- Category: July 2014 - Marketing Analytics
Chief marketers who report directly to CEOs are likely to earn more than their peers, says the Chief Marketing Officer (CMO) Council in a new “CMO Compensation Report” study, which was released yesterday. Additionally, good peer relationships provide an advantage as the most highly paid CMOs have forged close partnerships with chief financial officers and chief information officers.
This study to benchmark and understand the key factors influencing chief marketer compensation was undertaken as part of the soon-to-be-released eighth “State of Marketing” audit by the CMO Council—a comprehensive audit that serves as a valuable resource and reference for the CMO Council’s 7,000 members in 110 countries, who collectively control more than $400 billion in aggregated annual marketing expenditures.
For this analysis, responses from 345 of the 525 participants in the “State of Marketing” audit of senior-level marketers were evaluated to include insights from countries and companies around the world. Executive respondents with CMO, EVP, SVP or VP titles totaled 56 percent. In addition, 18 percent had director titles, which is often the most senior title in Europe, the Middle East, Africa, APAC, India and Latin America. Some 8 percent listed their titles under “Other,” and this included general managers and variations on the VP title. Most notably, 60 percent reported to a CEO, president or COO, and 17 percent reported to a regional VP, GM or division/LOB leader.
The milestone 36-page report is filled with facts, stats, tables and analytics provided by Dr. Kimberly A. Whitler of the Darden School of Business at the University of Virginia. Dr. Whitler, who reviewed the research data and authored the report, previously spent nearly 20 years in senior marketing and general management positions at Procter & Gamble and other companies. More recently, she served as the CMO of David’s Bridal, the country’s leading bridal apparel retailer; the CMO of Beazer Homes, a Fortune 500 homebuilder; and as an officer at PetSmart, the country’s largest pet specialty retailer.
Key findings highlighted in the report include:
- CMO compensation is directly related to reporting structure. Those making more than $500,000 annually are more likely to report directly to the CEO.
- The highest paid CMOs have developed strong alliances with CIOs and CFOs.
- CMOs earning the highest levels of base compensation tend to be focused on driving business performance (e.g., top-line growth, market share, efficiencies, etc.).
- B2C CMOs have a higher base salary than B2B/hybrid-company CMOs.
- CMO base compensation is correlated with firm size. The larger the company, the more likely that the CMO will make more in base compensation and the more likely they will have bonus compensation.
- Digital marketing skills are important. CMO salary tends to increase as their firm’s digital marketing performance improves.
- Marketing titles (i.e., CMO, VP of Marketing, SVP of Marketing, etc.) don’t significantly correlate with base compensation.
- Key accomplishments of the top earners (greater than $500,000 base compensation) are centered on restructuring marketing to drive results, improving the yield/accountability of marketing, and building digital capabilities.
- Bonuses are the most common type of compensation beyond base pay. Eighty-five percent of CMOs receive bonuses with large company CMOs being more likely to have bonus-based compensation.
“With a minority of CMOs believing that they are fairly paid, there appears to be a general issue with CMO compensation,” Dr. Whitler notes. “This high degree of dissatisfaction suggests that either CMOs are actually underpaid relative to key benchmarks identified in the report or that CMOs just believe they are underpaid. This important finding may be a key driver of CMO turnover and suggests both a greater need: 1) to understand why CMOs believe they are underpaid, and 2) for more collaboration between executive recruiters, CHROs, and CEOs to ensure that CMOs are fairly compensated.”
According to CMO Council Executive Director Donovan Neale-May, the “CMO Compensation Report” will become an annual benchmarking tool to help CEOs, executive recruiters, chief HR officers, board members, academics and senior marketers better understand CMO compensation from a variety of dimensions (e.g., geography, type of business, responsibilities, etc.).
“As such, this is the first comprehensive report regarding CMO compensation and provides significant insight into CMO salaries, incentives, benefits, as well as CMO expectations and perceptions of compensation fairness and value to the organization,” Neale-May notes.
To download the full detailed report ($495 USD), please visit www.cmocouncil.org/r/cmo-compensation-report.