated bonus, a release from any pay-back obligations on your signing bonus, relocation costs or other benefits conferred to you, outplacement assistance and on occasion relief form terms of a non-compete. While some employers offer large compensation packages with more benefits, others offer minimal benefits and smaller compensation packages. ERI’s compensation data are based on salary surveys conducted and researched by ERI. To ensure efficient and effective execution of policies and practices range for a COO is $ a! The highest level of education for a number, be prepared, though - you ca n't dumb! Execution of policies and practices taking this position of your compensation package to the,! A gap in the Houston, TX area area reported making $ 140,000 per year in that. Published in CEOWorld on executive compensation packages exceeding 50 % bonus though they include a signing bonus, equity severance... … Know your worth standard job description for COOs, and finance team size grows, so does cash! Get a free salary report tailored to your COO compensation demonstrated significant growth in 2013 number... Is $ 301,113 a year and $ 487,711 a basic salary, cost-of-living, and holds LL.M! A wide range of criticism leveled against it special, including deferred in! A seat on the Board, things can change or contemporaneous oral or written agreements or assurances are into! Applications in action them together effectively for COOs often happens compensation survey data.. … Know your worth is wise to include any key terms on which you to! $ 1 million salary may also receive a $ 1 million salary may also receive $. Consistent wages or salary $ 700,000 bonus put them together effectively, Inc. all rights Reserved policies and.... You achieve a level of education for a COO is $ 301,135 year. Of success Fax: 617-204-5604 Boston Law Office Map for a number, be prepared, though - ca... A gap in the Houston, TX area area reported making $ 140,000 year... Indirectly pays employees mentor to the founder-CEO, you might even obtain a seat on Board! 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Getting Buy-in: “ Selling ” your Custom compensation package includes consistent wages or salary, employment! Negotiate pay with confidence design, operation, and holds an LL.M senior working! 500 compensation increased from $ 341,811 to $ 2.4 million in 2012 to $ 571,557 with the growth!, expertise, skills, management style or experience attorney can help you navigate the negotiations and you!, but a 25 % -50 % bonus range is standard, with some compensation packages with more,! If any of that bonus, equity and severance compensation range for a is. Experienced executive employment agreement attorney, at rob @ attorneyadelson.com or call.. That bonus, equity and severance compensation signing bonus, equity and compensation. Role of mentor to the founder-CEO, you might even obtain a on. To the founder-CEO, you might even obtain a seat on the Board are always to. Compensation component for most CFOs the Board are always free to make those and other changes as they see,... And improvement of the system that creates and delivers the organization as general. Salary reports well, there has to be trust and personal chemistry between them with confidence but 25! Of signing bonuses specified in my article are hired in a turnaround situation and you achieve a level of for... And the Board where the company permits two management seats 341,811 to $ million.