Executive Compensation in Russia - Survey by SpenglerFox Executive Search

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A SpenglerFox Insight Report
Executive Compensation
Survey 2012: Russia

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CONTENTS
Preface 3
Executive Summary 4
Participated Companies 5
Salary Reviews 6
Base Salary and Bonus 7
Housing 8
Medical Benefits 9
Income Protection Plans 10
Travel Benefits 11
Stock Options 12
Child Care Benefits 13
Holidays and Sick Leaves 14
Training 15
Conclusion 16
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PREFACE
As an Executive Search and We would like to thank each
Human Capital Solutions of our contributors for
Firm, we have had the partaking in the process.
opportunity to engage in Their time, trust and
exciting dialogues with senior transparency is greatly
talent across the globe. Many appreciated.
of these conversations led to
a realisation that there is a
SpenglerFox has been in
deficit of current and
Russia since 2003. It is one
comprehensible data on
of our favourite markets, and
salary packages for senior
always one of the most
executives. This motivated
challenging.
us to initiate a series of
salary surveys starting with
Mark Hamill
the Russian market. The quest to understand and Chief Executive Officer
attain clarity on the Russian SpenglerFox
market coupled with the
Our research process
shortage of top talent
commenced only 6 weeks
inspired us to develop a tool
ago; through discussions and
that can help you navigate
on-line tools we have
through this fast paced
compiled our findings which
market more efficiently. We
are relevant and fresh unlike
sincerely hope you enjoy this
traditional salary surveys
report and find it useful.
which tend to be outdated as
soon as they are published.
In an attempt to avoid the If there is anything else we
same outcome, we decided can help you with in order to
to launch this „live market be more successful in the
data‟ approach to present market please feel free to
our insight. reach out to your nearest
SpenglerFox representative.
We worked with over 240
Russian based senior - Mark Hamill
executives from a variety of
industry sectors to
investigate the landscape of
current remuneration
packages in Russia.
EXECUTIVE COMPENSATION SURVEY 2012: RUSSIA 3

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EXECUTIVE SUMMARY
SpenglerFox, the globally Respondent Job Titles
networked Executive Search
and Human Capital Solutions General Manager
firm, has undertaken the first CEO
20.3%
of the series of Executive 19.6% Managing Director
Compensation surveys
Country Manager
inaugurating with executives
Regional Director
based in Russia. 22.2%
13.7% Regional Manager
Founder / Owner
This report summarizes the Chairman
result of an online survey President
organized by SpenglerFox in 5.2% Others
May 2012. The survey was 11.8% 2.6%
1.3%
sent to 530 top level 2.0%
1.3%
executives from Consumer,
Life Sciences, Industry,
Technology, Financial 22% of our participants were
Services and Energy sectors General Managers followed
based in Russia. By mid by CEOs and Managing
June, 241 completed Directors with20% each. The
responses were received positions held by other
resulting in a response rate participants included
of 45%. Regional Director, Regional
Manager, Country Manager,
Founder, Chairman and
President.
Respondent Nationalities Aside from Russian nationals
(who formed a majority of
7.6% 60%), nationalities of the
Russian
other senior executives
5.0% French included mostly French,
American American, German, Dutch
59.7% 5.0%
and Ukrainian.
German
2.5% Dutch
2.5% Ukrainian * Belgian, Italian,
17.4% Kazakhstani, Polish,
Others* Romanian, Slovenian,
Austrian, British, Czech,
Danish, Indian, Irish,
Japanese, Kyrgyz, Serbian
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PARTICIPATED COMPANIES
Sector
Majority of the participating
companies are SMEs mostly
from Life Sciences, Consumer, LifeSciences
11.6%
Industry, Technology, 9.6% Consumer
Services, Finance and Industry
17.8%
Mining sectors. 6.8%
Technology
4.8% Services
Financial
4.8%
Mining
1.4% Oil/Gas/Energy
28.8%
12.3% 1.4% Real Estate
0.7% Automotive
Other
Headcount
14.8%
12.5%
Turnover of Business 18.8%
18.8% 11.7%
14.1%
8.6%
22.7% 27.3%
6.3%
14.1%
Up to 50 101 - 200
7.8%
12.5% 51 - 100 201 - 500
10.2%
501 - 1000 1001 - 5000
More than 5000
$ 20 - 50 million Less than $10 million
$ 51 - 100 million More than $500 million
$ 101 - 250 million $ 250 - 500 million
$11 - 20 million
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SALARY REVIEWS
23%
The majority of the In regards to salary
executives have had their increases, majority of
performance and salary executives have received
review within the past 6 increments up to 10%. Many
feel pressure from months. However, a companies have been quite
Head Quarters significant 18% have not had generous this year with up to
regarding their their review for more than a 30% hikes. It is also
year, out of which 13% are interesting to note that there
package
Russian nationals. is no vast difference in salary
increments between Russian
nationals vs. expats.
Tenure
34.2%
20.0% 19.2%
11.7% 10.0%
5.0%
Up to a 11 months 1 - 2 years 3 - 4 years 4 - 5 years 5 - 6 years More than 6 years
Last Salary Review
39.2%
24.2%
14.2% 11.7%
4.2% 6.7%
Between 1 to 3 Between 4 to 6 Between 7 to 9 Between 10 to 12 Between a year to More than 2 years
months ago months ago months ago months ago 2 years ago
Salary Increment
55.8%
32.5%
6.7%
1.7% 1.7% 0.8% 0.8%
1 - 10 % 11 - 20 % 21 - 30 % 31 - 40 % 41 - 50 % 61 - 70 % 91 - 100 %
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BASE SALARY AND BONUS
73%
The most commonly asked Noteworthy is that out of 8% of
question – 73.5% senior the survey participants who
level executives in Russia earn less than $100,000
have salaries within the annually, over 5% are Russians.
$100,000 to $300,000 base salary between
bracket of annual basic. $100,001 and
The bonus calculated on annual
A small yet significant 0.9%
profit entitles most of the $300,000 p.a.
earns more than a million
participants to a commission of
dollars annually, which
up to 5% and in some cases
interestingly are all Russian
from 20% - 30%. In few cases,
nationals.
bonus is calculated on the basic
as opposed to profit.
Current Annual Base Salary (in USD)
73.5%
13.3%
8.0%
3.5%
0.9% 0.9%
Up to $100,000 $100,001 - $300,001 - $500,001 - $700,001 - $1 More than $1
$300,000 $500,000 $700,000 million million
Annual Bonus Structure (calculated on profit)
27.6%
25.2%
21.1%
11.4%
8.9%
5.7%
Up to 5% 6 - 10 % 11 - 15 % 16 - 20% 21 - 30% More than 30%
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HOUSING
We filtered the data on In the case of expats in
housing by nationalities and senior positions, 70% receive
found that 25% of the annual housing allowance.
Russian nationals at senior It is also worth mentioning
positions get a housing that a significant 11% of
allowance. This could be a them are entitled to over
reflection of repatriation of $100,000 annually.
70%
candidates, the assessment
of which was not included in
the scope of this survey.
of expats get
housing allowance
Annual Housing Allowance (in USD)
75.4%
29.5%
13.6% 9.1%
9.1%
6.8% 9.1% 9.1% 6.8%
7.7% 2.3% 4.5%
6.2%
4.6% 1.5%
3.1%
1.5%
0.0% 0% 0%
No Upto 10,001 - 20,001 - 30,001 - 40,001 - 60,001 - 80,001 - 100,001 - More than
allowance 10,000 20,000 30,000 40,000 60,000 80,000 100,000 150,000 150,000
Russian Nationals Other Nationalities
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MEDICAL BENEFITS
Coverage
90% 39.0%
11.0%
are offered medical
cover Local only
50.0%
Regional only
International
Life Insurance
51.7%
48.3% Yes
No
Coverage for Dependants
13.5%
41.9%
Local only
60%
Regional only
International
are offered medical
cover or
reimbursement for
dependants
44.6%
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INCOME PROTECTION PLANS
Only 29% of the companies
offer disability income
protection and 28% provide
pension plans to its
employees.
Disability Income Protection
Yes
No
70.7%
29.3%
Pension Plan
Yes
No
71.6%
28.4%
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TRAVEL BENEFITS
85%
85% of the respondents are 79% are given a car from the
entitled to at least an company out of which around
allowance or a company car 4% get additional car
if not both. Out of the 15% allowance for personal use.
are offered transport who do not have any sort of
benefits transportation benefits, a
majority with 10% are
Russian nationals.
Annual International Travel Allowance
38.4%
21.9%
19.2%
9.6% 8.2%
2.7%
None $1 - $10,000 $10,001 - $20,001 - $30,001 - More than
$20,000 $30,000 $40,000 $40,000
Annual Local Travel Allowance
34.6%
32.1%
15.4%
9.0%
3.8% 5.1%
None Actual cost $1 - $5,000 $5,001 - $10,000 $10,001 - More than
$20,000 $20,000
Company Car Personal Driver
Yes
Yes
79.1% No
66.4% No
20.9% 33.6%
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STOCK OPTIONS
Type of Stock
Incentive stock options (ISOs)
20.0%
69.1% Non-qualified stock options
(NQSOs or NSOs)
Other*
* Restricted stock options, warrants,
10.9%
phantom shares etc
50%
are offered stock
options
Number of Stocks Granted Annually
28.2%
20.5% 20.5%
12.8%
10.3%
7.7%
1 - 1,000 1,001 - 2,000 2,001 - 3,000 3,001 - 5,000 5,001 - 10,000 More than 10,000
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CHILD CARE BENEFITS
83%
Even with the rise of work
life balance awareness, most
of the companies do not offer
child support facilities.
A small 28% offers an are not offered
education allowance for the childcare benefits
children of senior level
executives.
Childcare Vouchers (flexible and
tax-efficient way to cover child
Workplace Nurseries care costs)
1.0% 3.2%
99.0% 96.8%
Yes Yes
No No
Average Annual Education Allowance for Each Child
71.6%
6.0% 6.0% 7.5% 7.5%
1.5%
None Actual cost $1 - $10,000 $10,001 - $20,000 $20,001 - $30,000 More than $30,000
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HOLIDAYS AND SICK LEAVES
As per Russian law, Even though the majority Sick leave entitlement varies
employees – regardless of falls in the bracket of 22 to from actual need to up to 7
their nationality - have a 35 days, we found that at days or up to 30 days on a
holiday entitlement of 28 least 4.5% of the case to case basis.
days per year. In some respondents declared taking
companies, it is more for fewer holidays.
senior executives and expats
if the contract demands it.
Annual Paid Vacation
50.5%
43.2%
2.7% 1.8%
0.9% 0.9%
None 8 - 14 days 15 - 21 days 22 - 28 days 29 - 35 days 36 - 42 days
Annual Sick Leaves
34.4%
15.6% 15.6%
13.9%
11.5%
9.0%
Nil 1 - 7 days 8 -14 days 15 - 21 days 22 - 30 days Actual Need
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TRAINING
Training Courses for Professional Development
Yes
No
78.4%
21.6%
78%
are offered
Training Courses for Personal Development
professional training
Yes
but only
52%
No
47.7%
are offered training
52.3%
for personal
development
Other Benefits
Tuition Reimbursement
Profit Sharing
Fitness Center Reimbursement
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CONCLUSION
This survey is a tool to This is even more true in the
understand the Russian case of Moscow as it stayed
market for Senior Executives. in the top 10 list of the most “We can clearly see that
With over 240 responses expensive cities in the world salaries are stretched
from executives in Russia, (number 4 in the last cost of two ways: on one hand
we had the opportunity to living survey in 2012) and you have the cost of
closely study the package still remains the most
living and the price that
information of locals as well expensive city in Europe.
as expats in Russia. If you should pay for high
Russian nationals have the Within the past year many qualitative products /
benefit of a higher salary and companies have provisionally luxury reflected with an
bonus scheme, expats are kept package reviews on hold inflation of more than
sanctioned housing, schools for senior executives
8% in 2011, and from
and private medical regardless of their
insurance – bringing both to nationalities. Out of the 18% the other hand, you
the same level of package. of our respondents who have have the pressure from
not had a salary review in Head office to reduce
Moscow was always over a year, 13% are costs. The amount of
renowned for its wages Russian nationals.
housing allowance is for
growth but it seems that this
era has passed and Senior executives in most me the most pertinent
companies (at least our sectors fall in the $100,001 element with a serious
clients) are more cautious to $300,000 band of base cut with 25% of the
regarding salaries and salary with the exception of sample having less than
benefits. This is also due to those in Financial and Oil &
2500 USD per month.”
change of policies in terms of Gas sectors whose annual
international assignments base salary is much higher.
which make them excellent However, bonuses are -- Nicolas Bordry
for exposition and career generally higher in Regional Manager,
growth but less in terms of Consumer, Life Sciences, Russia/CIS,
financial gain. Industry and Technology
SpenglerFox
sectors.
ABOUT SPENGLERFOX
SpenglerFox is a globally networked Executive Search and Human Capital Solutions firm. We are
specialists in finding talent for emerging markets and business critical roles. Our unique view of
the world is both global and local, creating a new approach to finding and nurturing talent.
Founded in 2003, we work with some of the world‟s most forward-thinking organisations across
our completely integrated and wholly-owned network of offices in 17 countries across Europe,
Middle East, Africa, Asia and South America. Our team of over 120 consultants and researchers
have vast and far-reaching industry experience.
At SpenglerFox, we are all about sharing knowledge or providing insightful thought leadership.
Our Knowledge Exchange is a platform that allows for sharing information, knowledge, insight
and hosting events that promote exchanging knowledge. We hope that you engage and not only
gain additional knowledge from us but that you also return the favour and share your insights.
Visit our website for more information – www.spenglerfox.com
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