Ethics & Compliance Officers Still Valued in American Corporations
The results of the 2006 Ethics & Compliance Officer Association (ECOA) Compensation Survey are in and findings indicate pay for the top ethics position continues to grow. The survey, conducted by Salary.com and the ECOA, found compensation increased more than 12 percent over the previous year, clearly signaling continuing organizational support for the efforts to keep companies “clean” and scandal-free.
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“Organizations are increasingly recognizing the importance of their ethics and compliance office, not just in a time of crisis, but as an integral part of day to day business,” said Keith T. Darcy, executive director of the ECOA, expressing no surprise in the findings when announcing them. “As a result, in addition to increasing compensation, organizations are encouraging their ethics and compliance employees to continually develop their skills through training and education programs. Never before have organizations seen the value in the work of the ethics and compliance officer as they do now.”
Salary.com analysis of the survey data reveals that top ethics executives are receiving compensation comparable to other executive-level jobs and are receiving significant amounts of long-term incentives, including stock options, non-qualified stock options and restricted stock. For instance, top global ethics and compliance executives earn a median annual salary of $206,800, median total cash compensation of $285,000 and median long-term incentives of $132,100. Top domestic ethics and compliance executives, meanwhile, earn a median annual salary of $180,600, with a median total cash compensation of $202,300 and median long-term incentives of $81,600. Finally, corporate ethics and compliance managers earn a median annual salary of $120,000, with median total cash compensation of $133,00 and median long-term incentives of $45,000.
The 2006 survey does indicate that the average amount of long-term incentives has actually declined, perhaps because last year’s high grants reflected hiring awards which are typically higher than annual awards. Stock options remain the most popular long-term incentive vehicle, however, the survey indicates that Full Value Shares (stock bonuses, restricted stock, performance shares and performance units) are increasing in prominence.
“With every corporate scandal, it seems we receive more calls about Ethics and Compliance Officer compensation,” Joseph Kilmartin, director of surveys at Salary.com explained. “Bad news seems to prod companies to act. This alone increases the demand for Ethics and Compliance professionals. Everyone wants to avoid a scandal, so they want to hire the very best candidates.”
Compensation levels for ethics and compliance positions continue to remain relatively consistent – not varying greatly by organization size, industry or geographic location, although compensation levels do tend higher in the Northeast region and specifically in New England. Ethics and compliance executives in the New York Metropolitan area earn total cash compensation that is well above the national medians. Total compensation in the government and not-for-profit sectors remain significantly below the national medians.
Survey results are based on data from 139 participating organizations, including some of the largest and most well known organizations in the world. Ninety-six respondents were from public corporations, 26 worked in private corporations, 10 were in not-for-profit organizations and seven worked in governmental entities. Among participants, 24 reported revenues exceeding $20 billion and 32 reported having more than 35,000 employees.
“From Enron and WorldCom, to the latest scandal regarding stock options, the risks to corporate reputation and shareholder value are enormous,” Darcy noted. “The ethics and compliance profession has become an essential and integral function in managing risk. Ethics and Compliance Officers are the guardians of corporate integrity, and their continuing value is clearly reflected in their increased compensation.”
A copy of the full survey and results can be ordered online through the ECOA web site at www.theecoa.org.