HRO Today CHRO Today 2019 - 7

Professional Insight
resulting in a valid sample of 18 percent.
Data was segmented into the Fortune
50, Fortune 100, Fortune 200, and
Fortune 500 bands. Within each of
these categories, the research team
looked at correlations to salary, total
cash compensation, and total noncash
compensation (stock options and
grants).
The data set was analyzed to look
for correlations between market
capitalization, earnings per share
(EPS), earnings before income tax,
depreciation and amortization (EBITDA),
and total employee headcount.
The findings show a broad spread of
HR compensation packages. Among
companies smaller than the Fortune 50,
there were no significant correlations
between company performance
or size and CHRO compensation.
Compensation for the most senior
HR executives within this group was
based upon factors outside company
performance, such as industry,
location, or the ability to get the best
package possible. However, among
the largest organizations within
the Fortune 50, the research found
statistically significant correlations
between compensation and company
performance. To explain further, a
coefficient of correlation of 1.0 is
perfect, meaning the two factors being
examined move completely in sync
with each other. Anything over a 0.7 is
considered highly correlated. Among
the Fortune 50 group, there was a
coefficient of correlation of about
0.8 to several factors that measure
company performance.
What drives CHRO compensation in
the Fortune 50? There is a strong
correlation (0.79) between total
compensation, which includes stock
incentive awards, and company EBITDA.
If a company is more profitable, the HR
leader is making more money. There
is also a similar correlation between
salary and EBITDA (0.81). We also found
correlations between restricted stock
awards and earnings per share (EPS)
(0.82) and cash compensation and EPS
(0.79).
But below the Fortune 50, the
connection disappears. For example,
within the Fortune 100, total
compensation versus EBITA has a
correlation of only 0.41, which is
considered a weak to moderate positive
correlation. Other metrics compared
to different forms of compensation
among Fortune 100 and Fortune 200
companies were analyzed, and the
results were the same or showed
even less of a correlation. In fact,
one analysis of restricted stock versus
EPS in Fortune 200 companies had a
negative correlation. In other words,
the analysis beyond the Fortune 50 left
no further insight into how CHROs are
compensated, just how they weren't
compensated.
For those who work for a Fortune
50 company or are looking to join
a company with strong profitability
in pure EBITDA or good earnings
Correlation Between
CHRO Compensation
and Company
Performance Metrics,
Fortune 50
FALL 2019
|
CHRO TODAY
[7]

HRO Today CHRO Today 2019

Table of Contents for the Digital Edition of HRO Today CHRO Today 2019

HRO Today CHRO Today 2019 - 1
HRO Today CHRO Today 2019 - 2
HRO Today CHRO Today 2019 - 3
HRO Today CHRO Today 2019 - 4
HRO Today CHRO Today 2019 - 5
HRO Today CHRO Today 2019 - 6
HRO Today CHRO Today 2019 - 7
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HRO Today CHRO Today 2019 - 40
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https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-december-2019
https://www.nxtbook.com/sharedxpertise/sharedxpertise/chro-today-2018
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-may-2018
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-april-2018
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-september-2018
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https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-november-2018
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-march-2018
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-june-2018
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https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-september-2017
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https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-november-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-march-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-june-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-july-august-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-january-february-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-may-2017
https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-december-2017
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https://www.nxtbook.com/sharedxpertise/sharedxpertise/hro-today-october-2015
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