NeuGroup Peer Research shows the growing importance of people in treasury
NeuGroup Peer Research conducted an FTE and Compensation survey across NeuGroup’s corporate treasurer-level groups, including The Treasurers’ Group of Mega-Caps (tMega), The Treasurers’ Group of Thirty Large-Cap Edition (T30LC), The Treasurers Group of Thirty (T30) and The Tech20 Treasurers’ Peer Group (Tech20).
The following results are aggregated from the 40 company responses The NeuGroup received from July to October 2016. The detailed responses yield a good representation of treasury FTEs and compensation levels for NeuGroup member companies. Compensation numbers have been examined by employee level, company size, location, sector and areas of responsibilities. A distinguishing factor of our survey is that this analysis drilled down into equity as a key component of compensation.
The results endorse treasury as a good place to be. Total compensation levels for NeuGroup treasury members were higher than suggested in other broader treasury surveys. Total compensation for treasurers averaged $845k, with the minimum at $214k and the maximum at $1.77M. Of that total, on average, $317k was the base/cash salary, $163k cash bonus, and $277k in equity grants and performance-based equity awards (vesting in approximately three years). For assistant treasurers, total compensation averaged $436k, with the minimum at $122k and the maximum at $770k. Of that total, on average, $223k was the base/cash salary, $99k cash bonus, and $104k in equity grants and performance based equity awards (vesting in approximately three years).
A snapshot of average and median compensation across our network of respondents is included below.
In comparison to the broader AFP 2016 compensation survey conducted during the calendar year 2015 and including base salaries effective January 1, 2016, NeuGroup Peer Research shows significantly higher average treasurer base cash salary compensation. The NeuGroup compensation survey indicates treasurer average base cash salary of $317k versus $193k for AFP and assistant treasurer’s base cash salary of $223k versus $140k for the AFP survey. The higher compensation levels in the NeuGroup survey can be explained by the survey responses coming from large US corporates, of which several are growth companies. The AFP survey covered a much broader universe and 75% of its survey respondents were from companies with total annual revenues of less than $1 billion.
Treasury professionals in certain industries and regions do particularly well, like biotech and pharma in the Northeast and the tech industry in the West. Nonetheless, we believe the compensation level analysis shows treasury’s growing importance within MNCs across all sectors and geographies.Treasury had the opportunity to shine during the financial crisis and regulatory upheaval, and this is reflected in the higher compensation levels for treasurers and their staffs.
Key Takeaways
- Strategic treasury earns more. The increasingly strategic role of treasury is showing up in respectable compensation levels. Higher level strategic roles such as hedging, capital allocation and portfolio management, generally receive 10-23% more in base compensation than colleagues at the same level in more operational roles. Cash and operations roles in treasury tend to get lower average comp levels, even as workload and work importance rise in response to bank regulation, tax and related compliance matters. Notably, at the mid-level for senior managers and managers, the compensation between the areas of responsibility is more even. Mid-level rotation programs would benefit from this compensation alignment.
- Differentiating treasury comp poses challenges. Treasurers face a challenge in offering higher compensation to different roles and responsibility groups within treasury. Therefore a tension is created in that this upward bias in compensation for certain treasury roles may make it more challenging for corporates to encourage high-potential treasury professionals to rotate across treasury. Similarly, if treasury is compensated differently than other finance areas, it beomes difficult to rotate out of treasury to be promoted into more senior finance roles.
- Equity rewards are significant incentives. Our survey differed from other treasury salary surveys in that we reviewed both performance- and non-performance-based equity grants and vesting periods. We found that the potential remunerative benefits in this space is substantial. At the treasurer and assistant treasurer levels, equity awards may range up to 3x the amount of base salary, with average vesting periods of 3-4 years. Within the healthcare (including pharma and biotech) and tech spaces, equity awards may be exceptionally high, averaging $403k and $322k respectively, even including a maximum of $1mn in equity rewards. While these grants may not be consistently generous every year, they do substantially contribute to higher compensation levels. This might explain why the general compensation trends recently favor cash bonuses over equity.
- HR is often a road block. In discussions at our most recent 2016 H2 peer group meetings, treasurers noted pushback by HR in revealing salary details. Members also mentioned that HR would be reluctant to accept salary data from outside “official” sources, especially if the response count was not in the hundreds. This validates the value for increased participation in compensation benchmarking to cut through corporate red tape and overcome other roadblocks.
TREASURY HEADCOUNTS
Since the financial crisis, the scope of the treasury function continues to expand and teams are consistently asked to do more with less. Our survey found that companies averaged 21 full time employees (FTEs) at headquarters and 28 globally, although those numbers varied significantly by company size. Smaller companies with less than $10 billion in total annual revenue have an average of 6 FTEs at headquarters and 4 globally whereas companies with more than $50 billion in total annual revenue have an average of 46 FTEs at headquarters and 97 away from HQ. Discussions with treasurers reveal that these numbers often are skewed by the different activities performed by treasury across companies (e.g., FTEs are higher if credit and collections is part of treasury). In addition, recent M&A transactions may make FTE counts temporarily larger as companies work to integrate acquisitions. On balance, differing organizational structures and roles considered to be part of treasury make headcount comparisons a challenge.
Key Takeaways
- Teams are proportionately lean. As expected, bigger companies have bigger treasury departments with an average total headcount of 10 treasury employees at a company with annual revenues of less than $10bn; while at companies with $50bn or more in revenues, the average headcount is 143.
- Org charts are weighted to operations. Breaking down headcounts by function revealed operational functions have higher headcounts than those in more strategic areas. The average cash management team has 9 FTEs, and regional treasury centers average 19 full time employees, versus the average capital markets/FX team having 4 FTEs or investment management teams also averaging 4.
- Department sizes stay the same. More than half of companies won’t be adding personnel in 2017 but at least the amount of survey respondents reporting a reduction of headcounts is less than (9%) those in 2016 (13%).