• by Karlene Lukovitz  @KLmarketdaily, July 25, 2014

Only 48% of chief marketing officers feel fairly compensated, according to the CMO Council's first comprehensive compensation report.

Not surprisingly, CMOs who make more money are more likely to feel fairly compensated.

But the high overall degree of dissatisfaction with compensation calls for further research to determine whether CMOs are actually underpaid relative to key benchmarks for other C-level executives -- and if not, why CMOs believe they're underpaid, says Kimberly A. Whitler, assistant professor at the University of Virginia’s Darden School of Business, who analyzed the data and authored the report.

The finding also suggests that other questions need to be answered, including whether the perception of unfair pay (accurate or not) relates to the high turnover among CMOs, and whether this perception is affecting CMO performance.

The report is based on an analysis of responses to compensation-related questions from 345 of 525 participants in the Council's “State of Marketing” survey among senior-level marketers at companies around the world.

Best-paid CMOs report to CEOs

The research also found that 69% of the highest-paid CMOs – those earning more than $500,00 in annual base pay -- report directly to CEOs, and that a majority of these CMOs have developed strong alliances with CIOs and CFOs.

In addition, the highest-compensated CMOs tend to be focused on driving overall business performance (top-line growth, market share, efficiencies), and tend to cite their key accomplishments as being focused on restructuring marketing to drive results, improving the yield/accountability of marketing, and building digital capabilities.

Other results highlights:

• Most CMOs earn between $100,000 and $350,000 per year: 39% of respondents reported earning between $100,000 and $199,999, and virtually the same percentage reported earning between $200,000 and $349,999.
• Not surprisingly, the larger the company, the more likely that CMOs make more in base compensation, and the more likely that they receive bonus compensation. Nearly 55% of CMOs at large companies earn more than $200,000 in base pay, versus just 31% of those at small companies.  And while an average of 85% of all respondent CMOs receive bonuses, 96% of those at large companies report getting bonuses, versus 71% of those at small companies.
• However, surprisingly, CMO base compensation was not found to be highly correlated with the number of people that the CMO manages. While it would be expected that larger marketing teams presumably requiring more time and support from a manager would correlate with CMO compensation, this isn't the case. "This suggests that marketing team size is not necessarily driven by firm size," notes the report.
• Nearly 16% of B2C CMOs earn $350,000 or more per year, versus just 7% of B2B CMOs, and 10% of hybrid-company CMOs.
• CMO salary tends to increase as a company's digital marketing performance (as assessed by the CMOs themselves) improves. Thirty-seven percent of CMOs who earn more than $350,000 rate their digital performance as excellent, whereas none who rated their digital performance as "failing" reported earning in that range.
• Specific head-of-marketing titles weren't found to correlate significantly with base compensation. For example, individuals with the VP of customer experience and director of marketing titles had a higher average base compensation than SVPs/EVPs of marketing. The report suggests that, at least in part, this likely reflects differences in titles and their interpretations by geographic region.

Respondents to the survey questions analyzed for the CMO Council's compensation report were predominantly from B2B enterprises (45%), with 20% from B2C companies and 35% from hybrid companies. Thirty-five percent were from companies with revenues of more than $1 billion, 39% from companies with revenues of $51 million to $1 billion, and 25% from companies with revenues of $50 million or less. Respondents were drawn from more than 25 industry sectors, with 20% having marketing teams of more than 100 staff members.

The full report can be purchased on the CMO Council site.

"Businessman holding money" photo from Shutterstock.