Evaluating CCO Compensation
The board of a global family of mutual funds requested a compensation analysis for their Chief Compliance Officer. Our client was concerned that the amount and structure of the CCO's compensation lagged in an increasingly competitive marketplace.
The CCO also served as adviser CCO, and both the funds and adviser had experienced a significant increase in assets under management and overall complexity since their last in-depth review of the CCO’s compensation structure.
We reviewed over a dozen surveys compiled by various recruiting, consulting, and research firms serving the financial services industry in order to provide a bench-marking and trend analysis related to:
- The current and projected CCO marketplace;
- Factors used in compensation setting; and
- The structure and elements of compensation.
We considered the context of each survey in conjunction with the firm’s profile to present only well supported and relevant findings that best reflected our client’s size, industry, and complexity.
We also developed a proprietary 11-point CCO compensation factor analysis with which to assess CCO compensation structure and elements.
We presented our findings and recommendations along with the factor analysis in a memorandum to the board.
The board gained critical insight into the current and projected state of the CCO position, differences among CCO skill sets, and both internal and external factors that influence CCO compensation.
Our client increased the CCO's total cash and non-cash compensation (bonus and base) to reduce flight risk and encourage the CCO's continued success managing growing responsibility, risk, and complexity for the adviser and the funds.
Armed with ReGroup's 11-point factor analysis, the board is better positioned to determine competitive compensation based on an informed evaluation of the person's suitability to the CCO role and their firm's unique needs.