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The 2013 BlueSteps Executive Compensation Report

2013 aesc-blue steps-executive-compensation-report

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Page 1: 2013 aesc-blue steps-executive-compensation-report

The 2013

BlueStepsExecutiveCompensationReport

Page 2: 2013 aesc-blue steps-executive-compensation-report

About BlueSteps.com BlueSteps.com is an online career management service for global senior executives. As an exclusive service of the Association of Executive Search Consultants (AESC), BlueSteps enables senior executives to make their career profile accessible to over 8,000 retained executive search professionals in more than 75 countries who are members of the AESC, and use the database as an additional resource in their candidate and source identification process. BlueSteps members can stay informed of executive job market trends and news via the BlueSteps Career Library and Blog, and use a variety of tools and resources to facilitate the successful management of their executive career path. For more information, please visit www.BlueSteps.com.

About The Association of ExecutiveSearch Consultants The Association of Executive Search Consultants (AESC) is the worldwide professional association for the retained executive search industry. The AESC promotes the highest professional standards in retained executive search consulting, broadens public understanding of the executive search process, and serves as an advocate for the interests of its member firms. For more information, or to download the AESC Code of Ethics and Professional Practice Guidelines, please visit www.aesc.org.

About Executive Search Connect The AESC also offers www.ExecutiveSearchConnect.com, a service for the HR community offering industry information and tools to assist with senior executive recruiting, including access to the AESC membership directory.

BlueSteps425 Fifth Avenue, 4th FloorNew York, NY 10016Phone: 1 (800) 363-1207Email: [email protected]: www.bluesteps.com

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The 2013BlueStepsExecutiveCompensationReport

Contents:

Page 4-5: Executive Summary

Page 6: About Our Study

Page 7-9: Survey Demographics

Page 10: Organizational Segmentation

Page 11-13: Base Salary

Page 14: Cash Bonuses

Page 15: Other Cash Compensation

Page 16-17: Total Compensation

Page 18: C-Suite Executive Salary

Page 19: Non-C-Suite Executive Salary

Page 20: Board Director Compensation

Page 21: Salary By Gender

Page 22: Salary By Region

Page 23: Salary By Industry

Page 24: Shares

Page 25: Executive Contracts

Page 26: Perquisites

Page 27: Compensation vs. Travel

Page 28: Work/Life Integration

Page 29: Long-term Incentives

Page 30: Satisfaction vs. Motivation

Page 31: Flexibility & Compensation

Page 32: Spending vs. Saving

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4 2013 BlueSteps Executive Compensation Report

Base Salaries - The NumbersThe 2013 BlueSteps Executive Compensation Report shows that the largest percentage (26.5%) of global executives (director-level) and above earn an annual base salary between $151K and 200K USD. Only 2.4% of global executives earn an annual base salary above $500K USD.

Total Compensation - Increases or Decreases?In the last fiscal year, almost half (44%) of executives reported an increase in total compensation while 40.1% saw no change in their total compensation. Only 16% of global executives reported a decrease in their total compensation in the last fiscal year.

Of those executives who reported an increase in total compensation in the last fiscal year, the greatest percentage (41.8%) reported an increase in the 1-5% range, followed by 26.6% of executives who experienced an increase of 6-10%. Only 9.9% of executives reported increases above 20%.

2013 Executive Compensation TrendsWhile almost half of executives did experience an increase in total compensation in the last fiscal year, many executives reported concerns about salaries not fairly commensurating with performance. One executive reported, “Markets have changed since 2008 and compensation is being deliberately managed downwards. Companies are moving towards leaner staffing, increasing the work load on executives without compensating for it.”

Long-term Incentives - Are They Effective?When asked if they are motivated to higher levels of performance by long-term incentives, 66.8% of global executives agreed that they are in fact motivated to higher levels of performance by long-term incentives, while one-third (32.1%) reported that they are not motivated by long-term incentives.

Cash Bonuses vs. Shares? When asked if cash bonuses or shares are more attractive, the overwhelming majority of global executives (88.1%) reported a preference for cash bonuses compared to the only 11.9% of executives who prefer shares.

How Much Are Executives Saving?The largest percentage (39.5%) of global executives reported saving 11-20% of their annual income, followed by 21.9% who reported saving 21-30% and 20.1% who save less than 10% each year. Only 18.4% of executives reported saving more than 30% of their annual compensation.

Executive Summary

The BlueSteps Executive Compensation Survey was conducted in September 2013 and received 778 responses from BlueSteps member executives worldwide, including 53% from the Americas, 35% from EMEA and 12% from Asia Pacific.

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5 2013 BlueSteps Executive Compensation Report

Salary Allocation - Where Are Executives Spending?The majority of executives reported family/general living expenses as their number one priority in the allocation of their annual compensation, followed by investments/shares as a second priority and real estate coming in third. Executives chose continuing education, followed by luxury items (cars, boats, etc.) and charitable donations as their lowest priorities in terms of overall annual salary allocation.

Executives’ Concerns About Compensation in 2013When asked what their greatest concerns are regarding the current state of executive compensation, global executives raised the following primary concerns: compensation does not represent executive performance, a lack of long-term incentives, economic slowdown impacting compensation, pay disparity between genders, industries and countries and limited raises. Here’s what some of them had to say:

“I am concerned with the disparity in compensation when you compare men and women doing similar jobs. In addition, Fortune 500 companies continue to reward CEOs with big salaries without the performance to match it.”

“My greatest concern is the public’s perspective that executive compensation is too high. Executives generally work significantly longer hours that are erratic, and at the same time open their families to the public eye which has a cost. Additionally, executives are increasingly held accountable for process failures that are the result of collusion of non-management employees. The risks are high and yet the increasing public perspective is that executives should be taxed more to pay their fair share and that there should be compensation caps. I feel that the American workforce continues to experience erosion due to a feeling of entitlement which decreases it’s overall competitive advantage.”

“After 25+ years in the electronics industry, industry opportunities at senior levels are very limited. While I have proven that my skills transferred very successfully to other industries, in general, I am overlooked as a candidate due to the electronics industry branding. Thus, electronics industry executive compensation has been curtailed by global forces. My compensation has been essentially flat for six years in spite of ever increasing skills and experience.”

“HR managers don’t understand the difference between performance & retention. Stocks are not to reward performance as they are a long term option, so they only work for retention. Cash bonuses do promote short term performance. As an executive, you already work extra hours every day, during vacations, etc. - you never fully unplug, so offering time off is just an illusion - meaningless. Offering less travel is a big deal, especially if you are traveling more than 30% of your time. It wears you out and should be compensated more. As always, upward mobility and the opportunity to grow are more important than compensation - ultimately compensation follows performance at a higher capacity.”

“I don’t understand why one’s current employer (who has known you for years and seen your solid performance) would not be willing to pay you as much as a new employer who does not have any track record with you. Companies essentially seem to force existing employees (oftentimes) to search for a new position in order to get a pay increase.”

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6 2013 BlueSteps Executive Compensation Report

About Our Study

Participants

778778 executives from around the world participated in the study

574 men97 women107 did not identify gender

183 public374 private28 nonprofit193 did not identify organization type

Gender

Sector

Title

53%35%

12%

86%

14%

31% 64% 5%

26%21%

15%7%

6%3%

SVP/EVP/VPDirector

CEOCFO

COOCITO

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7 2013 BlueSteps Executive Compensation Report

Regions of the World Represented by Survey Participants

Survey Demographics

42%

4%

4%

2%

3%

21%

5%

1%

4%

1%

3%

3%

1%

4%

2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

US

Canada

Latin America

Brazil

UK

Continental Europe

CEEC

Africa

Middle East

Russia

China

India

Japan

ASEAN

Australia/New Zealand

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8 2013 BlueSteps Executive Compensation Report

Industries Represented by Survey Participants

Survey Demographics

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9 2013 BlueSteps Executive Compensation Report

Survey Participants Working in Country of Nationality vs. Working as Expatriates

Survey Participants by Career Level

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10 2013 BlueSteps Executive Compensation Report

Executives by Size of Organization

Executives by Annual Revenue of Organization

Organizational Segmentation

The largest percentage (34%) of global executives reported being employed by organizations of more than 10,000 employees.

The majority (66%) of global executives reported that about 1-49 employees report to them as a manager. In addition, 13% of executives have 100-499 employees reporting to them. Only 11% of respondents have 500 or more employees reporting to them.

The majority (48%) of global executives are employed by organizations with annual revenue of $1 billion+ USD.

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11 2013 BlueSteps Executive Compensation Report

Base Salary Among Global Executives Last Fiscal Year (in $USD)

Base Salary

The greatest percentage (26%) of global executives earned annual base salaries in the $151-200K USD bracket in the last fiscal year. More than one in five (22%) global executives earned an annual base salary in the $201-250K USD bracket last fiscal year. Only 2.4% of global executives earned a base salary of more than $500K USD. None of the global executives surveyed earn base salaries of more than $1 million USD. There was no significant change in the most common base salaries compared to 2012 compensation results.

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12 2013 BlueSteps Executive Compensation Report

Fluctuation of Base Salaries Among Executives Last Fiscal Year

Base Salary

Base salaries among more than half (55%) of global executives increased in the last fiscal year. Base salaries remained the same (neither increased nor decreased) for more than one in three (40%) global executives in the last fiscal year. Only 5% of global executives experienced a decrease in their base salaries in the last fiscal year.

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13 2013 BlueSteps Executive Compensation Report

Increase of Base Salaries Among Executives Last Fiscal Year

Decrease of Base Salaries Among Executives Last Fiscal Year

Of those 55% of global executives who experienced an increase in their base salaries in the last fiscal year, the majority (58%) received an increase of 1-5%.

Of those 5% of global executives who experienced a decrease in their base salaries in the last fiscal year, the greatest percentage experienced a decrease of either 6-10%, 11-15% or 16-20% (each at 16%).

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14 2013 BlueSteps Executive Compensation Report

Cash Bonuses Among Global Executives Last Fiscal Year (in $USD)Excluding profit sharing payouts

Cash Bonuses

The largest percentage (37%) of global executives received total cash bonuses of less than $50K USD in the last fiscal year. Almost one in four global executives (24%) received total cash bonuses in the $51-100K USD range. More than one in four (26%) global executives received cash bonuses last fiscal year totaling more than $100K USD. 13% of global executives received no cash bonus in the last fiscal year.

Preference Among Global Executives for Cash Bonuses vs. Shares

The overwhelming majority (88%) of global executives prefer cash bonuses over shares.

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15 2013 BlueSteps Executive Compensation Report

Other Cash Compensation Among Global Executives Last Fiscal Year (in $USD)Including profit sharing from non-retirement plans, tax reimbursements, director’s compensationExcluding payments from retirement accounts and cash bonuses

Other Cash Compensation

68% of global executives received other cash compensation ranging from $0-25K USD in the last fiscal year. 22% received other cash compensation in the $26-100K USD range in the last fiscal year. 9% of global executives received other cash compensation totaling more than $100K USD.

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16 2013 BlueSteps Executive Compensation Report

Fluctuation of Total Compensation Among Executives Last Fiscal Year

Total Compensation

The majority of global executives (44%) experienced an increase in total annual compensation during the last fiscal year. Almost as many (40%) executives saw no change (neither an increase nor a decrease) in total annual compensation during the last fiscal year. More than one in ten executives (16%) experienced a decrease in total annual compensation in the last fiscal year. A significant amount of executives (56%) experienced stagnant or decreasing total compensation when compared to 2012. Last year, 42% of executives reported that their compensation decreased or stayed the same, which is 14% lower than this year’s results.

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17 2013 BlueSteps Executive Compensation Report

Increase in Total Compensation Among Executives Last Fiscal Year

Decrease in Total Compensation Among Executives Last Fiscal Year

Of those 44% of global executives who experienced an increase in total compensation in the last fiscal year, the greatest percentage (42%) experienced an increase of 1-5%.

Of those 16% of global executives who experienced a decrease in total annual compensation in the last fiscal year, the greatest percentage (22%) experienced a decrease of 1-5%. Compared to 2012, executives appear to be seeing slightly lower decreases in total compensation. Last year the majority of these executives experienced a 6-10% decrease.

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18 2013 BlueSteps Executive Compensation Report

18%

29%

19%

16%

6%

4%

3%

1%

2%

0%

0%

0% 5% 10% 15% 20% 25% 30% 35%

None

Less than $50K

$51K-100K

$101K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-1m

More than $1m

4%

10%

21%

23%

17%

16%

5%

2%

0%

0%

0%

0%

0%

0% 5% 10% 15% 20% 25%

Less than $100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

$901K-1m

More than $1m

C-Suite Executive Salary

$254,276 USD Average Global C-Suite Base Salary Based on annual base salaries of 208 executives in C-suite positions worldwide

Annual Base Salary for Global C-Suite Executives (CXO and President-Level)

Annual Bonus for Global C-Suite Executives (CXO and President-Level)

The largest percentage (23%) of global C-suite executives earn annual base salaries between $201-250K USD, followed closely by 21% who earn annual base salaries between $151-200K USD. The global average annual base salary among executives in the C-suite was $254,276 USD. The average C-suite executive salary has declined 8.8% when compared to 2012.

The largest percentage (29%) of global executives occupying positions in the C-suite earn annual bonuses of less than $50K USD. Less than one-fourth (19%) earn annual bonuses between $51K and $100K USD.

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19 2013 BlueSteps Executive Compensation Report

Non-C-Suite Executive Salary

$210,477 USD Average Global Non-C-Suite Base SalaryBased on annual base salaries of 285 executives in non-C-suite positions worldwide

Annual Base Salary for Global Non-C-Suite Executives (SVP, VP, Director-Level)

Annual Bonus for Global Non-C-Suite Executives (SVP, VP, Director-Level)

The largest percentage (30%) of global non-C-suite executives earn annual base salaries between $151-200K USD. The global average annual base salary among executives in non-C-suite positions was $210,477 USD. Average non C-suite executive salaries have increased 4.6% when compared to 2012.

The largest percentage (41%) of global executives occupying non-C-suite positions earn annual bonuses of less than $50K USD.

5%

17%

30%

24%

15%

6%

2%

0%

0%

0%

0%

0%

0%

0% 5% 10% 15% 20% 25% 30% 35%

Less than $100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

$901K-1m

More than $1m

9%

41%

28%

12%

6%

1%

1%

1%

0%

0%

0%

0% 10% 20% 30% 40% 50%

None

Less than $50K

$51K-100K

$101K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-1m

More than $1m

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20 2013 BlueSteps Executive Compensation Report

Board Director Compensation

Base Salary Among Global Board Directors Last Fiscal Year (in $USD)

The greatest percentage (80%) of global board directors earned annual base salaries of less than $100K USD in the last fiscal year. Only 20% of board directors surveyed earned $100K USD or more. None of the global board directors surveyed earn base salaries of more than $601K USD.

Cash Bonuses Among Global Board Directors Last Fiscal Year (in $USD)*Excluding profit sharing payouts

The largest percentage (79%) of global board directors received no cash bonuses in the last fiscal year. Of the board directors who did receive cash bonuses last fiscal year, 10% made less than $50K USD. 79% of global board directors received no cash bonus in the last fiscal year. Only 10% of global board directors received cash bonuses of $51K USD or higher. No board directors surveyed received more than $301K USD in cash bonuses last fiscal year.

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21 2013 BlueSteps Executive Compensation Report

13%

36%

25%

14%

6%

2%

2%

1%

1%

0%

21%

44%

16%

10%

4%

3%

0%

0%

0%

3%

None

Less than $50K

$51K-100K

$101K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-1m

Female % Male %

6%

13%

27%

22%

16%

11%

3%

1%

0%

0%

0%

7%

27%

21%

27%

8%

4%

3%

1%

0%

0%

1%

Less than $100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

Female % Male %

Salary By GenderAnnual Base Salary for Male and Female Senior-Level Executives

Annual Bonus for Male and Female Executives

On average, male executives made higher salaries than female executives in the last fiscal year. The majority (27%) of global female executives surveyed made between $100-150K USD or $201-250K USD. The majority (27%) of male executives surveyed made between $151-200K USD in the last fiscal year.

The largest percentage (44%) of annual cash bonuses for female executives was less than $50K USD in the last fiscal year. The majority (36%) of global male executives also received less than $50K USD in cash bonuses. Nonetheless, male executives received the majority of the bonuses above $51K USD.

$227,883 USD Average Male Executive Base Salary $205,808 USD Average Female Executive Base SalaryBased on annual base salaries of 454 male executives and 73 female executives.

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22 2013 BlueSteps Executive Compensation Report

Salary By Region

Annual Base Salary for Senior-Level Executives By Region

The majority (28%) of executives in the Americas surveyed made between $201-250K USD. The highest percentage (29%) of executives in EMEA surveyed made between $151-200K USD in the last fiscal year. Lastly, most executives in the Asia Pacific region (24%) made $201-250K USD.

$229,261 USD Average Americas Executive Base Salary $212,066 USD Average EMEA Executive Base Salary$243,642 USD Average APAC Executive Base SalaryBased on annual base salaries of 274 executives from the Americas, 188 executives from EMEA and 67 executives from APAC.

3%

12%

28%

28%

15%

11%

1%

1%

0%

0%

0%

0%

8%

19%

29%

15%

16%

7%

4%

1%

0%

1%

0%

0%

13%

15%

15%

24%

7%

12%

7%

4%

0%

0%

0%

1%

Less than $100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

$901K-1m

APAC% EMEA% Americas%

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23 2013 BlueSteps Executive Compensation Report

0% 20% 40% 60% 80% 100% 120% 140%

Less than $100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

$901K-1m

Less than$100K

$100K-150K

$151K-200K

$201K-250K

$251K-300K

$301K-400K

$401K-500K

$501K-600K

$601K-700K

$701K-800k

$801K-900K

$901K-1m

Financial Services % 3% 15% 20% 30% 17% 5% 8% 2% 0% 2% 0% 0%Industrial % 7% 8% 34% 30% 8% 7% 3% 1% 0% 0% 0% 1%Consumer % 10% 13% 15% 15% 25% 15% 3% 0% 2% 2% 0% 0%Tech/Telecoms % 5% 16% 32% 22% 12% 11% 2% 0% 0% 0% 0% 0%Healthcare % 4% 12% 24% 24% 16% 12% 2% 4% 0% 0% 2% 0%

Salary By IndustryAnnual Base Salary for Senior-Level Executives By Industry

Average Executive Base Salary by IndustryHealthcare/Life Sciences: $248,420 USDConsumer: $244,133 USDFinancial Services: $239,803 USDIndustrial/Manufacturing: $218,645 USDTechnology/Telecoms: $211,677 USD

Based on annual base salaries of 66 Financial Services executives, 107 Industrial executives, 60 Consumer executives, 82 Technology/Telecoms executives and 50 Healthcare/Life Sciences executives.

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24 2013 BlueSteps Executive Compensation Report

Percentage of Global Executives Required to Purchase a Definite Number of Stock Shares Through Payroll Deduction or Cash Outlay

Shares

Stock Options Offered to Global Executives by Their Organizations

Only 6% of global executives are required to purchase a definite number of stock shares through payroll deduction or cash outlay.

Restricted options are the most common stock options offered to global executives by their organizations.

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25 2013 BlueSteps Executive Compensation Report

Executives Employed Under an Executive Employment Contract

Items Included in Executive Contracts

Executive Contracts

Less than half (45%) of global executives are employed under the conditions of an executive employment contract.

Of the 45% of global executives who are employed under the conditions of an executive employment contract, the most common terms outlined in those contracts involve severance (69%), followed by minimum compensation guaranteed (58%) and housing/living expenses (30%).

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26 2013 BlueSteps Executive Compensation Report

Perquisites Offered to Global Executives by Their Organizations

Perquisites

The overwhelming majority (93%) of global executives receive mobile phones from their organizations of employment. Other perquisites commonly received by executives from their organizations include a company car or allowance (50%), relocation assistance (42%) and paid parking/reserved space (41%). Almost one quarter (24%) global executives receive auto/car insurance as a perquisite from their organizations of employment. 24% of global executives are offered executive physicals covered by their employers.

The perquisites actually used by global executives in the last fiscal year most commonly included mobile phone (93%), company car or allowance (47%) and paid parking/reserved space (34%).

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27 2013 BlueSteps Executive Compensation Report

Do Executives Feel Their Compensation is Proportionate to Their Travel Requirements?

Would Executives Accept a Pay Cutif it Meant They Would be Required to Travel Less?

Compensation vs. Travel

More than one-third (37%) of global executives do not feel that their travel requirements are adequately proportionate to their compensation.

Only one in ten (10%) global executives would accept a pay cut if it meant that they would be required to travel less.

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28 2013 BlueSteps Executive Compensation Report

Work/Life Benefits Offered by Organizations That Global Executives Value Most

Work/Life Integration

The most common and highly valued benefits include a flexible daily work schedule, followed by the ability to work from home/telecommute.

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29 2013 BlueSteps Executive Compensation Report

Long-term Incentives Received by Global Executives

Responses of Global Executives When Asked if Long-Term Incentives Motivate Them to Higher Levels of Performance

Long-term Incentives

Less than one-third (28%) of global executives receive stock options as part of a long-term incentives package.

The majority (67%) of global executives believe long-term incentives do motivate them to higher levels of performance.

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30 2013 BlueSteps Executive Compensation Report

Responses of Global Executives When Asked to Rate Their Satisfaction with Their Current Total Compensation

Satisfaction vs. Motivation

More than one-third (37%) of global executives are dissatisfied or very dissatisfied with their current total compensation.

Responses of Global Executives When Asked the Importance of Compensation in Motivating Them to Higher Levels of Performance

More than half (58%) of global executives consider compensation to be an important motivator of performance. Almost one-third (32%) ranked it as extremely important.

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31 2013 BlueSteps Executive Compensation Report

Benefits That Would Most Entice Executivesto Consider a Career Move Even if it Required a Pay Cut

Maximum Pay Cut Executives WouldAccept to Move toa More Ideal Job

Flexibility Regarding Compensation

More than half of global executives (55.9%) would be willing to make a career move for a better role/increased responsibility even if it meant a pay cut.

32% would consider a pay cut of 6-10% in order to move to a more ideal job.

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32 2013 BlueSteps Executive Compensation Report

Spending vs. Saving

Allocation of Annual Compensation by Global Executives

Percentage of Annual Income Saved by Global Executives

The largest percentage (40%) of global executives save 11-20% of their annual income. Less than one in five (18%) of global executives save more than 30% of their annual incomes.

2.82

3.41

5.49

1.8

3.57

4.61

5.61

0 1 2 3 4 5 6

Investments/Shares

Real estate

Luxury items: Cars, boats, etc.

Family/Living expenses

Vacations/Travel

Continuing education

Charitable donations Family/living expenses and real estate are given greatest priority by global executives in the allocation of their annual compensation. Charitable donations and luxury items are given the least priority by global executives in the allocation of their annual compensation. Executives ranked each allocation by importance from 1 to 5, with 1 being the most important.

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