Pay Drops for HR's Elite
After two years of double-digit growth, the average annual compensation for HR's top earners took a step backward in 2016.
By David Shadovitz
As a group, the 50 highest-paid HR executives named in filings with the Securities and Exchange Commission experienced a decline in compensation in 2016.
Average annual compensation for these executives decreased by 6.1 percent last year, compared to an increase of 11.9 percent in 2015.
Fewer women were also represented on this year's list. Three of the top 10 earners in 2016 were women, compared to seven the prior year. Overall, 38 percent of those on the list were women in 2016, compared to nearly half (48 percent) in 2015.
Ranked at the top of the 2016 list was Fiona Laird, executive vice president and chief HR and communications officer for Newell Brands Inc. Laird, who joined the company on April 1, 2016 after 25 years at Unilever, took home $7,945,685. In comparison, the top earner in 2015 received $6,618,442.
Tracy Keogh, chief HR officer at HP Inc., held the No. 2 spot for the second year in a row, earning $6,988,270. She was followed by Interpublic Group's Executive Vice President and Chief Strategy and Talent Officer Phillipe Krakowsky, who earned $6,404,937.
Seven of the executives on the 2016 list took home north of $4 million, compared to 11 a year earlier.
Together, the 50 highest-paid HR executives received an average annual compensation package of $3,029,634 last year. In contrast, those on the 2015 and 2014 lists averaged $3,228,149 and $2,884,194, respectively.
Dan Marcec, director of content and marketing for Equilar, points out that variable pay packages are going to vary from year to year based on any number of factors -- for instance, whether people are new to their positions and received signing bonuses or whether they were promoted and just received huge stock grants. But one specific metric that may have contributed to the decline in 2016 could have been the fact that "the average annual revenue for the 50 companies on the list was around $15.8 billion, compared to $24 billion the year before," he says. "If you are looking at that big a difference, it's not surprising to see compensation go down." Equilar, based in Redwood City, Calif., compiled the HR's Elite list.
As a percentage of CEO pay, the compensation for HR leaders averaged 30 percent in 2015, just slightly more than the prior year. On the high end of the spectrum, Piyush Mehta, senior vice president and chief HR officer for Genpact Ltd., made 67 percent of what his CEO earned in 2016. On the low end, Anthony Ambrosio, senior executive vice president, chief administrative officer and chief HR officer at CBS Corp., took home 7 percent of what his CEO earned.
Marcec says it's worth noting that HR executive pay continues to run in step with CEO pay, but that those on this year's list were a bit closer to their CEOs as far as pay is concerned.
The 2016 HR's Elite list was culled from a universe of 231 former and current HR executives at Russell 3000 companies who were among the five most highly compensated officers in their companies and were therefore included in those organizations' filings with the SEC. In 2015, 252 former and current HR executives made the cut.
In determining the rankings, Equilar calculated total compensation as the sum of base salary, discretionary and performance-based cash bonuses, and the grant-date value of stock and option awards. (Benefits and perquisites were excluded from the calculation.) All compensation values were taken directly from the summary compensation table for each company's proxy statement.
The top 50 earners on the list experienced a 4.8 percent decrease in full-value stock awards -- from $1,452,585 to $1,382,473 -- compared to a 23.1 percent increase a year earlier. Bonuses, meanwhile, decreased an average of 19.1 percent, declining from $709,059 in 2015 to $685,266 in 2016.
Similarly, average stock-option awards decreased by 20.6 percent -- from $462,287 to $367,091. (A year earlier they declined 8.7 percent.)
As for base salaries, those on the 2016 list experienced a modest decline, averaging $523,921, compared to $555,198 in 2015.
On a per-employee basis, average HR executive pay declined from $824 in 2015 to $563 in 2016. At the high end, Jolanta Bott, executive vice president of operations and HR for Paramount Group, earned $8,169 per employee. On the low end, Christabel Lo, chief people officer of Yum China Holdings Inc., earned just $5 per employee. (Not surprisingly, Paramount Group was the smallest company on the list in terms of the number of employees, with just 334 people; and Yum China had the largest number of employees, with 420,000.)
The companies this year were noticeably smaller in size than a year earlier, as far as employee size is concerned. The average workforce size declined from 51,000 employees in 2015 to around 40,000 employees in 2016.