Reasonable comp: What’s in a title?

BVWireIssue #205-2
October 9, 2019

executive compensation, reasonable compensation

When using the market approach to determine replacement compensation, very often you begin by asking somebody his or her title. “You may want to use that in benchmarking, but I would suggest you go beyond that because sometimes a title is not very descriptive,” says compensation consultant Stephen Kirkland (Atlantic Executive Consulting Group LLC). Someone might have the title of vice president or even CEO, but that might not really tell you what they do. Kirkland, speaking during a BVR webinar, related his experience with two commercial construction companies, one on the East Coast and one on the West Coast. Even though the companies were somewhat similar and both very successful, the two CEOs did very different things. One CEO devoted almost all of his time to quality control in the field on job sites, and the other CEO devoted almost all of his time to marketing and business development. “You need to be careful when you look at the title someone uses,” he says. “Maybe his title is CEO, but maybe he is really functioning more as a CFO, and maybe we need to benchmark him that way.” Kirkland presented a webinar, Reasonable Compensation for Closely Held Businesses + RCReports Demo, along with Paul Hamann (RCReports).
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