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Focus: Sourcing/Procurement: Feature Article from Our Sourcing and Procurement Subject Area - See All

From SCDigest's On-Target e-Magazine

- May 26, 2015 -

 
Supply Chain News: Just How Much to Chief Procurement Officers Make? A Lot

Average Total Annual Compensation Bordering on $500,000, CAPS Research Study Finds

 

SDigest Editorial Staff 

 

If you can manage to make it to the top of a company's procurement organization, the financial rewards will be substantial and are growing fast than inflation.

That is the headline news out of another annual compensation study from CAPS Research, an arm of the Institute for Supply Management.

SCDigest Says:

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What industry you are in makes a big difference in how much compensation a CPO receives - especially if you are lucky enough to be in the consumer products sector

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CAPS, in association with recruiting company Korn Ferry, recently released results for its annual study, based on an executive survey of chief procurement officer compensation levels. Total average compensation was a whopping $464,756, consisting of $287,151 in salary and an average bonus of a nice $180,002.

Median compensation (half above, half below) was slightly lower, coming at $409,000.That was based on a salary of $270,000 and bonus of $139,000.

Whether you prefer average or median figures, life at the top of procurement would seem to be pretty good.

CPO compensation has also been rising at about twice the rate of inflation. The compound annual growth rate (CAGR) for CPO compensation from 1998-2014 was about 5%. On an inflation-adjusted basis, the GAGR was 2.6%.

Interestingly, the bonus portion of total compensation has been increasing faster in recent years versus base salary. The value of stock options for CPO is also on the rise, up to an impressive $774,000 in 2014, according to the CAPS survey data.

While previous ISM research has shown a persistent gap between male and female compensation in procurement across the board (though that gap narrowed in 2014 in a related ISM salary survey), there is no such gap at the CPO level. Total compensation for women CPOs was an average $468,500 in 2014, versus $462,720 for men.

CAPS says that the percent of survey requests sent to and responses from female CPOs were both about 18% for this year's survey. While that still a bit less than one in five CPOs being women, that percentage is nearly double the level seen as recently as 2006, CAPS says.

What industry you are in makes a big difference in how much compensation a CPO receives - especially if you are lucky enough to be in the consumer products sector. Examples total CPO compensation by industry sector is listed below:

Consumer products: $750,500

Automotive: $628,167

Financial services: $539,200

Petroleum: $432,900

Diversified foods: $432,833

Industrial manufacturing: $425,955

Aerospace/defense: $417,286

Utilities: $ 332,131


(Sourcing and Procurement Article Continues Below)

CATEGORY SPONSOR: SOFTEON

Learn More about Softeon's Innovative Supply Chain Solutions

 

CAPS notes that some characteristics have surprisingly no bearing on how much CPOs make. These include age, years of experience in supply management and years in their current CPO role.

There's also no difference in compensation between CPOs with master's degrees and CPOs with only bachelor's degrees.

A few other interesting observations from the research:

• The percentage of CPOs reporting directly to the CEO or one level down from the CEO has increased from 60.4% in 1999 to 82.1% in 2014.

• The percentage of CPOs reporting to Chief Financial Officers has nearly doubled since 2006. In 2014, almost one in five CPOs report to a CFO.

• CPOs mostly come from the ranks of supply management (but perhaps not from the same organization) and retire from that role, move laterally, or leave the company. Very few are promoted from CPO to higher executive positions in their current company or in another company.

All this and more is summarized in the table below from CAPS.

 

 

Source: CAPS Research



Anything surprise you in this CPO salary survey? Did you know CPOs had it this good? Let us know your thoughts at the Feedback button (email) or section (web form) below.




Recent Feedback

Just a small correction...  CAPS Research is not an arm of ISM.  We received no funding from them last year and while we share a building with them at Arizona State, we are a self standing (non-profit) commercial entity not financially affiliated with them.


Deb Stanton
Executive Director
CAPS Research
Jun, 03 2015

Not clear what is meant by stock value - is this long term inventive total, and if so, is this an annual amount or aggregate to at all for the individuals?


Steve
CPO
Private
Nov, 20 2016
 
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