During the first few months of this year, CEO turnover has seen an 18% increase compared to the previous year, as reported by coaching firm Challenger, Gray & Christmas. The recent shake-ups in leadership positions include Roz Brewer stepping down from Walgreens Boots Alliance, the ousting of Planet Fitness' CEO Chris Rondeau by the board, and NPR's chief John Lansing announcing his departure at the end of the year. But it's not just CEOs who are experiencing frequent changes; several C-suite roles, such as CFOs, chief data officers, and CMOs, have also witnessed a high turnover rate, vying for the dubious distinction of having the shortest average tenure among C-suite jobs. Fortune has sought advice from top employment lawyers and leadership coaches on securing the best senior leader pay package, including a favorable severance agreement. Here are the insights they shared:
1. Find an experienced lawyer: Compensation packages can be complex, encompassing various components such as base pay, severance, signing bonuses, and performance payouts. Hiring an employment lawyer with expertise in C-suite compensation is essential. Look for someone with a positive track record and recent publications or quoted in the press, indicating their commitment to staying updated on details and relevant legislation.
2. Conduct thorough research: Whether you're a C-suite executive being recruited or transitioning to a new role, understanding market rates and industry standards is crucial when negotiating your pay package and severance. While your lawyer will have data to inform your decisions, it's also beneficial to conduct your own research, such as reviewing corporate filings on the SEC website (EDGAR) for public company compensation information. Aim for ambitious yet realistic expectations, recognizing that the CEO's salary may be the highest but significant compensation is still possible for CFO roles.
3. Let the company initiate discussions: Once adequately informed, set an acceptable pay range for yourself but allow the company to present the first offer to avoid undervaluing your worth inadvertently. Remember, in many states, it's now illegal for recruiters to inquire about your current salary and use it as a starting point. If asked, politely decline by expressing a desire for a concrete offer from the company to base negotiations on.
4. Be aware of bias: Women, especially women of color, should be aware of potential unconscious bias in salary negotiations. Advocate for yourself and ensure your lawyer or coach is attuned to the possibility of pay disparities compared to colleagues, particularly white men at similar levels. Studies have shown that women, particularly those in their 50s or older, are often less inclined to request higher pay or comprehensive perks, such as relocation assistance, loan forgiveness, or insurance benefits.
5. Equity is not cash: While equity can be an attractive component of compensation, executives should avoid overvaluing it and neglecting the importance of a competitive base salary. Equity is subject to volatility and may be worth less than anticipated by the time it vests, depending on market conditions, ownership changes, or the whims of private company founders. Negotiating an accelerated vesting schedule for stock options and ensuring their retention even in case of departure without cause can be beneficial.
6. Discuss severance with your lawyer: Planning for the possibility of job separation may feel uncomfortable, but it's crucial to address this topic with your lawyer. Some candidates entering the C-suite for the first time may feel awkward bringing up the subject, especially when focused on the excitement and opportunity the role presents. However, having a discussion about severance agreements is essential to ensure protection and clarity should the job not work out as anticipated.