4 questions to ask before accepting an executive position

This article appears in Charlotte Business Journal.

Business leaders know that due diligence — that period of fact-finding and data-gathering — is crucial to making business decisions. But due diligence is also critical when considering a job offer, particularly if it comes with an executive title. Learning more about the benefits and drawbacks of your new role can be illuminating as you decide whether or not to accept the offer.

How can you uncover the facts during your due diligence process? Here are four important questions to ask.

1. What is the culture like?

If you’re considering joining a company, you’ll want to learn about the culture and whether the firm’s values and work style align with yours. Of course, this can apply to joining a business unit or division within your company too.

The best source is inside experience. Start by talking with current and former employees to find out their thoughts and then check your network for former employees for confirmation of what you heard. Check out the online review platforms for current and former employee reviews. Lastly, do your Google research looking for the best companies to work for awards nationally, by industry, and locally along with seeing if news, industry awards and public image aligns with their values.

2. Where will my compensation come from and how much will it be?

Executive compensation is often complex, with total compensation coming from a mix of base pay, bonuses, equity plans and more. Since the amounts of all compensation sources can change from year to year, as much as 75% of an executive’s compensation may be variable.

Here are a few questions you can ask as you are comparing equity-based compensation:

  • What is the base pay?
  • What performance targets do I need to hit to receive bonus compensation? What happens if performance targets aren’t met?
  • What are the performance and vesting requirements for performance share awards/ units? What is the probability of hitting the performance share requirements?
  • What is the vesting period for restricted share awards/units?
  • What is the outlook and potential volatility of the company’s stock the awards and options are based on?
  • If stock options are awarded, what are the vesting requirements? How confident are you that the stock price will increase after the grant from vesting to expiration?

If you’re leaving one executive job with equity compensation to take a role at a different firm, one factor you want to consider is the amount of unvested equity you’re leaving at your current company. (Your financial advisor can help you determine this number.) You will need to negotiate with the new company on how they will make up for the equity compensation you’re leaving behind.

Don’t forget to include other benefits as you add up your total compensation package. These might consist of retirement plans, health insurance premiums, professional development or continuing education opportunities, vacation time, moving expense reimbursement and travel-related policies.

3. Is there room for growth?

Everyone needs goals to strive for and new challenges to tackle, even top-level executives. Before taking a new job, examine what skills and responsibilities the job will require. Will there be room for personal and professional growth? What support will be available to you and who will provide it? Will the new role fulfill or position you well for your career aspirations?

4. How will my day-to-day life look?

Perhaps most importantly, your new role should allow you to live out what is important to you professionally and personally. How will the new position impact your life outside of work? Our lives are never perfectly in balance; the question is, do you have the flexibility to give attention to what is important to you when you want or need arises?

Saying “yes” to an executive-level position can impact your overall job satisfaction, career trajectory, and personal goals. But answering these questions on your own isn’t always easy. We encourage high-level leaders to seek counsel from their financial advisor to run the numbers and discuss the questions. By conducting extensive due diligence, you can gain clarity about whether you should take the role or wait for a better opportunity to present itself.

Interested in learning more about executive compensation strategies? Contact Dan Dubay, director of SignatureExecutive, today.

SignatureFD is a financial advising firm headquartered in Atlanta, Georgia. We believe in helping our clients achieve wealth beyond money. Our team of investment, financial planning and tax experts are committed to proactively helping clients take control of their financial lives and achieve their goals.

Dan Dubay, CFP, is a partner, wealth advisor and director of SignatureExec. Dubay has served as president of the Financial Planning Association of Georgia, is a member of the Georgia Planned Giving Council and has served as a content expert for the Certified Financial Planner Board of Examiners.

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