how to run a compensation committee presented by: marc rosenberg, cpa the rosenberg associates ltd

HOW TO RUN A

COMPENSATION COMMITTEE

PRESENTED BY:

MARC ROSENBERG, CPA

THEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com


The Rosenberg AssociatesThe Rosenberg Associates Marc Rosenberg, CPA, PresidentMarc Rosenberg, CPA, President

Over 20 years consulting to CPA firmsOver 20 years consulting to CPA firms

Consultant, author and speaker to CPAsConsultant, author and speaker to CPAs

700 client firms from coast to coast700 client firms from coast to coast

Named one of the most recommended CPA firm Named one of the most recommended CPA firm consultants by consultants by INSIDE Public AccountingINSIDE Public Accounting

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What What ReallyReally Makes CPA Firms Profitable? Makes CPA Firms Profitable?

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Rosenberg’s work with CPA firms:Rosenberg’s work with CPA firms: Partner compensation & retirementPartner compensation & retirement Succession planningSuccession planning MergersMergers Facilitation of retreatsFacilitation of retreats Strategic planning & goal settingStrategic planning & goal setting Practice management reviewsPractice management reviews Partner relations and conflictPartner relations and conflict Expert Witness-Practice ManagementExpert Witness-Practice Management


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Accounting Today Accounting Today calls it “generally calls it “generally accepted as the barometer for CPA firm accepted as the barometer for CPA firm practice management.”practice management.”

The Rosenberg Blog- The Rosenberg Blog- Marc shares his Marc shares his thoughts every week on hard-hitting, thoughts every week on hard-hitting, topical issues that CPA firms face every topical issues that CPA firms face every day. day. http://blog.rosenbergassoc.comhttp://blog.rosenbergassoc.com


Where Marc Goes In His Free TimeWhere Marc Goes In His Free Time

MVP


Final Ground ruleFinal Ground rule

I take questions I take questions

during the presentationduring the presentation


Poll of ListenersPoll of Listeners

Which describes your firm:Which describes your firm:

a.a.We use the comp committee We use the comp committee todaytoday..

b.b.We are We are thinkingthinking of changing to the comp of changing to the comp committee.committee.

c.c.Neither of the above.Neither of the above.

Please key in your responses to me.Please key in your responses to me.

What’s Important?What’s Important?Success Factors

Blue Collar

Performance evaluation

Production - # of widgets & quality

People development

N/A

Interpersonal skills

Nice but not critical

Work hours How MUCH he/she works

Teamwork ME

Intangibles Obey rules and be on time


Success Factors

Blue Collar Corporate World


Production - # of widgets & quality

Achieve goals

People development

N/A What could be more important?



Critical

Work hours How MUCH he works

Not how MUCH, but how SMART she works

Teamwork ME Us. Company is #1.

Intangibles Obey rules and be on time

Leadership; teamwork;Innovation

What’s Important?


Which is a CPA firm partner Which is a CPA firm partner closer to?closer to?


Success Factors


Production - # of widgets

Book of businessBillable hours

Achieve goals

People development

N/A Not rewarded much What could be more important?



Not rewarded much Critical

Work hours How MUCH he works

More hours; moreproduction

How SMART she works

Teamwork Not critical Lone Rangers allowed Company is #1

Intangibles Obey rules; be on time

Not rewarded much Leadership; teamwork;Innovation

What’s Important?


What Makes a CPA Firm What Makes a CPA Firm GreatGreat??

1.1. Production (Finding, Minding, Grinding)Production (Finding, Minding, Grinding)

2.2. Satisfying clients; delivering GREAT serviceSatisfying clients; delivering GREAT service

3.3. GrowthGrowth

4.4. Quality workQuality work

5.5. Leadership and managementLeadership and management

6.6. Skilled, motivated staffSkilled, motivated staff

7.7. Leadership developmentLeadership development

8.8. The right people on the busThe right people on the bus

9.9. Intangibles (teamwork, loyalty, work ethic, etc.)Intangibles (teamwork, loyalty, work ethic, etc.)

10.10. Accountability; follow throughAccountability; follow through


What Should You

Compensate Partners For?

ExecutiveExecutive

1.1. Finding-Minding-Grinding

Finding-Minding-Grinding

2.2. Satisfying clients

Satisfying clients

3.3. GrowthGrowth

4.4. Quality work

Quality work

5.5. Leadership Leadership

6.6. Great staffGreat staff

7.7. Leadership development

Leadership development

8.8. Right people on the bus

Right people on the bus

9.9. IntangiblesIntangibles

10.10. Accountability

Accountability

Production Production WorkerWorker

1.1. FindingFinding2.2. Minding

Minding3.3. GrindingGrinding

OR


Best PracticesBest PracticesPartner CompensationPartner Compensation

1.1. Performance – basedPerformance – based

2.2. Practice development plays a Practice development plays a meaningful rolemeaningful role

3.3. Integrate with strategic planning, goal Integrate with strategic planning, goal setting and performance evaluationssetting and performance evaluations


Best PracticesBest Practices

4. Teamwork rules: Partners do what 4. Teamwork rules: Partners do what the firm the firm needsneeds them to do them to do

5. Multi - tiered:5. Multi - tiered: Return on capitalReturn on capital BaseBase Incentive bonusIncentive bonus


Best PracticesBest Practices

6. MP has more impact than other 6. MP has more impact than other partnerspartners

7. Reward intangibles7. Reward intangibles

8. Flexibility8. Flexibility


9. Leadership vs. Management vs. Administration*9. Leadership vs. Management vs. Administration*

LeadLeadWorth Worth MORE MORE than than your billing rateyour billing rate

ManageManageWorth your billing rateWorth your billing rate

AdministerAdministerWorth Worth LESSLESS than your than your billing ratebilling rate

* Originally presented by Bob Bunting.THEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

Does your firm have a “best practice” Does your firm have a “best practice” that’s missing from the 9 practices I just that’s missing from the 9 practices I just

shared with you?shared with you?

1.1.Performance-basedPerformance-based

2.2.Practice development Practice development

3.3.Link compensation to the Link compensation to the firm’s strategic planfirm’s strategic plan

4.4.TeamworkTeamwork

5.5.Multi-tier comp componentsMulti-tier comp components

6.6.MP impact on allocationMP impact on allocation

7.7.IntangiblesIntangibles

8.8.FlexibilityFlexibility

9.9.LeadershipLeadership

Please key it Please key it

in to me in to me nownow..

QTHEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

Partner Compensation SystemsPartner Compensation Systems

Comp Comp CommitteeCommittee

FormulaFormula

Paper & PencilPaper & Pencil

Ownership PctOwnership Pct

MP DecidesMP Decides

Pay EqualPay Equal

All DecideAll Decide


Partner Compensation SystemsPartner Compensation Systems2 2

PtrsPtrs3-4 3-4

PtrsPtrs5-7 5-7

PtrsPtrs8-12 8-12 PtrsPtrs

13+ 13+ PtrsPtrs

20112011

TotalTotal

Comp CommitteeComp Committee 0%0% 19%19% 23%23% 54%54% 70%70% 32%

FormulaFormula 23%23% 36%36% 36%36% 29%29% 11%11% 30%

Paper & PencilPaper & Pencil 3%3% 4%4% 5%5% 2%2% 2%2% 3%

Ownership PctOwnership Pct 10%10% 4%4% 6%6% 2%2% 8%8% 5%

MP DecidesMP Decides 12%12% 11%11% 12%12% 6%6% 9%9% 10%

Pay EqualPay Equal 32%32% 6%6% 4%4% 4%4% 0%0% 7%

All DecideAll Decide 20%20% 20%20% 14%14% 3%3% 0%0% 13%

OpenOpen 98%98% 82%82% 81%81% 65%65% 49%49% 77%

ClosedClosed 2%2% 18%18% 19%19% 35%35% 51%51% 23%

2012 Rosenberg MAP Survey2012 Rosenberg MAP Survey

How DifferentHow DifferentCompensation MethodsCompensation Methods

Reward SuccessReward Success

Compensation System

Characterized By:

Pay Equal 3 MusketeersConflict avoidersPartners deluded…

Ownership percentage What does this have to do with performance or success?

Paper and PencilAll Decide

Democracy rulesProne to politics and cliquesNarrows gap from high to low

Formula Production focused; very little if any recognition to other success factors

Comp CommitteeMP Decides

Major premise: What makes the firm successful?THE

ROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

Partner Compensation SystemsPartner Compensation SystemsChanges in Past 4 yearsChanges in Past 4 years

5-7 5-7 PartnersPartners

8-12 8-12 PartnersPartners

13+ 13+ PartnersPartners

20112011 20052005 20120111

20020055

20112011 20052005

Comp Comp CommitteeCommittee

23%23% 19%19% 54%54% 39%39% 70%70% 58%58%

FormulaFormula36%36% 47%47% 29%29% 39%39% 11%11% 38%38%

Per 2010 Rosenberg MAP Survey THEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

Best Practices Vs. Comp SystemBest Practices Vs. Comp System

BEST PRACTICES

COMPENSATION SYSTEMEqual OrOwner

%

Paper &

Pencil Formula

Comp Comm Or MP

Decides

Performance-based No Yes Yes Yes

Pract. development-meaningful role No Yes Yes Yes

Strat planning, goal setting, perf eval No Maybe Maybe Yes

Teamwork rules No Maybe Maybe Yes

Multi-tier system No Yes Yes Yes

MP has impact > other partners No Maybe Maybe Yes

Intangibles No Maybe Maybe Yes

Flexible No Maybe Maybe Yes

Leadership and management valued No Maybe Maybe Yes


Compensation Compensation CommitteeCommittee

Remainder of WebinarRemainder of Webinar


Compensation Committee:Compensation Committee:“The Devil is in the Details”“The Devil is in the Details”


Compensation Committee:Compensation Committee:Why Firms Use ItWhy Firms Use It

1.1. Aligns the firm’s Aligns the firm’s visionvision with how with how partners are evaluated and partners are evaluated and compensated.compensated.

2.2. 3.3. 4.4. 5.5. 6.6.


StrategicPlanning

andCore Values

Partner Evaluation

PartnerCompensation

The Convergence of 3 Aspects of Management

MVP


Compensation Committee:Compensation Committee:Why Firms Use ItWhy Firms Use It

1.1. Aligns the firm’s vision with how partners are Aligns the firm’s vision with how partners are evaluated and compensated.evaluated and compensated.

2.2. Formulas have big flaws.Formulas have big flaws.3.3. Balances rewards between production and Balances rewards between production and

intangibles.intangibles.4.4. Too many partners for each to know what Too many partners for each to know what

others contribute.others contribute.5.5. MP doesn’t want sole responsibility.MP doesn’t want sole responsibility.6.6. Partners won’t give sole power to MP; MP Partners won’t give sole power to MP; MP

doesn’t want it.doesn’t want it.


Comp Committee:Comp Committee:Keys to SuccessKeys to Success

1.1. IF THE PEOPLE IF THE PEOPLE BEING JUDGED BEING JUDGED DON’T TRUST DON’T TRUST THE JUDGES, THE JUDGES, THE SYSTEM THE SYSTEM WON’T WORK.WON’T WORK.

PERIOD.PERIOD.

MVP



2. 2. RULES GOVERNING THE DECISIONS MUST BE CONSISTENT AND WELL UNDERSTOOD; PARTNERS MUST UNDERSTAND WHICH BEHAVIORS AND WHAT RESULTS TRANSLATE THE MOST TO BIGGER REWARDS.

THINGS MUST BE CLEARTHINGS MUST BE CLEAR



3. A SINCERE EFFORT MUST BE MADE 3. A SINCERE EFFORT MUST BE MADE BY THE JUDGES TO COLLECT ALL BY THE JUDGES TO COLLECT ALL PERTINENT INFORMATION AND PERTINENT INFORMATION AND STUDY IT. STUDY IT.

DON’T ALLOCATE COMPENSATION DON’T ALLOCATE COMPENSATION BASED ON REPUTATION, INTUITION, BASED ON REPUTATION, INTUITION, PERCEPTION, ETC.PERCEPTION, ETC.



4. JUDGMENTS THAT ARE 4. JUDGMENTS THAT ARE EXPLAINEDEXPLAINED AND AND COMMUNICATEDCOMMUNICATED ARE MORE ARE MORE READILY ACCEPTED THAN THOSE READILY ACCEPTED THAN THOSE THAT ARE NOT.THAT ARE NOT.

MVP


Make-Up of CommitteeMake-Up of Committee

SmallSmall MP is permanent memberMP is permanent member Voted or appointedVoted or appointed All members must be credibleAll members must be credible Not everyone gets a turnNot everyone gets a turn Comp Comm relation to Exec CommComp Comm relation to Exec Comm


If your firm has a Comp Committee If your firm has a Comp Committee ANDAND an Exec Committee: an Exec Committee:

a.a.Are they exactly the Are they exactly the samesame people? people?

b.b.Are each composed of totally Are each composed of totally differentdifferent people? people?

c.c.Not the same people, but there IS some overlap.Not the same people, but there IS some overlap.

If (b) or (c), why aren’t the two committees the If (b) or (c), why aren’t the two committees the samesame people? people?

Please key in your responses to me.Please key in your responses to me.

Comp Committee:Comp Committee: Important Decisions Important Decisions

1.1. Determining the # of CC membersDetermining the # of CC members

2.2. Length of a CC member’s term?Length of a CC member’s term?

3.3. Should the CC be the same as or different Should the CC be the same as or different from the EC?from the EC?

4.4. Performance criteriaPerformance criteria


Performance CriteriaPerformance Criteria

LeadershipLeadership People skills and People skills and

developmentdevelopment Practice Practice

developmentdevelopment Client serviceClient service

Client transitionClient transition Traditional Traditional

production measures production measures TeamworkTeamwork Good citizenshipGood citizenship

MVP


LeadershipLeadership

Performance in management positionsPerformance in management positions Impact performance of othersImpact performance of others Stretches people’s abilities Stretches people’s abilities Identifies challenges; resolve quicklyIdentifies challenges; resolve quickly CheerleaderCheerleader


People Skills & DevelopmentPeople Skills & Development

Excellence at managing all Excellence at managing all relationshipsrelationships

Staff &younger partners advance Staff &younger partners advance under his/her tutelage under his/her tutelage

Inspires people to achieveInspires people to achieve


Practice DevelopmentPractice Development

Emphasis is on how your Emphasis is on how your teamteam performs at bringing in businessperforms at bringing in business

Moves clients upscale in Moves clients upscale in sophistication, profitability and usage sophistication, profitability and usage of multiple servicesof multiple services


Client TransitionClient Transition

RetentionRetention ““If you leave, will your clients stay?”If you leave, will your clients stay?” Successfully moved clients to other Successfully moved clients to other

partnerspartners Transfer of Transfer of expertise expertise


TeamworkTeamwork

Develops a strong team beneath themDevelops a strong team beneath them Ensures that clients have multiple “touch Ensures that clients have multiple “touch

points” within the firmpoints” within the firm Shares the work among business unitsShares the work among business units

““If a partner manages a big client or a If a partner manages a big client or a big book of business ALONE, he/she big book of business ALONE, he/she would be shot.”would be shot.”


Good CitizenshipGood Citizenship

Is a good partnerIs a good partner Treats people respectfullyTreats people respectfully Lives/breathes the firm’s core values Lives/breathes the firm’s core values

every dayevery day Sets an example of following the Sets an example of following the

policiespolicies


What else does your What else does your Comp Committee look at Comp Committee look at

to make their income to make their income allocations?allocations?

Please key in your responses to me Please key in your responses to me nownow

Comp Committee Operation:Comp Committee Operation: Important Decisions Important Decisions

5. How CC communicates with each partner 5. How CC communicates with each partner

6. How CC 6. How CC actuallyactually allocates the $$$: allocates the $$$:• MP recommends + group “tweaks”MP recommends + group “tweaks”• CC does a paper and pencil exercise, then tweaksCC does a paper and pencil exercise, then tweaks• Some sort of ranking/performance gridSome sort of ranking/performance grid


Important Comp Committee DecisionsImportant Comp Committee Decisions

7. 7. Incentive Bonus or Final Year-End Distribution? Incentive Bonus or Final Year-End Distribution?

INCENTIVE INCENTIVE

BONUSBONUS

SeparateSeparate criteria from criteria from basebase

Base is a “salary”Base is a “salary”

FINAL FINAL

DISTRIBUTIONDISTRIBUTION

SameSame or similar criteria or similar criteria as the baseas the base

Base is really a draw on Base is really a draw on a final numbera final number



8. Use 8. Use non-bindingnon-binding paper/pencil paper/pencil exercise?exercise?

9. What data will the committee 9. What data will the committee review?review?


Data Reviewed by CommitteeData Reviewed by Committee

1.1. Partner evaluationsPartner evaluations

2.2. Self-evaluationsSelf-evaluations

3.3. Upward evaluation by the staffUpward evaluation by the staff

4.4. Achievement of goalsAchievement of goals

5.5. Production statisticsProduction statistics

6.6. Input from MP, PICs, dept. heads Input from MP, PICs, dept. heads

7.7. Paper and pencil (non-binding)Paper and pencil (non-binding)



10. Reporting year & when CC 10. Reporting year & when CC deliberates.deliberates.

For those with For those with calendarcalendar year-ends, how does year-ends, how does the timing of the tax season impact the timing of the tax season impact whenwhen your CC works? your CC works?

Please key in your responses to me Please key in your responses to me nownow.. QTHEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com


11. Appeals? Partner votes to 11. Appeals? Partner votes to approve?approve?

Crash Course in Crash Course in Partner Goal SettingPartner Goal Setting


Management of a CPA Firm: The Highest Level

VISION

FIRM GOALS

PARTNER GOALS

ENGINES

Leadership

Operations

Partner Comp

Accountability


Management of a CPA Firm: The Highest Level

VISION

FIRM GOALS

PARTNER GOALS

ENGINES

Leadership

Operations

Partner Comp

AccountabilityTHEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

6 SOURCES FOR PARTNER GOALS

ALL

PARTNER

GOALS

STRATEGICPLANNING

GOALS

ROLE INTHE FIRM

PARTNERPRODUCTION

GOALSFULFILL DAY-TO-DAY ROLE AS A

PARTNER

SELF-IMPROVEMENT

GOALSLIVE AND BREATHE

THE FIRM’S CORE VALUES


Goal Setting: Best PracticesGoal Setting: Best Practices

1.1. IndividualIndividual goal setting starts with a goal setting starts with a firmfirm vision.vision.

2.2. Partners draft their own goals.Partners draft their own goals.3.3. Each partner has 2 kinds of goals: Each partner has 2 kinds of goals:

production & intangible.production & intangible.4.4. Think big / keep it simple.Think big / keep it simple.5.5. Monitor and coach during the year.Monitor and coach during the year.6.6. Compensate based on goal achievement.Compensate based on goal achievement.7.7. Ya gotta wanna.Ya gotta wanna.8.8. Goals should be in writing & Goals should be in writing & S.M.A.R.T.S.M.A.R.T.


S.M.A.R.T. GOALSS.M.A.R.T. GOALS

SS SpecificSpecific

MM Measurable Measurable

AA AttainableAttainable

RR RealisticRealistic

TT Time boundedTime bounded


Good Words and Bad WordsGood Words and Bad Words

Use action wordsUse action words

IncreaseIncrease CreateCreate SellSell ReduceReduce JoinJoin

Avoid vague wordsAvoid vague words

CommunicateCommunicate PromotePromote InstillInstill ConsiderConsider ConceptualizeConceptualize


Individual Partner Goals PlanIndividual Partner Goals PlanPRODUCTION GOALS

Target ActualORIGINATION

CLIENTS BASE MANAGED

BILLABLE HOURS

REALIZATION

ETC.

QUALITATIVE GOALS

QUALITATIVE GOALS Deadline Weighting

1. Head up the banking niche.

2. Delegate 100K of small clients to managers.

3. Mentor Susie Staffperson.

4. Put on a law firm dog and pony show.

TOTAL 100%

MVP


Closed vs.Closed vs. Open Systems Open Systems

““If people are concerned about their absolute If people are concerned about their absolute level of compensation, then they level of compensation, then they cancan be be satisfied. However, if their focus is on satisfied. However, if their focus is on relative standing, then they can relative standing, then they can nevernever be be satisfied.”satisfied.”

Andrew GroveAndrew Grove

Former Chairman of the Former Chairman of the BoardBoard

Intel Intel


Open Vs. Closed SystemOpen Vs. Closed System

OPENOPEN

Partners feel like “real” Partners feel like “real” partnerspartners

Avoids image of “smoke-Avoids image of “smoke-filled room”filled room”

See how you stack upSee how you stack up

Tough to take it awayTough to take it away

CLOSEDCLOSED

Andy Grove quoteAndy Grove quote

CC less likely to be CC less likely to be influenced by how influenced by how they think partners they think partners will reactwill react

Reduces unhealthy Reduces unhealthy competitioncompetition


Open vs. Closed SystemOpen vs. Closed System

OPEN

PARTNERSHIP / DEMOCRACY

INALIENABLE RIGHT

CLOSED

CORPORATION

IN CORPORATIONS, DO ALL OFFICERS KNOW

EACH OTHER’S COMP?


““If you have an open If you have an open compensation system, compensation system, change it.” change it.”

Tony KendallTony Kendall, MP of Top 100 firm Mitchell & Titus, , MP of Top 100 firm Mitchell & Titus, describing success after 34 years of complaints describing success after 34 years of complaints

from his partners on compensation issues.from his partners on compensation issues.


In the last few years, have any firms In the last few years, have any firms moved from open to closed?moved from open to closed?

How well has it worked?How well has it worked?Please key in your Please key in your

response to me, response to me, now.now.

QTHEROSENBERG ASSOCIATES LTD.www.rosenbergassoc.com

Comp Committee TimetableComp Committee Timetable(Assume calendar year cycle)(Assume calendar year cycle)Action Item General

TimelineYour Firm’s

Actual

1. Elect CC members. March-Sept

2. Decide the 12 month cycle July

3. Create strategic plan & vision for next yr

Sept-Oct

4. Partner goal setting Early December

5. Partners evaluations Mid December

6. CC or mgmt meets one-on-one with each partner to review performance and finalize goals for coming year

Mid DecemberEarly January

7. Decide size of base and bonus pools for the coming year

Early January


Comp Committee TimetableComp Committee Timetable(Assume calendar year cycle)(Assume calendar year cycle)

Action Item General Timeline

Your Firm’s Actual

8. Optional: non-binding paper/pencil exercise

Mid December

9. CC collects all data used to evaluate ptrs

3rd week January

10. CC meets for 1 or 2 days to allocate income

4th week January

11. CC agrees on the “messages” to be communicated to the partners

4th week January

12. Communicate CC results to each partner- Clarify criteria for coming year

Early February

13. CC or mgmt monitors progress on partner goals throughout the year

All Year


Comp Committee’s Job At Year End:Comp Committee’s Job At Year End:Step #1 of 2: Allocate Step #1 of 2: Allocate ThisThis Year’s Year’s BonusBonus

Interest Base/Draw Bonus/Final Distr

Grand Total

Smith 24,000 339,000

Jones 20,000 318,000

Thomas 16,000 246,000

Kent 11,000 302,000

Francis 8,000 216,000

Total 79,000 1,421,000 400,000 1,900,000

TARGET

BEGINNING OF THIS YEAR - PROJECTED


Comp Committee’s Job At Year End:Comp Committee’s Job At Year End:Step #1: Allocate Step #1: Allocate ThisThis Year’s Year’s BonusBonus

Grand Total

Interest Base/Draw Bonus/Final Distr

Amount Increase

Smith 24,000 339,000 102,000 465,000 12.9%

Jones 20,000 318,000 145,000 483,000 13.4%

Thomas 16,000 246,000 32,000 294,000 6.9%

Kent 11,000 302,000 91,000 404,000 9.2%

Francis 8,000 216,000 80,000 304,000 13.9%

Total 79,000 1,421,000 450,000 1,950,000 11.4%

BEGINNING OF THE YEAR – PROJECTED 79,000 1,421,000 400,000 1,900,000

END OF THIS YEAR – DISTRIBUTE BONUS/FINAL DISTRIBUTION FOR THIS YEAR:


Comp Committee’s Job At Year End:Comp Committee’s Job At Year End:Step #2: Reset Base/Draw For Step #2: Reset Base/Draw For Next YearNext Year

Interest Base/Draw Bonus/Final Distr Grand Total

Smith 26,000 353,000 (+4%)

Jones 21,000 338,000 (+6%)

Thomas 18,000 252,000 (+2%)

Kent 12,000 323,000 (+7%)

Francis 10,000 235,000 (+9%)

Total 87,000 1,501,000 (+6%) 470,000 2,058,000

TARGET

LAST YEAR: 79,000 1,421,000 450,000 1,950,000

END OF THIS YEAR – ADJUST BASE AND START THE NEW YEAR:


Compensation Committees: Compensation Committees: ChallengesChallenges

1.1. How CC members set their own pay.How CC members set their own pay.

2.2. CC members end up the highest paid.CC members end up the highest paid.

3.3.

4.4.

5.5.

6.6.


Comp Committee ChallengesComp Committee Challenges



How does your CC deal with these two How does your CC deal with these two challenges?challenges?

Please key in your responses to me Please key in your responses to me now.now.

Compensation Committees: Compensation Committees: ChallengesChallenges



3.3. Don’t you eventually Don’t you eventually havehave to use a to use a formula? formula?

4.4. Separate EC from CC. Yes? No?Separate EC from CC. Yes? No?

5.5. Avoiding image of “smoke filled room.”Avoiding image of “smoke filled room.”

6.6. Dealing with “problem partners”.Dealing with “problem partners”.


Evolution of a Comp CommitteeEvolution of a Comp Committee

As the firm grows in size

Jury Management


The Marc Rosenberg Blog- The Marc Rosenberg Blog- Marc shares his thoughts every week Marc shares his thoughts every week

on hard-hitting, topical issues that on hard-hitting, topical issues that CPA firms face every day.CPA firms face every day.

http://blog.rosenbergassoc.comhttp://blog.rosenbergassoc.com


QUESTIONS


The Rosenberg AssociatesThe Rosenberg Associates

1000 Skokie Blvd. Suite 5551000 Skokie Blvd. Suite 555

Wilmette, IL 60091Wilmette, IL 60091

Phone: 847-251-7100Phone: 847-251-7100

Fax: 847-251-4622Fax: 847-251-4622

[email protected]@rosenbergassoc.com


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