Negotiating Executive Compensation

In my 20 plus years of executive search experience, I have worked on hundreds of C-level assignments and navigated countless compensation negotiations through the “offer stage”. Here are 5 tips for executive candidates to keep in mind when closing the deal:

  1. Think like an owner. Value long-term awards and creating value over time as the key drivers for your compensation. Forgoing cash for more equity sends a strong message of leadership and “buy-in” to the board and/or C-suite. This indicates you are committed to the future success of the company and have confidence in the value creation you can drive. If the opportunity is available and you are in a position to do so, ask to purchase stock on your own beyond the equity grant or put your own money in the PE or VC round of financing. 

  1. If you negotiate, go one turn and then accept the counter offer. There is nothing wrong with accepting the initial offer if you believe it is strong and it meets your expectations. Yes, you may be able to negotiate marginal percentage points higher in base, bonus, equity, or sign-on, but do not underestimate the momentum of a positive, team oriented start. In my experience, one round of tweaks or negotiations is common, but if you push beyond that, it is generally poor form. 

  1. Communicate your compensation expectations to the company and/or recruiter prior to receiving the formal offer.  Many candidates think they are weakening their bargaining power by sharing expectations. They think keeping things “close to the vest” until the actual negotiations will provide the best outcome, but this can work against them. If the company is not clear on the expected compensation range, they may low-ball the candidate at offer stage (often a red flag for a dysfunctional company culture). Ultimately, the deal needs to be compelling for both the candidate and the company. Lack of communication of expectations prior to the formal offer stage can undermine the deal and be perceived as unprofessional. 

  1. Share your current and past compensation with the recruiter and company if they ask. Note, it is now illegal in a number of states to ask a candidate’s compensation. In the states where it is legal, withholding this information is regarded as a lack of understanding of how executive deals are structured. As executive recruiters, we are not asking your previous compensation history to lessen your negotiating power. We are asking these questions to ensure the best fit for both you and the company in an effort not waste either party’s time. For example, if your base salary is $400,000, you will ultimately not take a job offering a $275,000 base. There are exceptions, but in my 500+ executive searches over two decades, candidates are rarely willing to take pay-cuts in cash compensation. A candidate squeezing into a role with less than ideal compensation, usually means the role is not the right fit and the candidate leaves the company within 24 months. The exceptions tend to be candidates who forgo cash for more equity, aligning with point number 1. 

  1. Focus your identity as an executive on the value you create, not being the highest paid in your industry. Value creators are discovered and rewarded over time – keep this in mind in negotiations. You want to exceed the expectations of the CEO and board and create value and wealth for everyone in the organization. The experience of doing this is far more valuable, fulfilling, repeatable, and lasting than a certain base salary or sign-on bonus. 

Interested in more career advice? Sign-up for Lead5 and take advantage of the free career consultation plus gain more insight, intel and career tips from the Lead5 Community.

Executive Outlook – June 2021

Market Returning to Normal Seasonal Hiring Patterns in Executive Openings and Executive Appointments

Lead5 tracks executive openings and executive appointments for leading US based companies. Analysis for Lead5 April and May 2021 data shows executive openings down 11% compared to Q1 2021. This is the normal seasonal exec hiring pattern as January through March and September through November historically show higher levels of executive hiring. The market has bounced back to this normal pattern, for example YOY comparison with the effects of Covid the market last year was down 24% for the same time period. Executive appointments for April and May held steady down just 3% compared to Q1 2021 vs the YOY comparison which was down 20% last year.

How does this translate for executives actively or passively seeking new opportunities? The market is solid and has bounced back into a historical pattern of executive search flows. The summer months will yield less activity leading to more active openings and appointments in the fall months of late Q3 and early Q4.

Now is the time to research and prepare a pro-active strategy for your next executive career move. Join Lead5 today to stay connected to ever-changing market intel from the Lead5 community. Familiarize yourself with the Indicators of Management Changes, How to Best Approach Executive Recruiters, How to Best Approach In-House Corporate Recruiters, and Sample Email Templates to Send Direct to Hiring Managers.

Executive Outlook – April 2021

Increasing activity for Q1 2021 for Executive Openings and Executive Appointments

Lead5 tracks executive openings and executive appointments for leading US based companies. Analysis for Lead5 Q1 data for 2021 shows a 17% increase quarter-over-quarter in executive openings and a 28% increase quarter-over-quarter in executive appointments. Year-over-year Lead5 shows executive openings still down 27% from Q1 2020 data, but we are seeing a steady climb back up from the low point of Q3 2020 off of Covid shutdowns where executive openings were down over 40%.

What does this all mean for executives actively or passively seeking new opportunities? The market has upward momentum and looks to continue climbing in terms of openings and appointments. Now is the time to stay connected and pro-active on what is happening in the market for executive opportunities. Familiarize yourself with the Indicators of Management Changes and join the Lead5 community to share insights and gain market intel from fellow members.

Introducing the New Lead5 Corporate Executive Recruiter Database

One major trend of the executive search industry over the last two decades is the increased flow of consultants from the major firms (Korn/Ferry, Heidrick, Spencer Stuart, & Russell Reynolds) to in-house executive recruiting roles within companies, PE firms, and VC firms. The takeaway for the candidate is more senior level leadership positions are being actively sourced and placed directly by the company or financial sponsor. Add the Covid-19 lockdowns and an increased corporate view on cost cutting and you have a scenario entering 2021 where, more than ever, companies are directly recruiting executives and bypassing the retained search firms.

With this trend in mind, Lead5 has built and launched a corporate executive recruiter database that our members have access to and the Lead5 community continues to enhance. Log in to Lead5, click on Community, then People, scroll down and select the Corporate Recruiters tab and use the Lead5 filters to identify the gatekeepers to leadership hiring for thousands of companies including contact details.

Remember, you have a green light to send your resume directly to these in-house executive recruiting professionals and the goal is ensuring your information is updated in the company or PE firms’ executive ATS (Applicant Tracking System). In addition, you want to make the networking connection with the in-house team to keep you informed of current and future leadership openings.

One Lead5 member built a targeted list of companies specific to his industry sector and experienced a 70% response rate to direct outreach to in-house recruiters. This method yields a much higher response than contacting retained recruiters or C-level execs – why? Because the in-house recruiters number one priority is to evaluate external talent and build a bench of current and future available talent for the organization. Remember, retained recruiters number one priority is the hiring company, not the candidate!

Want to learn more? Join the market discussion on Lead5 here:

https://lead5.com/community/forums/posts/241182

Review sample emails for direct outreach here:

https://blog.lead5.com/how-to-best-approach-executive-recruiters/

https://blog.lead5.com/how-to-send-a-strong-intro-email-to-a-ceo/

 

 

Executive Hiring Doubled from Q2 to Q4 Based on Lead5 Member Analysis

Lead5 analysis of executive members who indicated they landed a new position has increased 98% from Q2 to Q4 in 2020. The increase from Q2 to Q3 was 40%. This is consistent with the pent-up demand from the predominate lockdown months of April through June and is a good signal for a continued uptick in executive hiring to carry through Q1 2021 and beyond. We will continue to monitor these leading indicators from Lead5 data.

Lead5 is the fastest growing executive community for exchanging hidden opportunities, intel, and career advice.

See what Lead5 members are saying about the market and join the conversation:

https://lead5.com/community/forums/posts/241182

How to Best Approach Executive Recruiters

One of the most frequently asked questions from members of Lead5 is how to approach executive recruiters. We have put together a sample email at the end of this blog that we hope is helpful, but let’s also highlight five key points to remember when connecting with search firms:

1. Understand the retained search business model. Lack of understanding of how retained executive search firms operate is the first clue you are not an experienced executive. Retained firms only work for companies – the hiring company is the client. The candidates are a commodity. We as search professionals try not to treat the candidates like a commodity, but the business model is structured in a way that, more often than not, leaves the candidate sensing this dynamic

2. You have a green light to send your resume directly to executive search firm consultants, but make sure you are doing your research. Every firm has partners and principals who recruit for specific industry sectors and functional roles. Determine the best contact by reviewing bios to ensure there is a match between your experience and the partner’s coverage area. The Lead5 recruiter database is a go-to resource for this research. There, you can quickly pinpoint the right targets using your My5 filters.

3. Most executives conducting an active job search connect with 5 to 7 retained search firms, typically with recruiters that have approached them in the past. This is fruitful, but candidates should send their resume to 25 to 30 plus search firms, given the executive search industry is highly fragmented beyond the top 4 to 5 firms. Take the time to complete the research necessary to make sure you are in the “flow” of available opportunities for your industry/function.

4. If you do not hear back from a retained executive recruiter to whom you have sent your resume, do not worry. The first priority is having your resume updated and marked in the proprietary database of the search firm as interested in opportunities. All search firms have a process to update resumes in the database and mark you interested for a 6-to-12-month time frame. In some cases your name is actually highlighted within the system. The baseline is to market yourself to 25 to 30 search firms by having your profile activated in the database. If the particular search consultant you reach out to has an active search that is a fit, they will reach out to you. Otherwise, you are a “seeker candidate” and the best path for a seeker candidate is to get tagged in the system so the entire firm can query and have access to your resume.

5. Personalization is key. If I recruit Chief Marketing Officers and a Chief Technology Officer reaches out, it is not a good look. Do your homework, as 15 to 25 highly targeted, thoughtful notes to search consultants who cover your areas of expertise by industry and function is much more effective than the spam blanket email sent to 100 recruiters. Start with the recruiters/firms you know and expand out with direct outreach to the firms who need to know you.

 

Sample Email to Retained Executive Recruiters

Hi Susan,

Good afternoon. I am a senior HR executive with over 20 years of experience in the consumer products and industrial services sectors. I am aware that you specialize in the HR center of expertise for SmithThompson Search and I’m currently actively seeking out my next role. I would welcome the opportunity to discuss my background further at your convenience and I would also appreciate getting marked as active/interested in your firm’s database.

I’ve attached my resume, but my work experience includes the last four years as CHRO of Virtue Products, a PE backed, middle market global consumer company based in Phoenix, AZ.  I previously spent 8 years with Danson Corp, the publicly traded large cap environmental services firm where I served in a variety of divisional and corporate HR leadership positions. I have an undergrad in management from the University of Wisconsin, and an MBA from Notre Dame. Given the right opportunity and location, we would be open to relocation from our current home base in Arizona.

Please let me know if there is any additional information I can provide and thanks in advance for your time.

Best Regards,

Joe Sample

 

 

Executive Outlook – September 2020

On September 4, the U.S. Bureau of Labor Statistics reported that unemployment has continually declined since the jobless peak spurred by the covid-19 lock down measures in March.  Lead5’s recent analysis of executive appointments shows a gradual improvement in the c-level job market, and we will continue to monitor and report on these trends as executive hiring is historically an early indicator of overall employment.

A discussion point in the Lead5 Executive Community is what executives should be doing now to increase their marketability.   The good news is that there are proactive measures that executives can deploy that are proven to be effective in any market.   The key is developing an action plan and sticking to it.

Executives: Be Proactive and Discover New Opportunities

See what Lead5 members are saying about the market and join the conversation:

https://lead5.com/community/forums/posts/241182

The Executive’s Career Strategy for the Current Economic Climate – March 2020

March 2020 – Special Report

The Executive’s Career Strategy for the Current Economic Climate

Josh Wimberley, founder and CEO of Lead5 here.  I wanted to provide a mid-month update given the unprecedented nature of the last two weeks. As you can see from Lead5 metrics, there is a sharp decline in executive opportunities and PE deals, accelerating the trend revealed by February’s data. I’ve been receiving phone calls from executives who I have assisted over the span of my career, and a lot of our conversations have revolved around the appropriate career strategy during the near-term economic slow-down. I decided to compile and disseminate this information in the hope that it will be valuable to you.

  • If you are in the market seeking opportunities, you can expect opportunities to be frozen or put on-hold and a continued slowdown in executive hiring. My advice is to use this period as an opportunity to undergo some introspection on your career and your marketability and perform some important research steps that will give you increased leverage in the marketplace.
  • Polish your CV. Many executives wait too long to do this so don’t be caught off-guard when the next opportunity arises.
  • Network. During economic turmoil, it can be challenging to network with members of the C-suite; however, corporate in-house recruiters are prime candidates for your outreach. Remember, you have a green light to reach out directly to corporate executive recruiters in the same manner you reach out to traditional executive recruiters (contact information for these in-house corporate recruiters can be found with their respective companies in the Lead5 Company database).
  • Research Companies. I have helped executives land positions with great firms that they never knew existed in their industries and preferred locations. Part of our mission at Lead5 is unveiling this information and I encourage you to start building your company list today. This puts you in the driver’s seat so that you are no longer waiting on a recruiter’s phone call.
  • Career Consultation. This is a complimentary and confidential session where all career questions are welcomed. To set that up, you can email me directly at josh@lead5.com

I hope this blog is useful to you as you navigate these extraordinary times and I wish you and your family safety and good health. If I can be of service, please don’t hesitate to reach out at josh@lead5.com.

Sincerely,

Josh

Josh Wimberley | Lead5 Founder and CEO | josh@lead5.com

Boost Your Executive Opportunities by 200%

Boosting your executive opportunities by 200% is easier than you think.

Are you an executive who is seeking ways to increase your market exposure?   The good news is that it’s easier than you think.   From placing top executives in leading firms for over two decades, here is a trap to avoid and a tactic that is proven to work:

  • Trap to avoid: many execs I consult with rely solely on their own professional network to seek new opportunities or they select a few executive recruiters they have come in contact with over the years.  While it’s smart for you to tap into this network, you must realize that this represents only a small fraction of available opportunities.
  • Best method: I emphasize to my executive clients the need to be proactive.  This means researching and discovering the companies and opportunities that fit your background and marketing yourself directly to those company’s key contacts. It also means marketing yourself to the relevant industry or functional practice sector consultants at all the major, regional, and boutique executive search firms, not just the select firms you know from the past.
  • How can you start today? My company Lead5 offers comprehensive lists of companies that you can filter by position, region, company size, industry, and ownership structure.  This list, combined with Lead5’s intel of executive departures, yields companies that are strong candidates for your outreach. Lead5 also maintains an executive recruiter database of the leading US-based retained search consultants for firms of all sizes, sortable by the Lead5 filters.
  • Start small, think big. If you deployed this proactive methodology, even sending only one outreach per week, you are exponentially increasing your chances of being discovered.

To wrap this up, I encourage you to take a proactive role in your career.   This is the best way to maximize your value in the marketplace.  I see too many executives waiting on a phone call from a recruiter or over-relying on their own professional network.   By expanding your comfort zone, you are positioning yourself for career growth and stability.

How to Send a Strong Intro Email to a CEO

Connect to a CEO

As an executive candidate you need to be aware of the “numbers” of a typical retained executive search where the search firm over a 90 day time frame may interview/screen as many as 40+ qualified candidates. In contrast, when you connect with a CEO or other recommended hiring contact of a company when the news breaks of an opening, there are times when companies work their own network to see if they can interview quick hits for the position without going the full retained search route. In this case, if you are qualified for the position, you are one of 4 or 5 as opposed to 1 of 40 in the typical 150 day exec search.

The Lead5 view is to pursue all angles (direct and through exec recruiters) to maximize your flow of awareness of available opportunities and obtain a greater understanding of the dynamics at play behind the recruiting process.

In summary, at times a position warrants a quicker fill time with best athlete available vs. the “take our time” 150 day full due diligence process. Lead5 is built to create awareness, leads, and ultimately connections for both types of openings. Below are sample emails Lead5 recommends you send to CEOs and other recommended hiring contacts in various scenarios, along with commentary in BOLD italics.

Sample Note to for CEO Opportunity

Hi Carol,

Good afternoon. I recently became aware of the CEO opening at ComTech. I would like to confidentially submit my credentials to the search committee. I am an experienced executive officer most recently with (insert current company, a $x billion market cap publicly traded insert industry sector/brief description of your current/most recent company). I am actively seeking out my next executive career opportunity and we are open to relocation. Please find my attached resume and I would welcome the opportunity to confidentially discuss the position. (Also consider adding a line or two about your combination of experiences over the last 5 to 7 years leading large teams, driving P&L, working in a related biz model, etc. that might relate to the particular company)Thanks in advance for your time.

A note that is efficient/to-the-point they can read in less than 30 seconds and have a good summary understanding of your skill set is best – they can always click on and read your resume if they want more information.

Best Regards,

Jason Candidate

Sample Note to CEO for Potential CHRO Opportunity

Robert,

Good afternoon. I recently became aware of a potential CHRO opening at your company. I am an experienced CHRO most recently with Smith Corporation, a $5 billion market cap publicly traded industrial manufacturer (or best description of your most recent company). I am actively seeking out my next executive career opportunity and we are open to relocation. Please find my attached resume and I would welcome the opportunity to discuss the position if it remains available. Also consider adding a line or two about your combination of global manufacturing, leading large teams, process improvement, etc. that might relate to the particular company – i.e. “I have 15 plus years of experience leading the HR function for global manufacturers that would be highly relevant to Smith Corporation. Thanks in advance for your time.

A note that is efficient/to-the-point they can read in less than 30 seconds and have a good summary understanding of your skill set is best – they can always click on and read your resume if they want more information.

Best Regards,

Elizabeth Candidate

Sample Note to companies you are targeting with newly appointed CEO’s

Catherine,

Good afternoon. Congratulations on your appointment to NewCo Corporation as CEO. I wanted to make a brief introduction. I am an experienced Chief Human Resources Officer most recently with Smith Corporation, a $5 billion market cap publicly traded industrial manufacturer. I am actively seeking out my next executive career opportunity and we are open to relocation. Please find my attached resume and I would welcome the opportunity to confidentially discuss available leadership positions that may be open in your company. NewCo Industries is a company I have targeted for my career search given the similarities in business model and industry sector to my career experience. Thanks in advance for your time.

Best Regards,

Joseph Candidate

Sample Note to Private Equity Partners or CEO’s of PE backed companies that are the result of a recent/relevant PE deal

Robert,

Good afternoon. Congratulations on the recent deal of NewCo Corporation’s recapitalization with MountainTop Capital. I wanted to make a brief introduction. I am an experienced Chief Human Resources Officer most recently with Smith Corporation, a $5 billion market cap publicly traded industrial manufacturer. I am actively seeking out my next executive career opportunity and we are open to relocation. I am interested in pursuing HR leadership roles with private equity backed middle market companies in the industrial and consumer products sectors. Please find my attached resume and I would welcome the opportunity to confidentially discuss an HR leadership position if it becomes available with this new investment/growth phase for NewCo Corporation. Thanks in advance for your time.

Best Regards,

Elizabeth Candidate