View
244
Download
0
Category
Tags:
Preview:
DESCRIPTION
Audit Professionals Compensation Study
Citation preview
KORN/FERRY INTERNATIONAL
Internal Audit ProfessionalsCompensation Study 2004Internal Audit ProfessionalsCompensation Study 2004
Objectives and MethodologyObjectives and Methodology
KORN/FERRY INTERNATIONAL 3
Objectives
Analyze compensation trends among internal audit professionals
• Base pay amounts
• Mix of compensation components
• By experience level
Assess attitudes of internal audit professionals regarding theircompensation
Analyze the relationship between compensation levels, attitudes and the demographic characteristics of internal audit professionals
KORN/FERRY INTERNATIONAL 4
Methodology
Web survey of internal audit professionals from August 14 through September 10, 2004
• Study conducted by Korn/Ferry International
• Analysis performed by KPMG, L.L.P.
289 total respondents
Key FindingsKey Findings
KORN/FERRY INTERNATIONAL 6
Key FindingsCompensation Componentsand Practices
For more than 1/3 of respondents, their total compensation award is set by the CFO
2/3 have a base pay of at least $120K
Vast majority (88%) have bonus potential
• Nearly half have a target bonus of at least 26% of base pay
• Target bonus potential rises as base salary rises
Most receive other forms of compensation besides base and bonus
KORN/FERRY INTERNATIONAL 7
Key FindingsSatisfaction with Compensation
Most are satisfied with their compensation
• 63% are satisfied with their cash compensation
• 57% are satisfied with their total compensation
Respondents with higher base pays and target bonuses are more likely to be satisfied
• Respondents with low bonus (less than 25%) are about equally likely to be satisfied with their total compensation as respondents with no bonus
KORN/FERRY INTERNATIONAL 8
Key FindingsDifferences BetweenRespondent Groups
Base pay rises with internal audit experience
• However, target bonus percentage does not
• Satisfaction varies little by experience level; ‘>15 years’ are directionally less satisfied
Internal audit professionals at larger companies more likely to have:
• Higher base pay
• Higher target bonus
• Higher satisfaction, particularly with total compensation
KORN/FERRY INTERNATIONAL 9
Key FindingsDifferences BetweenRespondent Groups (cont.)
Internal base pay at public companies similar to privates; directionally lower at not-for-profits
• Much less bonus potential at not-for-profits; not much difference between public and private companies
Despite the lower compensation levels at not-for profits, satisfaction levels similar across company types
• Slightly less (directional) at not-for-profits on satisfaction with total compensation
KORN/FERRY INTERNATIONAL 10
Key FindingsProfessional Credentials
Vast majority are professionally credentialed
• Certified Public Accountant (CPA) and Chartered Accountant (CA) is the most common (67% of respondents)
• Internal Audit professionals with CPA/CA certification have only slightly higher (directional) base pay; very little difference in bonus opportunity
By company type, internal audit professionals differ in their professional credentials
Detailed FindingsDetailed Findings
KORN/FERRY INTERNATIONAL 12
For Over 1/3 of Respondents, Total Compensation AwardIs Set By CFO
39%
17%11% 10%
6% 6% 4%9%
0%
20%
40%
60%
CFO/Finance
CEO
Audit Committe
e
Exec.
Comm./Mgmt/O
wners
Chief Audit E
xecutiv
e/Gen
eral A
uditor
BOD / Compensa
tion C
ommittee
HR/VP of HR
Other
Note: Some respondents indicated multiple individuals with
responsibility for setting their compensation
Q13. My total compensation award is set by:
KORN/FERRY INTERNATIONAL 13
Over 2/3 Have Base Paysof At Least $120K
6%
14% 12%15%
20%27%
7%
0%
20%
40%
60%
Up to $7
5 000
$75 0
00 - $
99 99
9$1
00 00
0 - $1
19 99
9$1
20 00
0 - $1
39 99
9$1
40 00
0 - $1
74 99
9$1
75 00
0 - $2
49 99
9More
than $2
50 00
0
69% Note: Numbers do not add to 100%
due to rounding
Q9. My base pay is in the following range:
KORN/FERRY INTERNATIONAL 14
88% Have Bonus Opportunity;Nearly ½ Have a Target ofAt Least 26%
19%23% 21%
15%
5% 5%
12%
0%
20%
40%
60%
1 – 15% 16 – 25% 26 – 35% 36 – 50% 51 – 65% 65% plus No bonusopportunity
46%
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 15
Target Bonus Potential RisesAs Base Salary Rises
68%
14% 16%
39%
11%16%
51%
23%
9%1%
44%
6%
0%
20%
40%
60%
80%
100%
1-25% 26-50% More than 50% No bonus opportunity
Less than $120K $120K - less than $175K At least $175K
Note: Some numbers do not add to 100% due to rounding
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 16
Most Receive Other Formsof Compensation BesidesBase and Bonus
5%
2%
10%
19%
22%
24%
44%
70%
0% 20% 40% 60% 80% 100%
Other
Preferred shares
Discretionary cash
Long-term incentive plan
Deferred comp.
Restricted shares
Options
401(k) or 403(b) match
Q11. The following represent other forms of compensation that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 17
Most Common Benefits
7%
2%
4%
15%
55%
58%
80%
85%
87%
0% 20% 40% 60% 80% 100%
Other
Country club
Child care
Car/Car allowance
Retirement
Cell phone
Life insurance
Dental
Medical
Q12. The following represent benefits that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 18
By Company Type, ThereAre Significant Differences in Other Compensation Received
5%
3%
19%
25%
31%
62%
74%
0%
18%
21%
13%
51%
5%
0%
7%
14%
7%
0%
67%
10%
8%
15%
18%
0%
0% 20% 40% 60% 80% 100%
Other
Preferred shares
Discretionary cash
Long-term incentive plan
Deferred comp.
Restricted shares
Options
401(k) or 403(b) match
Public Private Not-for-profit
Q11. The following represent other forms of compensation that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 19
Differences in Benefits Received by Company Type
5%
2%
17%
48%
64%
81%
87%
88%
3%
10%
59%
72%
77%
85%
9%
2%
2%
9%
84%
40%
81%
84%
5%
56%
8%
10%
88%
0% 20% 40% 60% 80% 100%
Other
Country club
Child care
Car/Car allowance
Retirement
Cell phone
Life insurance
Dental
Medical
Public Private Not-for-profit
Q12. The following represent benefits that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 20
Most Are Satisfied with Their Compensation; Higher Satisfaction with Cash Component
63%
37%43%
57%
0%
20%
40%
60%
80%
100%
Yes No
Satisfied with cash compensation?Satisfied with total compensation?
Q7. Are you satisfied with your total cash compensation?Q8. Are you satisfied with your total compensation including cash options etc?
KORN/FERRY INTERNATIONAL 21
Respondents with HigherBase Pay Are More Likelyto Be Satisfied
52%
43%51%
77% 76%
59%
0%
20%
40%
60%
80%
100%
Satisfied with cash compensation Satisfied with total compensation
Less than $120K $120K - less than $175K At least $175K
Q7. Are you satisfied with your total cash compensation?Q8. Are you satisfied with your total compensation including cash options etc?
KORN/FERRY INTERNATIONAL 22
Respondents with <25% Bonus About Equally Likely to Be Satisfied As Those with No Bonus
47%
73%
46%
68%
0%
20%
40%
60%
80%
100%
Satisfied with total compensation
1-25% 26-50% More than 50% No bonus opportunity
Q8. Are you satisfied with your total compensation including cash options etc?
KORN/FERRY INTERNATIONAL 23
Base Pay Rises with Internal Audit Experience…
16% 17%
9%
14%
29%
7%
12%
20%16%
6%
0%
13%9%
15%
25%29%
9%7%
22%18%
6%
0%
20%
40%
60%
Up to $75,000 $75,000 -$99,999
$100,000 -$119,000
$120,000 -$139,999
$140,000 -$174,999
$175,000 -$249,999
More than$250,000
0 - 6 years 7 - 15 years More than 15 years
Percentage with base salary at or above $120K
0-6 yrs – 59%
7-15 yrs – 64%
More than 15 yrs – 78%
Note: Some numbers do not add to 100% due to rounding
Q9. My base pay is in the following range:
KORN/FERRY INTERNATIONAL 24
…But Target BonusPercentage Does Not
22%
14%17%
3%6%
19%
26%
15%
7% 6%
17%
25%21%
14%
5% 5%
14%
19%
5%
20%21%
0%
20%
40%
60%
1 – 15% 16 – 25% 26 – 35% 36 – 50% 51 – 65% 65% plus No bonusopportunity
0 - 6 years 7 - 15 years More than 15 years
0-6 yrs – 45%
7-15 yrs – 47%
More than 15 yrs – 45%
Percentage with target bonus above 25%
Note: Some numbers do not add to 100% due to rounding
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 25
Satisfaction Varies Little by Experience Level; ‘> 15 Yrs’ Are Directionally Less Satisfied
67%61% 59%59%
52%
64%
0%
20%
40%
60%
80%
100%
Satisfied with Cash Compensation Satisfied with Total Compensation
0 - 6 years 7 - 15 years More than 15 years
Q7. Are you satisfied with your total cash compensation?Q8. Are you satisfied with your total compensation including cash options etc?
KORN/FERRY INTERNATIONAL 26
IA Professionals at Larger Companies More Likely toHave Higher Base Pay…
Percentage with base salary at or above $120K
13%
26%
12%
21%
13%
0%
18% 19%
3%3%6%
9%
16%19%
34%
13%15%14%
28%
14%
5%
0%
20%
40%
60%
Up to $75,000 $75,000 -$99,999
$100,000 -$119,999
$120,000 -$139,999
$140,000 -$174,999
$175,000 -$249,999
More than$250,000
Up to $1 billion $1 billion to $5 billion > $5 billion
Note: Some numbers do not add to 100% due to rounding
Up to $1 billion – 46%
$1 billion to $5 billion – 68%
Larger than $5 billion – 82%
Q9. My base pay is in the following range:
KORN/FERRY INTERNATIONAL 27
…A Higher Target Bonus
34%
21%
10%
3%0%
19%
30%
10%
3%
12%
20% 21% 22%
8%10%
6%
13% 14%
2%
21%20%
0%
20%
40%
60%
1 – 15% 16 – 25% 26 – 35% 36 – 50% 51 – 65% 65% plus No bonusopportunity
Up to $1 billion $1 billion to $5 billion > $5 billion
Note: Some numbers do not add to 100% due
to rounding
Percentage with target bonus above 25%
Up to $1 billion – 26%
$1 billion to $5 billion – 36%
Larger than $5 billion – 61%
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 28
…And Higher Satisfaction, Particularly withTotal Compensation
57%
44%
56%
66% 65%63%
0%
20%
40%
60%
80%
100%
Satisfied with cash compensation Satisfied with total compensation
Up to $1 billion $1 billion to $5 billion > $5 billion
Q7. Are you satisfied with your total cash compensation?Q8. Are you satisfied with your total compensation including cash options etc?
KORN/FERRY INTERNATIONAL 29
IA Base Pay at Public Cos. Similar To Privates;Lower for Not-for-Profits
5%
12%15%
22%
27%
8%
18%15%
10%12%
19%
12%
19%
14%
23%
2%
11% 10%
29%
10%8%
0%
20%
40%
60%
Up to $75 000 $75 000 - $99999
$100 000 -$119 999
$120,000 -$139,999
$140,000 -$174,999
$175,000 -$249,999
More than$250,000
Public Private Not-for-profit
Public – 72%
Private – 64%
Not-for-profit – 58%
Percentage with base salary at or above $120K
Note: Some numbers do not add to 100%
due to rounding
Q9. My base pay is in the following range:
KORN/FERRY INTERNATIONAL 30
Much Less Bonus Potential atNot-for-Profits; Not Much Difference Between Public/Private
18%
25%
17%
6% 7%5%
18%
23%
5%
10%
21%16%
10%
2% 2%0%
49%
22%
3%
23%
18%
0%
20%
40%
60%
1 – 15% 16 – 25% 26 – 35% 36 – 50% 51 – 65% 65% plus No bonusopportunity
Public Private Not-for-profit
Percentage with target bonus above 25%
Public – 52%
Private – 54%
Not-for-profit – 14%
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 31
Satisfaction Similar Across Company Types; Slightly Less (Directional) For Not-for-Profits
64%58%
62%58%
47%
59%
0%
20%
40%
60%
80%
100%
Satisfied with cash compensation Satisfied with total compensation
Public Private Not-for-profit
Q7. Are you satisfied with your total cash compensation?
KORN/FERRY INTERNATIONAL 32
Vast Majority AreProfessionally Credentialed;CPA/CA is the Most Common
67%
34%
18%11%
5%
16%
0%
20%
40%
60%
80%
100%
CPA/CA CIA/MIIA AICPAcredential
CISA CCSA/CGAP/CFSA
No Response
Only 16% did not indicate
any credentials
Q6. I have the following professional credentials:
KORN/FERRY INTERNATIONAL 33
IA Professionals with CPA/CA Have Only Slightly HigherBase Pay (Directional)
5%
12%15%
20%
28%
8%
17% 16% 18%
6%11%
24%
13%7%
0%
20%
40%
60%
Up to $75,000 $75,000 -$99,999
$100,000 -$119,999
$120,000 -$139,999
$140,000 -$174,999
$175,000 -$249,999
More than$250,000
Professionals with CPA/CA Others
Note: Some numbers do not add to 100%
due to roundingCPA/CA – 71%
Others – 64%
Percentage with base salary at or above $120K
Q9. My base pay is in the following range:
KORN/FERRY INTERNATIONAL 34
Very Little Difference inBonus Opportunity Based on CPA/CA Certification
18%
25%
16%
5% 5%
12%
19%15%
5%
11%
19%
5%
23%22%
0%
20%
40%
60%
1 – 15% 16 – 25% 26 – 35% 36 – 50% 51 – 65% 65% plus No bonusopportunity
Professionals with CPA/CA Others
Percentage with target bonus above 25%
CPA/CA – 45%
Others – 48%
Q10. My target bonus opportunity as a percentage of base pay is:
KORN/FERRY INTERNATIONAL 35
By Company Type, IA Professionals Differ in Their Professional Credentials
70%
30%
13%
5%
13%
28%
5% 8%
31%
67%
53%
23%
7%2%
12%17% 18%
51%
0%
20%
40%
60%
80%
CPA/CA CIA/MIIA AICPA credential CISA CCSA/CGAP/CFSA
No Response
Public Private Not-for-profit
Q6. I have the following professional credentials:
APPENDIXDemographic Profiles of
Survey Participants
APPENDIXDemographic Profiles of
Survey Participants
KORN/FERRY INTERNATIONAL 37
Respondents by Length of Internal Audit Experience
4 - 6 years13%
7 - 10 years17%
More than 15 years39%
0 - 3 years11%
11 - 15 years20%
Q1. How many years of experience in internal auditing do you have?
KORN/FERRY INTERNATIONAL 38
Respondents by InternalAudit Industry Experience
10%
6%
15%
20%
22%
24%
25%
26%
33%
38%
0% 20% 40%
Other
Education
Not-for-profit/Government
Energy
Services
Technology
Healthcare
Consumer/Retail
Financial
Industrial/Manufacturing
Note: Does not add to 100% because some respondents are in multiple categories
Q2. My internal audit experience has been in the following industry sectors (select all that apply):
KORN/FERRY INTERNATIONAL 39
Respondents by Company Size
$500 million - $1 billion10%
$5 – 10 billion15%
Up to $500 million13%
No answer2%
Larger than $10 billion29%
$1 – 5 billion31%
Q3. What is the size of your current organization?
KORN/FERRY INTERNATIONAL 40
Respondents by Company Type
Q4. My organization is:
Private13%
No answer4%
Public68%
Not-for-profit15%
KORN/FERRY INTERNATIONAL 41
Respondents byReporting Relationship
5%
10%
1%
2%
2%
7%
7%
10%
17%
39%
0% 20% 40% 60%
No answer
Other
Controller
General Counsel / Legal
President/CEO
A direct report to Chief Audit Executive
Dual Reporting - Audit Comm. & a Comp. Exe
Chief Audit Executive
CFO
Audit Committee
Q5. In my internal audit role today I report to:
APPENDIXAdditional Analysis
APPENDIXAdditional Analysis
KORN/FERRY INTERNATIONAL 43
Other Forms of Compensation Received Similar Across Experience Levels
4%
3%
30%
43%
2%
20%
22%
44%
74%
8%
2%
7%
20%
26%
21%
71%
14%
14%
64%
14%
24%
10%
3%
43%
0% 20% 40% 60% 80% 100%
Other
Preferred shares
Discretionary cash
Long-term incentive plan
Deferred comp.
Restricted shares
Options
401(k) or 403(b) match
0 - 6 years 7 - 15 years More than 15 years
Q11. The following represent other forms of compensation that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 44
Retirement Benefits More Common Among Highly Experienced; Other Benefits Similar
16%
6%
4%
4%
15%
60%
54%
87%
89%
86%
81%
77%
57%
48%
12%
6%
0%
4%
86%
85%
79%
55%
2%
63%
5%
8%
83%
0% 20% 40% 60% 80% 100%
Other
Country club
Child care
Car/Car allowance
Retirement
Cell phone
Life insurance
Dental
Medical
0 - 6 years 7 - 15 years More than 15 years
Q12. The following represent benefits that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 45
Differences in Certifications Based on Years of InternalAudit Experience
65%
23%
1% 1%
26%
35%
12%
2%
17%
40%
14% 17%11% 9%
29%
15%
66%68%
0%
20%
40%
60%
80%
100%
CPA/CA CIA/MIIA AICPAcredential
CISA CCSA/CGAP/CFSA
No Response
0 - 6 years 7 - 15 years More than 15 years
Q6. I have the following professional credentials:
KORN/FERRY INTERNATIONAL 46
Some Differences by Company Size in Other Forms of Compensation Received
9%
2%
22%
2%
41%
76%
6%
2%
9%
29%
28%
31%
6%
7%
31%
62%
12%
14%
25%
17%
10%
1%
72%
54%
0% 20% 40% 60% 80% 100%
Other
Preferred shares
Discretionary cash
Long-term incentive plan
Deferred comp.
Restricted shares
Options
401(k) or 403(b) match
Up to $1 billion $1 billion to $5 billion > $5 billion
Q11. The following represent other forms of compensation that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 47
Comparison in Benefits Received by Company Size
2%
63%
85%
89%
7%
2%
4%
21%
59%
63%
87%
89%
3%
2%
6%
41%
47%
71%
81%
85%
3%
13%
89%
61%
7%
8%
84%
0% 20% 40% 60% 80% 100%
Other
Country club
Child care
Car/Car allowance
Retirement
Cell phone
Life insurance
Dental
Medical
Up to $1 billion $1 billion to $5 billion > $5 billion
Q12. The following represent benefits that I receive (select all that apply):
KORN/FERRY INTERNATIONAL 48
Little Difference in Professional Certifications by Company Size
63%
29%
7%3%
24%
39%
13%7% 6%
67%
34%
16%13%
5%
19%16%
22%
69%
0%
20%
40%
60%
80%
CPA/CA CIA/MIIA AICPA credential CISA CCSA/CGAP/CFSA
No Response
Up to $1 billion $1 billion to $5 billion > $5 billion
Q6. I have the following professional credentials:
KORN/FERRY INTERNATIONAL 49
Closing Thoughts
Are those who are new to their roles earning more money than career internal audit professionals?
Should CAEs receive bonuses? Stock options? Or should they be compensated on a purely cash basis?
How are internal audit professionals compensated, compared to CFOs, treasurers and other senior finance executives?
KORN/FERRY INTERNATIONAL 50
Feedback
If you have suggestions for the 2005 survey, please contact:
Charles B. EldridgeSenior Client Partner
Managing Director, Financial Officers PracticeKorn/Ferry International
+ 1 404 222 4012chuck.eldridge@kornferry.com
KORN/FERRY INTERNATIONAL
Internal Audit ProfessionalsCompensation Study 2004Internal Audit ProfessionalsCompensation Study 2004
Recommended