Originally Published in The FCPA Report | January 9, 2013 | By Vincent Pitaro
Consero Group LLC (Consero) recently conducted a survey of chief compliance officers (CCOs) of major corporations. The survey provides data on compliance departments with respect to department size, access to top management, budgets and compensation.
Consero conducted the survey at its October 2012 Corporate Compliance and Ethics Forum, held in Palm Beach Gardens. Forty-eight of the Forum’s attendees – all CCOs of Fortune 1,000 companies – responded to the questions. The survey size is small, but the data provides an enlightening snapshot of compliance departments at a diverse group of large companies. “The executive leaders among large global businesses seem to recognize the importance of chief compliance officers, whose personal compensation is on the rise. However, a large percentage of those CCOs seem to lack the resources they need to apply their skills and expertise effectively,” Paul Mandell, CEO of Consero, told The FCPA Report.
Robust CCO Compensation
Almost three-quarters of the responding CCOs reported salaries of over $200,000 per year. Only one-fifth of CCOs reported salaries in excess of $250,000. These figures do not include bonuses or other perks. Though these CCOs are certainly a well-compensated group, they seem to be compensated at a lower level than Fortune 1,000 general counsels as reported in a recent Equilar, Inc., survey. Equilar found that GCs have a median base salary of $425,000 and mean base salary of $459,340. See “Top General Counsel Compensation Increasing Amidst Growing Pressure on In-House Law Departments,” The FCPA Report, Vol. 1, No. 14 (Dec. 12, 2012).
Compliance Departments are Increasing in Size
More than three-quarters of the respondents had compliance departments with from one to five staff members. Another 12% reported between six and ten staff members. Almost half of the respondents indicated that their staff had increased over 2011. Of those, most reported changes in department size of up to 25%. A small number (12%) saw their departments decrease in size.
CCOs Have Access to the Executive Suite But Still Lack Resources
Consero believes that access to top management can be an “indicator of the weight of a corporate role.” Almost three-quarters of the respondents reported that they had a “sufficient level of access” to both their company’s chief executive officer and its board of directors. For an in-depth examination of reporting structures for chief compliance officers at hedge funds, see “To Whom Should the Chief Compliance Officer of a Hedge Fund Manager Report?,” The Hedge Fund Law Report, Vol. 4, No. 22 (Jul. 1, 2011).
Based on that measure, one conclusion to be drawn from the survey could be that most large corporations do treat their compliance departments seriously. On the other hand, almost half of respondents also reported that they did not have sufficient resources to carry out their duties. Consero noted: “The increasingly complex international regulatory landscape seems to present new risks and challenges with alarming regularity, creating more strain on compliance departments than ever before.” In addition, more than half of the CCOs answered “no” when asked whether “performance appraisal and incentive programs positively support your compliance and integrity objectives.”
Compliance Department Budgets Increasing Slightly
The great majority of respondents (68%) reported compliance department budgets of between $250,000 and $1 million. The remaining respondents were relatively evenly distributed across several budget categories ranging from under $100,000 to over $10 million. Almost half of the respondents reported budget increases over 2011. Those increases were concentrated in the ranges of 1-10% and 20-30%. Only 8% of respondents reported decreases in their budgets.
Consero’s next event for select compliance officers, its fourth, is in April in San Diego, California. Among the topics to be covered are minimizing exposure arising from third-party relationships, evolving strategies in shaping an ethical corporate culture and lessons learned from recent government investigations.