Heads of Small Businesses Earn $258K on Average

October 18, 2006 (PLANSPONSOR.com) - Salary.com's 2006 Small Business Executive Compensation Survey revealed that the national average salary for the CEO/Partner/Owner job function for small businesses is $258,400.

However, Salary.com said in a press release, compensation varies widely across geographies. Areas that ranked as the top five for CEO/Partner/Owner compensation and their base salary averages, according to the survey, were:

  • District of Columbia – $395,400
  • New York – $321,800
  • Tennessee – $300,500
  • Massachusetts – $298,500
  • California – $296,600.

Meanwhile, the states that ranked as the bottom five and their base salary averages were:

  • Nebraska – $188,800
  • Kansas – $185,900
  • Maine – $181,700
  • South Carolina – $175,800
  • Oklahoma – $141,100.

CEO/Partner/Owner compensation varies across industries as well, with the manufacturing industry paying its CEOs/Partners/Owners $254,700, or 8% higher than the national median, the news release said. Meanwhile, the retail trade industry pays $169,500 (38% lower than the national median); the construction industry pays $190,000 (23% lower); and the health care and social assistance industry pays $210,000 (11% lower).

By job function, the survey found the following positions ranked highest in terms of median base salary and median total cash compensation:

  • CEO/Partner/Owner ($233,600 median base and $290,300 median total),
  • Legal ($194,500 and $244,800),
  • Finance ($155,000 and $186,000),
  • Operations ($155,000 and $180,000), and
  • Sales ($137,500 and $169,700).

The office manager/assistant to the CEO position received the lowest median base and total compensations of $45,000 and $49,000, respectively.

Other survey findings included:

  • Compensation for executives of small businesses generally increases with company size, as measured by number of full-time employees and revenue.
  • Executives at publicly held corporations typically earn significantly more than their counterparts in sole-proprietorships and closely held corporations.
  • Higher total compensation in the mining, financial services and chemical manufacturing industries can be attributed to significantly larger bonuses, commissions and additional short-term incentives.
  • Companies in the Northeast and West Coast regions tend to pay their executives more than organizations in the Midwest, South and Mountain States regions.
  • The median total cash compensation for CEOs is highest in the Finance & Insurance – Funds & Trusts industry, at $683,000, and lowest in the Transportation Equipment Manufacturing industry.

Salary.com looked to more than 1,800 companies ranging in size from 1 to 500 full-time employees. To purchase a copy of survey results, go to http://research.salary.com .