According to the “2005 Executive Compensation Report,” conducted by Specialty Consultants (SCI), Pittsburgh, salaries for executives at electrical contracting firms are on the rise.
In fact, the average annual increase for all positions covered in the firm's annual electrical contracting segment of the survey, including president, vice president/general manager, branch/department manager, vice president/director of business development, and chief estimator, was 7.67% higher than last year. For a look at base salaries for typical positions compiled from the survey as well as common incentive packages (cash bonuses paid on an annual basis, whether based on structured formulas or discretionary programs), see the Table.
The ranges presented in the survey results reflect actual cash compensation packages (base salary and annual incentives), with all figures rounded to the nearest thousand. The 50th percentile represents the median of all salaries reported for a given position. The minimum of the range is the 25th percentile (25% of salaries reported for a particular position fall below this level); the maximum of the range is the 75th percentile (25% of all salaries reported for that position are above this amount).
When comparing the results of this salary survey over the last four years, executive level base salary increases have remained consistent, says Daniel Pauletich, director of SCI, averaging roughly 5% growth per year, adding that the structure of incentive and bonus packages also have remained consistent.
“Typically profit and loss managers are having their compensation packages structured with ⅔ of the compensation package guaranteed in base salary and ⅓ allocated in a bonus package that is predicated upon hitting predetermined goals,” Pauletich says. “Executive profit and loss management positions typically have target bonuses of 50% of their base salary. There are often additional stretch goals that would enable them to earn up to 100% of their base salary, but the full 100% bonus is rarely achieved.”
A growing trend among privately held companies is the replacement of traditional 401K plans with profit sharing or deferred compensation plans, explains Pauletich. “By contributing a fixed percentage of all employees' salaries to a profit sharing plan, executives are capable of deferring a larger amount than can be allocated under a traditional 401K plan,” he says. “The bankruptcies and liquidation of several of the publicly traded electrical contracting corporations of the 1990s changed the way that many executives value stock options. Stock is now more commonly viewed as a personal investment than a lucrative portion of a compensation package.”
Another trend can be seen on the benefits front. “All companies are feeling the crunch of rising health-care costs and are being forced to pass the burden along to their employees,” Pauletich says. “Just 10 years ago it was common for companies to offer 100% company-paid family health-care coverage. The median today is to ask the employee to pick up 20% of the premium cost.”