ID's 2016 Salary Report: Executives

In this first installment, see the factors affecting compensation and overall satisfaction levels of executives from our recent readership survey of industrial distributors.

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The results are in for Industrial Distribution’s annual Salary Report, one of our most popular and contentious features each year. Here, you’ll find the factors affecting compensation and overall satisfaction levels of our readership, which is comprised of distributorship employees ranging from those at very small companies to those firms on our annual Big 50 List.

Distributed via email, the 2016 Industrial Distribution Salary Report funnels survey respondents into three separate question pools based on where they identified their specific job functions. The following results are based on three separate sets of data from Executives (Owner, Chairman, CEO, CFO, CIO, COO, President or VP); Mid-Level (non-sales) Management (Product, Operations, Branch and/or Purchasing); and Sales Representative/Manager. This year’s split of nearly 300 respondents came at 21.4 percent executives, 29.2 percent mid-level management and 49.4 percent sales rep or sales management.

In this first installment we'll examine the results from our executive-level respondents.

EXECUTIVE RESULTS

As expected, this year’s executive group has the highest pay rates, tenure and experience within their career paths. This year, better than 97 percent are males, up from 90 percent in 2015. As always the oldest group of the three, 54 percent of our executives are 60+ years in age, up 10 percentage points from our 2015 survey. Only 15 percent of executive respondents are under 50 years old. This group is also our most highly educated, with 67 percent having at least a college degree.

This year’s executives’ business profile demographics look like this:

  • 72 percent oversee companies with less than $25 million in revenue, up from 56 percent in 2015. 26 percent are at companies of $25 million to $100 million and only one respondent’s company lands in the $100 million to $500 million range
  • 31 percent are located in the Midwest, 26 percent are in the West, 20 percent are in the Northeast, 18 percent are in the South and 5 percent are outside the U.S.

This year’s executives boast an average salary of $179K, which is nearly identical to 2015 (Figure 1) This group also receives another $100K in additional compensation, including bonuses, 401K contributions, educational reimbursement and additional cash.

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Given those numbers, it’s no surprise that our executives group feels the most satisfied year-over-year with their overall compensation package. The amount who say they feel fairly compensated has steadily rose in recent years from 84 percent in 2014, 87 percent in 2015 and then to 90 percent in this year’s survey (Figure 2). That rise comes despite a 3-point gain in those who said they’d had a salary or benefits cut in the past year to 13 percent, still a far cry from 25 percent in 2014.

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Some of our executive respondents have an egalitarian view for compensation in their company. One respondent said, “I own the company and try and level all income with all members of my organization,” while another stated, “It is a family business and I am keeping with our father’s wishes of taking care of all siblings.” Some respondents enjoy the flexibility that their small distributorship has when it comes to compensation options. One commented, “Small business — good compensation; my own choice as to whether to be more aggressive.” For those that own their industrial distribution company, compensation is tied tightly to its performance. One of our executives said, “I own my business and, as a subchapter S corporation, all profit flows through to my tax return. I am compensated for what is produced.” Others commented that their compensation was in line with company profits or comparative to what they’ve seen in the market.

Only 41 percent of our executive group said they received a raise in the past year, far less than last year’s 59 percent. This may coincide with the ongoing industrial recession that has negatively impacted many industrial distributors over the past 18 months, with many having to freeze bonuses or even force employees to take salary cuts to avoid having to reduce headcount. Going further:

  • 20.5 percent received a considerable performance-based raise
  • 18 percent received a standard performance-based raise
  • 7.7 percent were given more incentive-based opportunities for cash rewards
  • 5.1 percent were given a cost of living raise based on inflation, the same amount that were rewarded with a stronger benefits package

While 61.5 percent of our executive group say the demands of their job increased (Figure 3), that’s more than a 12-point drop from a year ago, while the amount who said their demands stayed the same — 36 percent — increased by 13 points.

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Overall, this year’s group of executives are more tenured than last year’s. Here’s how our 2016 executives’ experience level differed from past years:

  • Our average executive respondent has worked in the industry for 31 years, breaking a three-year streak of decline. Last year’s average was 26 years
  • The average company tenure is 25 years, up from 21 years in 2014
  • They’ve held their current position for an average of 15 years, up from 14 in 2015 and 12 in 2014

Stay tuned later this week for our Salary Report segments on mid-level management and sales/sales management.

View our 2015 Salary Report here

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