2835 Seventh Street, Berkeley, California 94710 | 510.658.5633 | www.KoffAssociates.com To: Prabhu Palan
i, Chief Investment Officer
From: Katie Kaneko, Managing Director, Koff & Associates Subject: CEO Salary Survey Update
Date: February 3, 2023
In September
2022 Koff & Associates provided The City of San Jose’s Office of Retirement Services (Office) with the total compensation study final report for the Chief Executive Officer (CEO) classification. The report outlined the study process, findings, and recommendations with respect to the CEO classification.
At the request of the J oint Personnel Committee (JPC) during their January 12, 2023 meeting, Koff & Associates conducted additional analysis of the base salary and total compensation market data to provide further compensation considerations.
The follow
ing data reflects the CEO’s adjusted base salary and total compensation in relation to the market median, 60th, 75th, and 90th percentiles, as well as to the market leader (or highest compensated comparable). The adjusted base salary, as described in the final report, reflects the top monthly salary at each comparator agency, adjusted by a percent value based on differences in cost of labor between the comparator and the Office. While the market median is the p hilosophy adopted by most public sector agencies, these above percentiles are those we’ve seen utilized in the public sector. While Koff & Associates typically recommends setting compensation in relation to either the base salary market median, or total co mpensation market median (depending on whether overall benefits positively or negatively impact market competitiveness), the Office has many options regarding the compensation philosophy and plan it wants to implement. Unlike most of the market comparators , the Office’s CEO classification is responsible for the direction of two different retirement plans and answers to two different retirement boards. Given the unique scope of responsibility and expertise required to effectively manage and direct the Office’s retirement plans, the Office should carefully consider a market position which will allow the Office to be competitive.
Table 1. Adj
usted Base Salary Market Position
Median of Comparators
Office of Retirement Services Above/Below
$29,269
-7.7%
60th Percentile of Comparators
Office of Retirement Services Above/Below
$29,583
-8.9%
75th Percentile of Comparators
Office of Retirement Services Above/Below
$31,374
-15.4%
90th Percentile of Comparators
Office of Retirement Services Above/Below
$33,577
-23.5%
Market Leader
Office of Retirement Services Above/Below
$34,510
-27%
P&F Board 5.4.23
2835 Seventh Street, Berkeley, California 94710 | 510.658.5633 | www.KoffAssociates.com Table 2. Total Compensation Market Position
Median of Comparators
Office of Retirement Services Above/Below
$37,673
-8.7%
60th Percentile of Comparators
Office of Retirement Services Above/Below
$38,908
-12.3%
75th Percentile of Comparators
Office of Retirement Services Above/Below
$40,027
-15.5%
90th Percentile of Comparators
Office of Retirement Services Above/Below
$43,753
-26.3%
Market Leader
Office of Retirement Services Above/Below
$48,902
-41.1%
Findings
Based on the market compensation data reflected in the above tables, the CEO classification is below market at each of the respective percentiles when factoring in differences in cost of labor for base salary and total compensation. When the benefits package does not contribute to overall competitiveness, as is the case in this study’s results, we recommend the salary recommendation be determined using base salary results and evaluating the benefits package separately.
Ba
se Salary Recommendations
K&A recommends adjusting the top of the base salary range for the CEO classification to align with the market position the Office determines is the appropriate competitive position. For example, if the Office decides to set the CEO’s salary range based on the 60th percentile, then the top of the current salary range would be adjusted up by 8.9%, to $29,583 with actual placement within the range determined by the JPC and Board.
Ra
nge Structure Adjustment Recommendations
The data collected and analyzed for the purpose of this study, is reflective of the market practices of the comparator agencies during the timeframe in which data was collected. Given that market pay practices are not static, K&A recommends that the Office conduct a periodic range structure movement review to maintain market competitiveness. Range structures are designed to meet an organization’s strategy on salary compensation ; as stated earlier, markets move periodically , and range structures should be designed to move with those market changes for ongoing market competitiveness.
K&A would like to reiterate that the final report, this update, and the findings are meant to be a t ool for the Office to create and implement an equitable executive compensation plan. Compensation strategies are designed to attract and retain excellent staff; however, financial realities and the Office’s expectations may also come into play when determi ning appropriate compensation philosophies and strategies. The collected data presented herein represents a market survey that will give the Office an instrument to make future compensation decisions.
It has been a pleasure working with the City of San Jos e’s Office of Retirement Services on this critical project. Please do not hesitate to contact us if we can provide any additional information or clarification regarding this data.
City of San Jose Retirement Agency
Market Compensation Data (sorted by Adjusted Top Monthly Salary) February 2023 Rank Comparator Agency Classification Title
Top
Monthly
Salary
Geographic
Differential
Adjusted
Top
Monthly
Salary
Benefits
Package
Total
Monthly
Comp
Salary
Effective
Date
Next
Salary
Increase
Next
Percentage
Increase
1 CALPERS Executive Officer, PERS $ 52,396 113.6% $ 59,522 $ 9,903 $ 69,424 unknown unknown unknown 2 San Bernardino County Employees' Retirement Association Chief Executive Officer $ 29,827 115.7% $ 34,510 $ 14,392 $ 48,902 1/1/2022 unknown unknown 3 San Francisco Employees' Retirement System Chief Executive Officer and Chief Investment Officer $ 32,955 100.0% $ 32,955 $ 6,777 $ 39,732 7/1/2022 7/1/2023 2.50% 4 Los Angeles City Employees' Retirement System General Manager, LACERS $ 26,840 111.0% $ 29,792 $ 7,557 $ 37,349 6/19/2022 1/29/2023 2.00% 5 Orange County Employees Retirement System Chief Executive Officer $ 26,017 112.5% $ 29,269 $ 11,052 $ 40,321 1/1/2022 unknown unknown 6 City of San Jose Retirement Agency Chief Executive Officer $ 27,177 100.0% $ 27,177 $ 7,469 $ 34,646 8/7/2022 7/1/2023 3.00% 7 Alameda County Employees' Retirement Association Chief Executive Officer, ACERA $ 26,652 100.0% $ 26,652 $ 11,021 $ 37,673 12/26/2021 unknown unknown 8 Contra Costa County Employees' Retirement Association Chief Executive Officer $ 24,823 100.0% $ 24,823 $ 8,263 $ 33,086 7/13/2022 unknown unknown 9 San Mateo County Employees' Retirement Association Chief Executive Officer, SAMCERA $ 24,519 100.0% $ 24,519 $ 9,413 $ 33,932 2/20/2022 10/2/2022 3.00% Top
Monthly
Salary
Adjusted
Top
Monthly
Salary
Total
Monthly
$ 30,504 $ 32,755 $ 42,553
-12.2% -20.5% -22.8%
$ 26,746 $ 29,530 $ 38,702
1.6% -8.7% -11.7%
8 8 8
$ 26,652 $ 29,269 $ 37,673
1.9% -7.7% -8.7%
$ 26,765 $ 29,583 $ 38,908
1.5% -8.9% -12.3%
$ 28,334 $ 31,374 $ 40,027
-4.3% -15.4% -15.5%
$ 31,078 $ 33,577 $ 43,753
% City of San Jose Retirement Agency Above/Below -14.4% -23.5% -26.3% Market Leader Position $ 32,955 $ 34,510 $ 48,902
% City of San Jose Retirement Agency Above/Below -21.3% -27.0% -41.1% 7 7 7
N/C - Non Comparator
% City of San Jose Retirement Agency Above/Below
Number of Matches
Median Without CalPERS match
% City of San Jose Retirement Agency Above/Below
Number of Matches
60th Percentile
% City of San Jose Retirement Agency Above/Below
75th Percentile
% City of San Jose Retirement Agency Above/Below
90th Percentile
Median of Comparators
Chief Executive Officer
Summary Results
Average of Comparators
% City of San Jose Retirement Agency Above/Below