Latest / Executive Careers with Fexingo: VP, C-Suite, and Senior Leadership Career Strategy / How Senior Leaders Manage Their Own Compensation Benchmarks
Transcript
- Lucas: A former Fortune 500 CFO we'll call Sarah — real person, just not using her full name — spent about a year interviewing for her next role. She was a finalist for three senior finance positions, all in the 150 million to 500 million dollar revenue range. She had a strong track record, a good network, and she knew how to tell her story. Luna: So what went wrong? Lucas: She was lowballing herself by about 30 percent. Not because she lacked confidence — she was actually quite assertive in negotiations — but because her compensation benchmark was built on stale, generic data. She was looking at national averages from a compensation survey that grouped companies by revenue band, and it didn't reflect the specific competitive dynamics of her industry and geography. Luna: So the data itself was the problem, not her approach. Lucas: Exactly. And this is more common among senior leaders than you'd think. At the VP and C-suite level, compensation isn't just base salary. It's a mix of base, annual bonus, long-term equity, deferred compensation, retirement contributions, perquisites — club memberships, car allowances, financial planning stipends. And the mix varies enormously by industry and company stage. Luna: What does a proper benchmark look like then? I assume it's not just googling 'average CFO salary.' Lucas: Absolutely not. The gold standard is peer-company analysis using SEC proxy filings. For public companies, you can find the summary compensation table for each named executive officer. You see base salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value, and all other compensation. It's all there in black and white. Luna: But what if you're aiming for private companies? Most senior roles aren't at public firms. Lucas: That's where it gets trickier. For private companies, you can look at comparable public companies and then apply a discount — typically 20 to 30 percent for lack of liquidity and less equity upside. You can also use compensation surveys from firms like Aon, Willis Towers Watson, or Radford, but you have to be careful. Those surveys aggregate data, and the averages can be misleading if your company is in a hot sector or a high-cost-of-living area. Luna: So the key is to narrow the peer group. Not just 'companies my size' but 'companies my size in my sector in my region.' Lucas: Right. And Sarah's mistake was that she used a broad national survey. She was based in Austin, Texas, which is a growing tech hub but still has a different cost structure than Silicon Valley or New York. When she built a peer group of ten public tech companies with headquarters in the South-Central U.S. and revenues within half a billion of her target companies, she found that the median total compensation for a CFO was about 1.2 million dollars, not the 900,000 she had been using. Luna: That's a 300,000 dollar gap. How did she use that in negotiations? Lucas: She didn't lead with it. She used it as a floor. In the first conversation, she listened to the range the company offered. Then in the second conversation, she said something like, 'I've done some research on peer companies, and for a role with this scope and in this geography, the total compensation tends to be in the range of X to Y. I'm confident I can deliver the results that would justify being in that range.' It was collaborative, not confrontational. Luna: So she framed it as market intelligence, not a demand. Lucas: Exactly. And that's the playbook. You want to be seen as informed, not entitled. A hiring committee doesn't want to feel like you're extracting the last dollar. They want to feel like you understand the market and you're being reasonable. Sarah ended up accepting a role with total compensation of 1.15 million — about 28 percent higher than her initial target. Luna: That's a big swing. And it probably also changed how she viewed her own value going forward. Lucas: It did. And that's a subtle but important point. Many senior leaders underprice themselves not because they lack ambition, but because they haven't done the homework. They rely on memory, or on what they made in their last role, or on what a recruiter told them once. But the market moves quickly — especially equity compensation, which can spike or drop with the company's stock price. Luna: How often should a senior leader refresh their benchmark? Annually? Lucas: At least annually, and more often if they're actively interviewing or if their company's performance changes significantly. I know a CEO who creates a personal compensation dashboard every quarter. He tracks the proxy filings of 15 peer companies, updates the stock prices, and recalculates the value of equity grants. He knows, at any moment, where he stands relative to his peers. Luna: A dashboard — that's interesting. What goes into it exactly? Lucas: He tracks five components. One: base salary, indexed to year-over-year increases at peer companies. Two: annual bonus, as a percentage of base and the performance metrics used. Three: long-term incentive value, usually restricted stock or performance shares, valued at the current stock price. Four: deferred compensation and retirement contributions. Five: perquisites and other benefits. He weights each component and produces a total compensation number. Then he compares it to the median, 25th percentile, and 75th percentile of his peer group. Luna: That's a lot of work. Is it worth it for someone who's not a CEO? Lucas: I think it is for anyone at the VP level or above. Because at that level, compensation is not just a number — it's a signal of how the company values you. And if you're not tracking it, you're flying blind. You might accept a role that looks good on base salary but has weak equity, or you might stay in a role where your total comp has fallen relative to peers because the stock dropped. Luna: There's also a behavioral risk, right? If you don't know your market, you might become complacent or, conversely, you might feel underappreciated when you're actually fairly paid. Lucas: Exactly. The knowledge itself creates stability. Sarah told me that after she built her dashboard, she felt more confident in her current role too. She knew what she was worth, and she could have a constructive conversation with her board about compensation without it being emotional. Luna: One thing I wonder about: when you do this research, you're looking at public data. But what about the unspoken components — like the network, the brand, the platform a role offers? Those aren't in the proxy statement. Lucas: That's a great point. And I think the best leaders account for that qualitatively. The dashboard gives you the quantitative floor. Then you add a premium or discount based on factors like company reputation, growth trajectory, culture fit, and career trajectory. For example, a role at a high-growth company with a strong brand might be worth accepting at 10 to 15 percent below market because of the platform it provides. Luna: So the benchmark is a starting point, not a rule. Lucas: Exactly. And that's the nuance that separates a savvy negotiator from someone who just demands a number. The best leaders use the data to inform their decision, not to dictate it. They know when to push and when to flex. Luna: I want to push back a little though. There's a risk that if you come in too informed, you might seem transactional. How do you strike the balance? Lucas: That's a real risk. The key is to present the data as context, not as a demand. You say, 'I've looked at the market, and here's what I see. I want to make sure we're aligned on the value of the role.' That invites a dialogue. If you say, 'I need X because the market says so,' you sound like you're reading from a script. The best negotiators make the data a shared reference point, not a weapon. Luna: So it's about framing. And I guess it also depends on the company's culture. Some companies have rigid bands and won't budge. Lucas: Right. And in those cases, the benchmark helps you decide whether to walk away. If a company is offering 20 percent below market and refuses to negotiate, that's useful information. It tells you something about how they value talent. Sarah actually walked away from one company that wouldn't move on base salary, even though she showed them the data. Six months later, they came back with a higher offer, but she had already accepted a better role. Luna: So the benchmark gave her the conviction to walk away. That's powerful. Lucas: It is. And that's the ultimate value of doing this work. It's not just about getting a higher number. It's about making decisions from a position of knowledge, not guesswork. And I think that's something that applies to all of us, regardless of level. Luna: Yeah, I think that's a great point. And it reminds me that this show is possible because listeners like you support it. If you've found value in episodes like this one — whether it's helping you think through a career move, a negotiation, or just how to position yourself — and you want to help keep the show ad-free and independent, you can support us at buy me a coffee dot com slash fexingo. It's a simple way to say 'this matters to me.' And it really does make a difference. Lucas: Absolutely. We don't run ads, and we want to keep it that way. So if the show is part of your routine, that's a meaningful way to keep it going. And we appreciate every bit of support. Luna: Anyway, back to benchmarks. One thing I'm curious about: do you think AI will change how leaders track compensation? There are tools now that scrape proxy data and generate real-time market rates. Lucas: It's already happening. There are platforms like CompAnalyst and Pave that use machine learning to model compensation based on thousands of data points. They can adjust for geography, industry, company stage, even specific job titles. For senior leaders, these tools could make benchmarking much more dynamic and accurate. But there's a catch: the data is only as good as the inputs, and many of these tools rely on self-reported data, which can be biased. Luna: So the human judgment piece is still critical. Lucas: Critical. The tool can give you a range, but you still need to interpret it in the context of your specific situation. And you still need to negotiate with empathy and strategy. AI won't do that for you. Luna: I wonder if, in five years, we'll look back at the era of opaque executive compensation and think it was almost primitive. Lucas: I think we might. The trend is toward transparency, both because of regulatory pressure and because of tools that democratize data. But there will always be a role for the savvy leader who knows how to use the data wisely. That's the skill that Sarah developed, and it's one that any senior leader can cultivate. Luna: Alright, let's leave it there. Thanks for listening, and we'll see you next time.