We are launching an aviation related JV with a Chinese SOE here in the U.S. and are trying to figure out what to pay the president. The JV is will be a small operation in the U.S. with manufacturing in China. It is expected to have sales over $40mil in 5 years. Any ideas would be appreciated. Thx.
What should the salary and incentive pay package be for the president of a joint venture in Seattle?
Answers
Oliver:
Market; depends on what you are asking of the president. $40M is small. JV's tend to have very little equity upside. If it is a known quantity, then incentive pay can be dis-incenting.
If the President needs to have special industry contacts / knowledge, I'd say the comp needs to be north of $250K. If it is an administration president, closer to $250 seems more likely. Additionally, if there is a product to be developed and brought to market, that is going to have upward pressure on comp, but meeting targets can be a good place to use incentives.
Finally, pay more if you need seasoned, again closer to $250 won't get you there.
Statstically, there is a direct correlation between revenue and comp. $40M only allows for so much room for high comp.
Anon.
1
Thanks. Good input.
I would add look at the business plan for this JV and see what metrics (quantitative and qualitative) that define success in the short term that are tied to long-term goals. Some were mentioned above. Then do some compensation bench marking. Applying both science and "art" to the total compensation relative to the talent you are attracting/targeting, the base salary and incentive plan should be assessed relative to the total compensation (there may be other discretionary components, perks, equity, etc). Hope this helps.
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Thanks. Any salary range that you think we should be looking at?
Ultimately, the right package for the President of a joint venture in Seattle is what you need to pay to get the right person.
I would suggest that total compensation should be in the predominately equity based in a startup, unless you can find a way to incentivize on strictly cash. A base of $250k maybe sufficient but if product development, sales and
You’re likely targeting experienced (Aviation) executives, who may forgo a higher base salary for increased equity, but the cash compensation will still be significant in addition to the other components you will negotiate. Those total rewards components are; base salary, benefits (including perq’s), short-term incentives, and long term incentives. Performance-based incentives for new executives will be paramount to measuring the success of this new venture. Assign metrics to what must be achieved, and tie higher cash incentives to those metrics. If you’ve structured the right system of short-term rewards, the short term incentive bonuses will pay for themselves.
Think creatively about what will sweeten the pot to hire the right person. For example, business or first-class airline travel written into the contract, as well as luxury car service and hoteling for the President’s time in China. Negotiate with your preferred candidate on what they need to be most productive. Some may want a health insurance program that covers them while they’re abroad. Continue to talk with people in your network, and best of luck on your search for this key role.
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Thanks Doug. Very helpful.
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