COO compensation demonstrated significant growth in 2013 that was on par with the year-over-year growth rate observed by CEOs. Phone: 617-875-8665 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. to. Salary. 2021 © ERI Economic Research Institute, Inc. ALL Rights Reserved. I would like to understand the details of your compensation package before making a decision". The award of bonuses and equity may be contingent on performance or guaranteed. The average salary range for a COO is between $187,793 and $487,711. ERI’s compensation data are based on salary surveys conducted and researched by ERI. The base salary for Chief Operating Officer ranges from $341,811 to $571,557 with the average base salary of $446,150. It is important to understand that almost all COO agreements have a “merger” clause. It is important to put in place a COO employment agreement that clearly delineates your role, your compensation, severance and other terms of employment. Long term incentive compensation. Employer name has been removed to protect anonymity. 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. 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 Company and the Board are always free to make those and other changes as they see fit, and it often happens. The average pay for a COO is $301,135 a year and $145 an hour in the United States. 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. 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). There is not a standard job description for COOs. It you are taking the role of mentor to the founder-CEO, you would likely report to the Board directly. Robert A. Adelson, Esq. COOs are most often seen as the executive who oversees all areas of operations, including production, marketing and sales, and research and development. 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. An experienced executive employment attorney can help you navigate the negotiations and help you protect your interests and career. Heads, plans, oversees, and coordinates the entire operation of an organization toward the achievement of established policies, goals, and operating objectives. Almost every compensation package includes consistent wages or salary. 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. If they do, you want to have your duties in writing and enforceable. 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. 5. Robert A. Adelson. Filter by location to see COO salaries in your area. I have represented C-Level and senior executives working for companies in Massachusetts and across the country. 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. 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. Similarly, the median S&P 1500 compensation increased from $2.2 million in 2012 to $2.4 million in 2013. Inside while the CEO is the Mr. Outside. Collaborates in the planning and formulation of organization policies and practices. 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 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. 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, CEO!andSeniorExecutive! Thus, even if you have excellent rapport with the CEO and a strong champion on the Board, things can change. Are you working in compensation or HR? per year. Your COO compensation package should include a signing bonus, equity and severance compensation. 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. The Components of a Compensation Package. 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 That would certainly be the case if you are hired in a turnaround situation and you achieve a level of success. All Posts; employment agreement; executive 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. Equity compensation is frequently the biggest part of a C-suite executive’s compensation package. That clause says that all prior or contemporaneous oral or written agreements or assurances are merged into the agreement. A compensation package is a summary of all the ways that a company directly or indirectly pays employees. Compensation!in!Private!Companies! COOs come in many varieties. In this situation, the COO complements the CEO. 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. A CEO with a $1 million salary may also receive a $700,000 bonus. 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. My recent article in CEOWorld on executive compensation packages is quite relevant to your COO package. ERI Economic Research Institute compiles the best salary, cost-of-living, and executive compensation survey data available. Contact me, executive employment agreement attorney, at rob@attorneyadelson.com or call 617-875-8665. To request a consultation, or learn more about my services, please call 617-204-5602, or fill out the form below. Taking this position, you likely should seek the types of signing bonuses specified in my article. This article was published in CEOWorld Magazine on May 28, 2019. Know your worth. 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. See our salary, cost-of-living, and executive pay applications in action. 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. 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. The national average salary for a COO is $142,523 in United States. 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. He graduated Northwestern Law School in Chicago, Law Review, and holds an LL.M. 3. 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. Get a free Salary Report tailored to your job title, experience and location. In terms of reporting structure, the COO employment agreement should state whether you would report to the CEO only or the Board and CEO. Inform your career path by finding your customized salary. 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. Below are the most recent chief operating officer salary reports. 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. 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. Oversees the design, operation, and improvement of the system that creates and delivers the organization's products or services. 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. Recent Salary Reports. He began as an associate at nationally prominent New York City mega law firms, Dewey Ballantine and Weil Gotshal & Manges. While some employers offer large compensation packages with more benefits, others offer minimal benefits and smaller compensation packages. Either way, the terms should be carefully spelled out. 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. 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. 2. $140,000. Time off, either paid o… The COO becomes the Mr. Executive Employment Lawyer. has been a corporate, tax and employment attorney since 1977. 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. 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. These compensation packages include salary, share-based awards, option-based awards, non-equity incentive plans, and “all other compensation.” Actual salaries are less. 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. The COO and CEO work very closely, and often complement each other. Thus, it is wise to include any key terms on which you rely to take this position. Total Reported Compensation: $102,210,396 Pay Ratio: 2,028 Mr. Bisignano was the second-highest paid chief executive in the country this year, … 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. Hence if a company underperforms, the executives typically receive … My recent article in CEOWorld on executive compensation packages is quite relevant to your COO package. The median S&P 500 compensation increased from $4.1 million in 2012 to $4.4 million in 2013. The severance terms that should be provided if your severance rights arise should include substantial severance pay (e.g. In this article four experts break down the key elements of compensation and explain how to put them together effectively. This compensation analysis is based on salary survey data collected directly from employers and anonymous employees in the United States. 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. Bonuses can vary, but a 25%-50% bonus range is standard, with some compensation packages exceeding 50% bonus. This position is nearly always the second highest paid position in the organization. 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. Report this post; Avinash Kaushik Influencer Follow 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. 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. Something special, including deferred compensation This has received a wide range of criticism leveled against it. degree in Taxation from NYU. Salary estimates are based on 264 salaries submitted anonymously to Glassdoor by COO employees. 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 About!the!Research! Compensation packages tend to vary by employer. If any of that bonus, say $500,000, does not … If possible, you might even obtain a seat on the Board where the company permits two management seats. If they do ask you for a number, be prepared, though - you can't play dumb forever. This may include a guarantee of regular increases based on the cost of living, time with the company, or the job performanceof the individual. … 4. As a general rule, the larger the corporation the larger the CEO compensation package. Short term incentive compensation. Conversely, a COO may be hired to mentor an inexperienced. Either way, the terms should be carefully spelled out. 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. Also relevant is my earlier CEOWorld article on Bonus Structure. How would this affect you? Benefits. Getting Buy-in: “Selling” Your Custom Compensation Package to the Company. For the duo to work well, there has to be trust and personal chemistry between them. 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. 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. Find out what you should earn with a customized salary estimate and negotiate pay with confidence. 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. 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. Here are the numbers: The COO fills a gap in the CEO’s knowledge, expertise, skills, management style or experience. On average, a Master's Degree is the highest level of education for a COO. 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. EXECUTIVESUMMARY! 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 … Therefore, though they include a basic salary, the fringe benefits they include often depend on the company and the specific position. 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. 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. 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. As the revenue of the company increases, and finance team size grows, so does the cash compensation component for most CFOs. In many cases, an annual bonus is nothing more than a base salary in disguise. Oversees and adjusts organization's processes and operations as necessary to ensure efficient and effective execution of policies and procedures. The average salary range for a COO is between $187,779 and $487,675 . How much does a COO make? Boston Law Office Map. 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. Fax: 617-204-5604 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. A Chief Nursing Officer in the Houston, TX Area area reported making $140,000 per year. The average pay for a COO is $301,113 a year and $145 an hour in the United States. As major economies show signs of recovering from the 2008 recession, compensation can become more decisive to retaining and motivating critical senior executive talent. Your COO compensation package should include a signing bonus, equity and severance compensation. 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. 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. 10 Key Elements of a Total Compensation Package Published on January 17, 2014 January 17, 2014 • 424 Likes • 67 Comments. “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. 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. 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