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SOURCE: Rothstein Kass
Survey Examines Fundamental Approaches for Structuring Compensation, Offers Framework for Successful Negotiations
New York, NY (PRWEB) June 20, 2012
The Rothstein Kass Family Office Group (http://www.rkco.com/Site/FamilyOffices/CorpContent.aspx), a division of professional services firm Rothstein Kass (http://www.rkco.com), today announced the release of “The Compensation Variance,” a report examining executive director compensation at single-family office operations. The study features the findings of a survey of 139 executive directors at single-family offices, both U.S. (53.2 percent) and abroad (46.8 percent). Statistical analysis of participant responses is combined with a detailed overview of the criteria for success. Due to specific qualities and characteristics of the single-family offices surveyed, a segmentation model based on the two principal payout models (employee and participant) employed by single-family offices was applied.
“For more than five years, we have examined how the evolving needs of ultra-wealthy clients are driving the growth of the single-family office space. Single-family office operations exist in greater numbers and represent more wealth than they did even a few years ago. In most cases, they also provide a broader array of products and services beyond traditional asset management. Determining the right blend of resources required to build a comprehensive strategy is typically accomplished by the single-family office executive in cooperation with the ultra-wealthy family,” said Rick Flynn, a Principal and Head of the Family Office Group at Rothstein Kass. “Because the needs of every family are distinct, no two single-family offices are identical. Finding an executive director with the specialized skills to support family objectives is a challenge in itself. Arriving at a fair model for compensating these professionals can be even more daunting without the benefit of competitive analysis.”
The survey found that the average total compensation for an executive director was nearly US $1.6 million. Executive directors working under the participant model averaged over US $3 million, while the mean compensation for executive directors working as employees was about US $472,000.
In compensating the executive director, the survey highlights four important steps:
1. Determining the Parameters: Negotiations should begin with creating and clearly articulating limitations that are acceptable to both parties. Broadly speaking, negotiations should encompass: base salary, bonus (direct and/or deferred) and benefits.
2. Structuring the Compensation Package: Once the parameters have been agreed on, implementation options must be decided. After evaluating various legal structures, techniques and products, the family office can choose the best way to combine various compensation components.
3. Establishing a Contingency Plan: Critical but often overlooked, a contingency plan is comprised of two basic components: transitional and financial. The transitional aspect deals with potential control change at the single-family office while the financial aspect is directly related to the compensation package and addresses concerns ranging from deferred disbursement to liquidation of mutual assets.
4. Refining the Compensation Package: As it can quickly become dated, the compensation plan should be refined at regular intervals by the family and executive director. It is essential to the efficient functioning of the family office and ensuring continual alignment.
About Rothstein Kass:
Rothstein Kass is a premier professional services firm that has served privately held and publicly traded companies, as well as high-net-worth individuals and families, for more than 50 years. As trusted advisors to our clients, Rothstein Kass provides accounting, auditing and tax services, as well as a full array of integrated services, to clients across industry spectrums and in all stages of organizational development. At the core of Rothstein Kass’ remarkable success lies our commitment to hiring, developing and retaining employees that represent an entrepreneurial spirit mirroring that of the sophisticated business and financial services communities that we serve.
The Rothstein Kass Family Office Group offers a wide range of financial, wealth planning and lifestyle management services to family offices and high-net-worth individuals. Composed of seasoned financial professionals and certified public accountants, the Family Office Group applies proven expertise with the utmost discretion and attention. A division of the Rothstein Kass Commercial Services Group, the Family Office Group does not provide investment allocation, asset management or advisory services.
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