For the top officers in small businesses, raises running well
With revenues increasing an average of 26 percent and profits close to double their 1983 performance, compensation for chief executive officers in smaller businesses is up an average of 12.5 percent - three times the rate of inflation - according to a survey of 21,000 smaller and medium-size US manufacturing, technology, and service companies published by Growth Resources Inc. (GRI) of Peabody, Mass.
The consumer price index, as published by the US Department of Labor, rose 4. 2 percent during the same period.
''Base salary increases averaging 8.5 percent, combined with large bonus increases, averaging over 18 percent - up from $37,400 in 1983 to $46,000 in 1984 - fueled the largest real increase in total compensation in the small-business sector since our first survey on this subject in 1979-80,'' said GRI president Richard J. Bronstein. ''By comparison, total CEO compensation was up an average of 6.6 percent in 1983.''
In GRI's report of compensation by company profitability, bonuses were up 20 percent in high-profit companies where after-tax return on investment averaged over 20 percent - from $60,000 in 1983 to $72,500 in 1984, and they led the large advance in total compensation.
Bonuses were up 17 percent in average-profit companies. Even GRI's low-profit company group, with after-tax returns on investment of 5 percent or less, reported that average bonuses rose from $16,500 in 1983 to $17,600 in 1984, an increase of 7 percent.
''As the performance and compensation figures reflect, most smaller and medium-size US companies are having an outstanding year in 1984 and almost no one is having a really bad year,'' Mr. Bronstein said.
''The substantial real increases in compensation reflect the sustained improvement in smaller-company profit performance in 1984 and emphasize the strong influence of profit performance in determining the compensation of smaller-company officers,'' he said.