Compensation as a Strategic Asset

APPENDIX2006 OWNER COMPENSATION SURVEY

Conducted byAugust J. Aquila, Ph.D. and Coral L. RiceSponsored byPCPS Division of the AICPA

2006 Owner Compensation SurveyOverall Results

What type of owner compensation system does the firm currently use?	N	%
Equal pay method	67	15.8
Formula method (firm uses algebraic formula to determine income allocation)	75	17.7
Managing owner decides how to allocate income	53	12.5
Compensation committee (small group of owners) decides how to allocate income	22	5.2
Executive committee decides how to allocate income	21	5.0
All owners (meet as a group) to decide how to allocate income	47	11.1
Pay-for-Performance method (objective and subjective goals are predetermined for each owner at the beginning of the year and evaluated at the end of the year)4	23	5.
Paper and Pencil method (all owners recommend a base compensation for each owner including themselves)	10	2.4
Ownership percentage method (income allocate based on ownership percentage)	28	6.6
Eat what you kill (system only rewards individual production effort)	23	5.4
Other (please specify)	55	13.0
Total Respondents	424

 

For how many years have you been using this method?	N	%
1 year or less	13	3.1
2 to 5 years	81	19.6
5 or more years	320	77.3
Total Respondents	414

 

Compared to 10 years ago, how much has your compensation system changed?	N	%
Hasn’t changed	185	45.2
Somewhat changed	142	34.7
Significantly changed	82	20.0
Total Respondents	409