CFA Institute 2007 Member Compensation Survey - Summary

CFA Institute

2007 Member Compensation Survey

Summary Report

Contents

CFA Institute 2007 Member Compensation Survey - Summary Report 2

Introduction, Methodology, and Compensation Calculation.................................................................................................................. 3 Introduction.....................................................................................................................................................................................................................4 Methodology...................................................................................................................................................................................................................5 Compensation Calculation..............................................................................................................................................................................................8

Respondent Profile ...................................................................................................................................................................................... 9 Type of Organization......................................................................................................................................................................................................11 Organization’s Assets under Management .....................................................................................................................................................................12 Type of Position..............................................................................................................................................................................................................13 Type of Occupation ........................................................................................................................................................................................................14 Years of Experience........................................................................................................................................................................................................15 Charterholder Status .......................................................................................................................................................................................................16 Advanced Degrees Held .................................................................................................................................................................................................17

Executive Summary .................................................................................................................................................................................... 18 Overall Compensation Trends ........................................................................................................................................................................................20 Occupation and Years of Experience..............................................................................................................................................................................21 Cash Bonuses and Long-Term Incentives ......................................................................................................................................................................24 Determinants of Cash Bonus ..........................................................................................................................................................................................25 Types of Long-Term Incentives Awarded......................................................................................................................................................................26

Appendices ................................................................................................................................................................................................... 27 Appendix A: Occupation Descriptions ...........................................................................................................................................................................28 Appendix B: Exchange Rates .........................................................................................................................................................................................32

Appendix C: Questionnaire Changes from 2005 to 2007...............................................................................................................................................33


Introduction, Methodology, and Compensation Calculation

Introduction


The 2007 Member Compensation Survey is designed to provide CFA Institute members with compensation information to help with career assessment and planning. The self-reported data included in this report covers broadly defined positions and, as such, provides members with useful directional frames of reference about pay levels. It should also be noted that because the survey includes only data from a sample of CFA Institute members, it is not necessarily representative of the full CFA Institute membership or the total population of individuals in these positions. CFA Institute members continually express the value they derive from the compensation survey. The priority for the 2007 Member Compensation Survey was therefore to thoroughly review the survey instrument, methodology, and reporting practices both internally and with outside experts. The goal of this review was to enhance the rigor of the entire survey process and improve the validity and precision of the compensation data provided to members this year and in years to come. To accomplish this objective CFA Institute worked collaboratively with two independent parties to blend their unbiased analysis and subject matter expertise. CFA Institute commissioned Harris Interactive, an independent global market research firm, to lead the 2007 Member Compensation Survey research process. Additionally, AON Corporation contributed to the design of the survey instrument and to the design and interpretation of the data reports. Significant enhancements were made to improve the quality of the findings in 2007. In summary, the following changes were made: 1. The data were standardized to the extent possible by not including data that might distort the compensation results. This was accomplished

by including only:

• Individuals who were employed on a full-time basis throughout 2006.

• Individuals who were not covered under expatriate pay arrangements in 2006.

• Individuals who were in the same position at the same company for the whole of 2006. 2. The organizations and occupations tracked in reporting have been more precisely defined to provide greater consistency. 3. The total number of questions was limited to reduce respondent fatigue and maintain or improve response rates. 4. The questions included in the compensation calculation were reengineered to more accurately capture the appropriate pay elements to

calculate total compensation. 5. All compensation data points were reviewed to confirm validity for inclusion in the calculation. See Appendix C for a full description of the changes to the survey instrument in 2007. Because of the extensive changes made to the survey instrument in 2007, it is not possible to make accurate comparisons with past survey

data. However, we believe these changes significantly improve the quality of the compensation data reported, and the 2007 survey will be a strong benchmark for future comparisons.

Methodology


CFA Institute commissioned Harris Interactive, an independent global market research firm, to conduct the 2007 Member Compensation Survey. Additionally, AON Corporation contributed to the design of the survey instrument and to the design and interpretation of the data reports. The 2007 Member Compensation Survey was conducted among the CFA Institute membership in the 11 countries with the greatest concentration of CFA Institute members: Australia, Canada, China, Germany, Hong Kong, Japan, Singapore, South Africa, Switzerland, the United Kingdom and the United States. The Member Compensation Survey was conducted online from 30 April through 29 May 2007. CFA Institute sent invitations to participate via e-mail, followed by two reminder e-mails. Each e-mail contained a link to the survey housed on a secure website managed by Harris Interactive. The survey took seven minutes, on average, to complete. CFA Institute members in the participating countries – 75,406 members in total1 – were invited to participate in the survey. A total of 14,258 members responded to the survey, and 13,562 are included in this report, representing 18 percent of the CFA Institute membership in these countries. Response rates vary by country and are detailed in the chart on the following page.

1 Sample based on CFA Institute members with a valid e-mail address as of April 2007. Members requesting not to receive e-mail or survey communications from CFA Institute were excluded.

Methodology


A note about reporting

The following sample size thresholds were implemented in reporting the data:

• The text reports display results for sample sizes of 10 respondents or more.

• The online searchable database displays results for sample sizes of 5 respondents or more.

• Low- and high- quartile data are displayed for sample sizes of 10 respondents or more. These thresholds were set in order to provide members with the greatest amount of information while still protecting the confidentiality of individual responses. The sample sizes for some of the reported data are quite small. Care should be taken when interpreting the data based on small sample sizes, as the results may not be representative of the total audience.

Methodology


Survey Response Rate

Country

Invitations

Sent

Respondents

Included

in Report*

Response

Rate

Australia 985 173 18%

Canada 10,613 2,079 20

China 1,146 123 11

Germany 1,198 250 21

Hong Kong 3,587 202 6

Japan 1,063 121 11

Singapore 2,088 193 9

South Africa 924 163 18

Switzerland 1,701 363 21

United Kingdom 5,706 925 16

United States 46,395 8,970 19

Total 75,406 13,562 18

*The report includes members who were employed full-time in the same position at the same employer for the whole of 2006. It excludes members who were covered under expatriate pay arrangements in 2006. Invalid compensation data were removed from the sample.

Compensation Calculation


Members were allowed to provide their compensation data in the currency of their choice. All compensation data were then converted to U.S. dollars (see Appendix B). Country-specific data were also converted to the local currency. The exchange rate used was the average of the daily average Interbank Rate for the period 1 January 2006 through 31 December 2006 as reported on www.oanda.com.

The compensation data presented in this report are in U.S. dollars (USD). Individual country reports present the compensation data in the local currency of the country. The compensation categories are defined as follows:

Base salary The median of the annual base salary, determined by multiplying one’s monthly salary as of 1 March 2007 by 12. As applicable, this includes fixed bonuses and/or other payments that are part of one’s annual salary and excludes year-end cash bonuses. For members in Japan, this includes contributions to supplementary retirement allowance plans

(SRAPs).

Cash bonus Median total cash bonus awarded for 2006 performance. This includes all cash payments related to the 2006 performance year, including commission payments and excludes prior year deferrals paid out in 2006, long-term incentive grants, and pension and other retirement funds. Note: Only those eligible for a cash bonus in 2006 are included in the cash bonus calculation.

Total cash compensation Total cash compensation was first calculated for each individual respondent by summing 2007 base salary and cash bonus awarded for 2006 performance. Median total cash compensation was then calculated for the full sample. Therefore, median total cash compensation will not necessarily equal the sum of the median base salary and median

cash bonus.

Total compensation Total compensation was first calculated for each individual respondent by summing base salary, cash bonus awarded for 2006 performance, and long-term incentives awarded for the 2006 performance year*. Median total compensation was then calculated for the full sample. Due to the small number of respondents who were awarded long-term

incentives for the 2006 performance year, total compensation is the same as total cash compensation in some cases.

Low quartile / high quartile Total compensation at the 25th percentile and 75th percentile.

N Number of qualified survey respondents included in the reported data.

* Long-term incentives include the expected cash equivalent value of share options, restricted shares, and other long-term incentives granted for 2006 performance. This includes the portion of 2006 cash bonus mandatorily deferred, phantom shares, performance units, and investment partnership payments and excludes pension and other retirement funds.

Note: In order to calculate the most accurate cash bonus and long-term incentive figures for the 2006 performance year, the data excludes members who were not in the same position at the same company for the whole of 2006. The data do include members who may have changed their position and/or company during January through May 2007, which is reflected in the reported 2007 base salary.


Respondent Profile

Respondent Profile


The following pages describe the composition of the survey respondents included in this report. It is important to keep in mind the profile of these respondents when reviewing the compensation results, as the group responding is not necessarily representative of the full CFA Institute membership or the total population of investment professionals.

Respondent Profile – Type of Organization


Survey respondents include individuals working in the following types of organizations.

• The majority of respondents work at investment management firms, investment banks, commercial banks, and brokerage firms. This is consistent across countries.

• A concentration of respondents in Australia, China, and Germany also work at consulting, accounting, and law firms. A concentration of respondents in Japan work at insurance companies.

Type of Organization by Country

N =

Total

(13,562) %

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %

United States (8,970)

%

Investment management firm 40 45 34 25 42 22 39 34 48 40 42 42

Investment bank, commercial bank, brokerage firm 28 28 30 46 26 42 37 41 29 33 35 25

Insurance company 6 2 5 7 9 3 12 6 4 7 3 6

Consulting, accounting, law firm 6 12 5 11 11 6 3 4 7 5 6 6

Hedge fund or fund of hedge funds 4 2 1 0 0 5 2 3 4 6 8 4

Government agency, department 3 3 5 2 1 4 1 2 1 1 1 3

Corporate plan sponsor 2 2 4 0 1 0 1 0 0 1 1 1

Family office 1 1 1 0 1 0 0 1 1 2 1 1

Endowment, foundation 1 0 1 0 0 0 0 0 0 0 0 1

Educational institution 1 2 1 0 0 0 1 1 1 0 0 1

Rating agency 1 1 0 0 1 1 0 1 1 0 1 1

Other 8 3 12 9 8 16 5 8 4 5 3 7

Respondent Profile – Organization’s Assets under Management


Survey respondents include individuals working in companies with the following assets under management. • The size of the companies represented in the survey varies widely by country.

o The companies represented in Germany, Japan, and the United Kingdom skew larger. Germany and the United Kingdom in particular have a high concentration of very large companies represented in the sample.

o The companies represented in China, South Africa, and Hong Kong skew smaller. China in particular has a high concentration of very small companies represented in the sample.

Assets under Management (AUM) by Country

only asked of executives/top management and buy-side professionals

N =

AUM in USD

Total (6,736)

%

Australia

(91) %

Canada (750)

%

China (53) %

Germany

(104) %

Hong Kong (65) %

Japan (63) %

Singapore

(85) %

South Africa (84) %

Switzerland

(159) %

United Kingdom

(465) %


%

Under $500 million 13 18 16 36 5 18 6 12 21 10 7 13

$200 million to less than $2 billion 15 10 12 23 7 22 10 15 19 12 11 15

$2 billion to less than $10 billion 21 25 25 15 16 15 14 24 31 19 16 20



$100 billion or more 24 14 11 8 42 17 29 25 2 30 38 25

Respondent Profile – Type of Position


Survey respondents include individuals working in the following types of positions. • The majority of respondents work in a buy-side position, although this varies some by country.

o China, Japan, and the United Kingdom have a higher proportion of sell-side professionals than other countries. o Switzerland has a higher proportion of private client professionals. o Singapore and South Africa have a higher proportion of executives and top management.

Position’s Function/Responsibilities by Country

N =

Total (13,562)

%

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

Buy-side professionals 41 47 28 38 42 27 46 36 35 34 46 44

Sell-side professionals 12 16 15 29 18 18 23 13 18 12 23 10

Private client professionals 12 2 14 2 4 10 2 7 6 20 5 13

Executives / top management 12 8 13 7 4 12 7 20 22 12 8 13

Other 23 27 31 23 32 33 21 24 18 21 19 21

Respondent Profile – Type of Occupation


Survey respondents include individuals working in the following types of occupations. (See Appendix A for a full description of the occupations.)

• Portfolio manager and buy-side research analyst are by far the most common occupations for responding members, followed by consultant and sell-side research analyst. o China has a higher proportion of investment bankers and risk managers than other countries. o Hong Kong and Singapore have a higher proportion of accountants/auditors. o South Africa has a higher proportion of CEOs and chief investment officers. o Switzerland has a higher proportion of private bankers.

Occupations by Country

N =

Total (13,562)

%

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

Portfolio manager 23 22 19 11 26 13 21 15 16 26 23 24

Buy-side research analyst 13 14 7 9 2 8 7 9 10 5 14 15

Consultant 6 9 6 7 10 7 3 3 9 6 5 5

Sell-side research analyst 5 11 5 10 5 6 3 1 6 4 8 4

Accountant/auditor 3 3 4 4 5 7 2 7 1 4 3 2

Chief investment officer 3 2 2 1 - - 2 2 8 4 2 4

Investment banker 3 3 4 12 5 4 7 6 5 2 6 2

Chief executive officer 2 2 1 - - 1 - 1 6 3 1 2

Buy-side trader 2 1 1 2 1 1 - 2 1 - 1 2

Buy-side sales/marketing 2 2 1 1 1 - 4 3 1 1 2 2

Manager of managers 2 2 2 1 2 - 1 1 4 3 3 2

Risk manager 2 1 3 7 4 2 2 3 1 2 3 2

Financial advisor/broker 2 1 4 2 1 2 - 2 1 4 - 2

Sell-side sales 2 1 2 2 5 2 2 - 4 2 5 1

Occupations comprising 1 percent or less of the sample: chief administrative officer/chief operating officer, chief financial officer, head of equities, head of fixed income, institutional sales, wholesale/intermediary sales, marketing manager, strategist, private banker (8 percent in Switzerland), actuary, credit analyst (rating), professor/lecturer, journalist, regulator.

Respondent Profile – Years of Experience


Survey respondents include individuals with the following years of experience.

• Years of experience generally follow a traditional bell curve, with some exceptions: o Respondents in China tend to have less experience than their counterparts in other countries. o Respondents in Canada, Japan, and the United States in particular, tend to have more experience. o Respondents in Germany tend to fall in the middle with five to ten years of experience.

Years of Experience by Country

N =

Total (13,562)

%

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

Less than 2 years 3 7 4 5 3 4 8 6 6 3 5 3

2 years to less than 5 years 21 29 24 42 22 26 20 32 30 25 29 18



20 years or more 12 1 7 0 1 2 7 2 2 3 5 15

Respondent Profile – Charterholder Status


Consistent with the general composition of the CFA Institute membership, respondents are predominantly charterholders.

Charterholder Status by Country

N =

Total (13,562)

%

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

Charterholder 87 85 89 89 94 88 92 90 91 91 81 87

Candidate 11 14 11 11 6 11 8 10 9 9 10 12

Neither 2 1 1 0 0 1 0 0 0 0 10 1

Respondent Profile – Advanced Degrees Held


Survey respondents include individuals with the following advanced degrees.

• The presence of advanced degrees varies widely by country. o The majority of respondents in the United States hold an MBA or equivalent. o The majority of respondents in China, Germany, and Switzerland hold a Master’s degree or equivalent. o The majority of respondents in Australia, Canada, Singapore, and South Africa do not hold any advanced degrees.

Advanced Degrees Held

N =

Total (13,562)

%

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

MBA or equivalent 43 13 31 29 29 27 36 17 20 26 18 51

Master’s degree or equivalent 19 29 16 53 57 27 17 33 23 52 39 14

Ph.D. or equivalent 3 3 1 4 5 2 1 2 1 9 3 3

None of the above 40 54 54 18 17 47 49 53 59 18 45 37

Note: Percentages do not equal 100 percent because respondents may have more than one type of advanced degree.


Executive Summary

Executive Summary


This report includes selected results from the 2007 CFA Institute Member Compensation Survey. CFA Institute members can access the full dataset through an online searchable database located on the CFA Institute website: http://www.cfainstitute.org/memresources/private/surveys/index.html. The online searchable database contains all of the compensation results organized by country, select metropolitan areas, currency, organization type, and occupation where sample sizes permit. When looking at any aggregate totals, one should remember that several factors contribute to differences in compensation, including position, years of experience, size of organization, type of organization, and country. In many countries, limited sample sizes do not allow us to present a full cross-tabulation of all variables. To protect respondent confidentiality, results are only provided for sample sizes of five respondents or more. In this report, results are only shown for sample sizes of 10 respondents or more.

Executive Summary


Overall Compensation Trends Respondents were asked to indicate the change in their total compensation from 2005 to 2006. On average, 73 percent of the investment professionals responding reported an increase in compensation, 6 percent reported a decrease, and 19 percent reported no major change in compensation. Responses varied some by country.

• In Australia, China, Hong Kong, Singapore, South Africa, and the United Kingdom, 80 percent or more responding reported an increase in compensation.

• In Canada, Germany, Switzerland, and the United States, between 70 and 79 percent of respondents reported an increase. Seven percent of respondents in the United States reported a decrease in compensation, the highest percentage of all countries.

• In Japan, 57 percent of respondents reportedly increased their compensation. Compensation remained stable for one-third of respondents in Japan (34 percent) and 6 percent reported a decrease.

Self-Reported Increase in Total Compensation

from 2005 to 2006

50%

43%

47%

47%

48%

41%

31%

31%

30%

27%

18%

22%

23%

25%

22%

20%

26%

28%

24%

24%

25%

21%

13%

17%

10%

13%

13%

14%

17%

20%

18%

19%

18%

85%

83%

82%

82%

81%

81%

76%

75%

72%

71%

57%

China

Australia

Singapore

United Kingdom

South Africa

Hong Kong

Switzerland

Germany

United States

Canada

Japan

20% or more 10% to 20% 5% to 10% = Total Increase

Q: How much did your total compensation increase or decrease from 2005 to 2006? Total compensation includes annual base salary rate, total cash bonus,

and long-term incentives.

Executive Summary


Occupation and Years of Experience As demonstrated for selected occupations in the table below, experience tends to be correlated with higher pay. In most cases, the median total compensation for those with ten or more years of experience exceeds that for those with five to ten years experience, which in turn exceeds the median total compensation for those with less than five years of experience.

Reported Median Total Compensation by Years of Experience for Selected Occupations

(in U.S. dollars)

Total

Less than

5 Years

Experience

5 to Less than

10 Years

Experience

10+ Years Experience)

Australia

Portfolio manager $196,000 $170,000 $303,000

Buy-side research analyst 136,000 $105,000

Sell-side research analyst 173,000 136,000

China

Portfolio manager 50,000

Investment banker 53,000

Germany

Portfolio manager 156,000 153,000 260,000

Sell-side research analyst 163,000 136,000

Consultant 118,000 126,000

Hong Kong

Portfolio manager 175,000 152,000

Buy-side research analyst 102,000 97,000

Japan

Portfolio manager 140,000 141,000

Note: Shaded areas indicate base sizes too small to report.

Executive Summary


Reported Median Total Compensation by Years of Experience for Selected Occupations (continued)

(in U.S. dollars)

Total

Less than

5 Years

Experience

5 to Less than

10 Years

Experience


Singapore

Portfolio manager $152,000 $246,000

Buy-side research analyst 140,000 $173,000

South Africa

Portfolio manager 209,000 $157,000 259,000

Chief investment officer 376,000 406,000

Switzerland

Portfolio manager 178,000 128,000 170,000 252,000

Buy-side research analyst 164,000 156,000

Private banker 196,000 220,000 291,000

Consultant 128,000 128,000


Executive Summary


Reported Median Total Compensation by Years of Experience for Selected Occupations (continued)

(in U.S. dollars)

Total

Less than

5 Years

Experience

5 to Less than

10 Years

Experience


Canada

Portfolio manager (equities) $251,000 $128,000 $200,000 $340,000

Portfolio manager (fixed income) 202,000 168,000 236,000

Portfolio manager (indexed/other) 148,000 93,000 135,000 202,000

Buy-side research analyst (equity) 119,000 109,000 143,000 158,000

Buy-side research analyst (fixed income) 97,000

Sell-side research analyst (equity) 154,000 116,000 304,000 328,000

United Kingdom

Portfolio manager (equities) 313,000 195,000 304,000 348,000

Portfolio manager (fixed income) 273,000 203,000 295,000 437,000

Portfolio manager (indexed/other) 173,000 121,000 350,000


Buy-side research analyst (fixed income) 201,000 157,000

Sell-side research analyst (equity) 294,000 194,000 369,000

United States

Portfolio manager (equities) 456,000 205,000 398,000 499,000

Portfolio manager (fixed income) 250,000 126,000 210,000 350,000

Portfolio manager (indexed/other) 158,000 87,000 135,000 190,000


Buy-side research analyst (fixed income)) 214,000 130,000 213,000 302,000

Sell-side research analyst (equity) 195,000 150,000 250,000 350,000


Executive Summary


Cash Bonuses and Long-Term Incentives Cash bonuses are part of the compensation package for almost all respondents. Ninety-one percent of respondents, on average, were eligible for a bonus in 2006. Long-term incentives are somewhat less common, with 40 percent of respondents, on average, receiving incentives for the 2006 performance year.

Cash Bonuses and Long-Term Incentives

96%

96%

94%

94%

93%

93%

90%

90%

88%

87%

86%

47%

35%

50%

27%

37%

33%

42%

31%

17%

33%

32%

United Kingdom

Switzerland

South Africa

Germany

Singapore

Hong Kong

United States

Canada

China

Japan

Australia

Eligible for a bonus in 2006

Awarded long-terms incentive for 2006 performance

Executive Summary


Determinants of Cash Bonus

The large majority of members in all countries were eligible for a cash bonus in 2006. The amount of the bonus, of course, varies widely due to a broad array of factors – years of experience, occupation, type of company, country, etc. The most important determinant of one’s bonus also varies widely. There is a wide distribution across individual, business unit / department, and overall firm performance factors as determinants of bonus.

Most Important Consideration in Determining Cash Bonus by Country

(among those eligible for a cash bonus in 2006)

N =

Australia

(149) %

Canada (1,875)

%

China (108)

%

Germany

(234) %

Hong Kong (187)

%

Japan (105)

%

Singapore

(179) %

South Africa (154)

%

Switzerland

(347) %

United Kingdom

(884) %


%

Eligible for a cash

bonus in 2006 86 90 88 94 93 87 93 94 96 96 90

Individual investment performance 12 12 12 20 13 11 14 14 14 17 15

Individual financial contribution 12 15 13 11 9 15 18 15 13 13 13

Other factors relating to individual performance 21 20 11 28 18 12 19 13 21 21 18

Business unit / department performance 30 26 31 22 22 24 25 25 26 24 22

Overall firm performance 22 26 31 15 29 34 20 29 22 20 27

Other 1 0 1 0 2 0 0 0 1 1 1

Not sure 3 3 1 4 6 3 4 5 3 5 4

Note: N sizes reported in this table reflect the number of respondents who were eligible for a cash bonus in 2006.

Executive Summary


Types of Long-Term Incentives Awarded On average, four in ten respondents were awarded long-term incentives for the 2006 performance year. Long-term incentives generally account for less than 10 percent of total compensation, regardless of country, occupation, or years of experience.

• Respondents in China and Germany are less likely to receive long-term incentives.

• Respondents in South Africa, the United Kingdom, and the United States are more likely to receive long-term incentives.

Restricted shares and other long-term incentives are generally more common than share options. Share options are more common in South Africa than in other countries.

Long-Term Incentives by Country

(long-term incentives awarded for 2006 performance)

N =

Australia

(173) %

Canada (2,079)

%

China (123)

%

Germany

(250) %

Hong Kong (202)

%

Japan (121)

%

Singapore

(193) %

South Africa (163)

%

Switzerland

(363) %

United Kingdom

(925) %


%

None of these 68 69 83 73 67 67 63 50 65 53 58

Restricted shares 15 12 6 10 17 14 15 9 19 22 21

Share options 8 8 4 3 13 10 12 29 9 13 12

Other long-term incentives* 13 14 9 16 8 14 16 22 12 18 17

* This includes the portion of 2006 cash bonus mandatorily deferred, phantom shares, performance units, and investment partnership payments and excludes pension and other retirement funds.

Note: Percentages do not equal 100 percent because respondents may have been awarded more than one type of long-term incentive for the 2006 performance year.


Appendices

Appendix A: Occupation Descriptions


Below is a full description of the occupations included in the 2007 Member Compensation Survey. Only those occupations with enough respondents to report are included in the text reports and searchable database. Chief executive officer – The highest-ranking officer in an organization. The position having ultimate responsibility for the organization’s financial and strategic success. Chief administrative officer/chief operating officer – Executive responsible for the organization’s administrative and operations functions. Oversees daily operations and typically reports to the CEO. Chief financial officer – Executive responsible for managing the organization’s financial affairs, including accounting, tax, budgeting, treasury, etc. Typically reports to the CEO. Chief investment officer – Executive responsible for the organization’s investment results. Oversees and directs all portfolio management, research, trading, and related investment functions. Typically reports to the CEO. Head of equities – Executive having overall responsibility for the organization’s equity investment activities. Typically leads all equity-related functions/staff (e.g., portfolio management, research, trading, etc.). Head of fixed income – Executive having overall responsibility for the organization’s fixed-income investment activities. Typically leads all fixed-income-related functions/staff (e.g., portfolio management, research, trading, etc.). Performance analyst – Professional responsible for compiling and analyzing investment performance data. Results of analyses may be shared with management, clients, and/or pension consultants. Includes those who wrote in “performance analyst” at the “other-please specify” prompt. Strategist – Helps define the organization’s overall investment strategy and/or asset allocation policies. Typically has extensive portfolio management experience but is not currently managing money. Manager of managers – Professional who evaluates, selects, and tracks third-party investment managers. Risk manager – Professional who focuses on monitoring and assessing the firm’s risk exposures (e.g., market risk, credit risk, operational risk) and on developing strategies to mitigate potential losses. Includes those who wrote in “risk manager” at the “other-please specify” prompt.



Portfolio manager includes:

Portfolio manager: equities (fundamental) – Portfolios/funds that consist largely of common shares issued by organizations. Investment approach focuses on analysis of individual securities’ financial performance, competitive advantage, quality of management, etc.

Portfolio manager: fixed income (fundamental) – Portfolios/funds that consist largely of fixed-income securities issued by organizations. Investment approach focuses on credit analysis and/or analysis of classes of securities, market trends, etc. Portfolio manager: quantitative – Investment approach that seeks to maximize portfolio performance by using strategies that rely on mathematical models. Responsibilities include portfolio construction, monitoring, rebalancing, and model refinement. Portfolio manager: indexed – Portfolios that are designed to replicate the performance of a specific index (e.g., MSCI, S&P 500). Private client portfolio manager – Primarily responsible for managing individual and/or trust account assets and investment relationships Portfolio manager: other – All other portfolio managers

Buy-side research analyst includes:

Buy-side research analyst: equity – Buy-side analyst whose investment recommendations are primarily based on fundamental analysis of equity securities. Buy-side research analyst: fixed income – Buy-side analyst whose investment recommendations are primarily based on fundamental and/or credit analysis of fixed-income securities. Buy-side research analyst: quantitative – Buy-side analyst whose investment recommendations are primarily based on advanced mathematical/statistical models.

Buy-side research analyst: other – All other buy-side research analysts



Buy-side trader includes:

Buy-side trader: equity – Buy-side trader who is primarily responsible for buying and/or selling equity securities for the firm’s portfolio managers. Buy-side trader: fixed income – Buy-side trader who is primarily responsible for buying and/or selling fixed-income securities for the firm’s portfolio managers.

Buy-side trader: other – All other buy-side traders

Buy-side sales/marketing includes:

Institutional sales rep/relationship manager – Buy-side sales professional who is primarily responsible for marketing asset management services to institutional investors, such as pension funds, governments, unions, endowments, and foundations. Wholesaler/intermediary sales rep – Buy-side sales professional who is primarily responsible for selling investment products through intermediaries (e.g., broker dealers, banks, financial planners). Marketing manager – Professionals responsible for supporting the promotion and distribution of investment products. Responsibilities could include product management, market research, creative services, etc.

Buy-side sales/marketing: other – all other buy-side sales/marketing positions

Sell-side research analyst includes:

Sell-side equity research analyst – Evaluates the earnings potential and prospective market value of publicly traded companies. Analyses are distributed to brokerage and/or banking clients. Sell-side fixed-income research analyst – Evaluates the creditworthiness of debt issuers and the value of their outstanding debt. Analyses are distributed to brokerage and/or banking clients.

Sell-side trader includes:

Sell-side equity trader – Trades equity securities as an agent or principal. Sell-side fixed-income trader – Trades fixed-income securities as an agent or principal.



Sell-side sales includes:

Equity sales – Provides equity brokerage and investment research services to institutional clients (e.g., asset managers, hedge funds). Fixed income sales – Provides fixed-income brokerage and investment research services to institutional clients (e.g., asset managers, hedge funds).

Financial advisor/broker – Primarily provides retail brokerage and financial advice to individual investors. Private banker – Primarily provides investment management and related investment services (e.g., trust, deposit, credit) to individual investors. Investment banker – Helps corporations, governments, and other institutions raise equity, issue debt, and/or complete mergers and acquisitions, private placements, restructurings, etc. Private client professional: other – All private client professionals who did not classify themselves as a financial advisor/broker, private banker, or private client portfolio manager. Accountant/auditor – Provides accounting, process control, and/or tax advice to corporations, governments, individuals, etc.

Actuary – Focuses on modeling, understanding, and quantifying the financial impact of various risks and uncertainties. Consultant – Provides expert advice in a specific area, such as business strategy, marketing, financial management, information technology.

Credit analyst (rating) – Monitors debt issuer’s creditworthiness and assigns ratings to specific financial instruments. Typically employed by a rating agency, such as Moody’s Investor Service or Standard & Poor’s. Journalist – Gathers and distributes information through the media (e.g., newspaper, magazine, television, internet).

Professor/lecturer – Conducts lectures and seminars and performs research in a specific field of study.

Regulator – Establishes, monitors, reforms, and/or enforces industry regulations on behalf of an industry association or government body/agency.

Appendix B: Exchange Rates


The following exchange rates were used for currency conversions to and from U.S. dollars. Each exchange rate is the average of the daily average Interbank Rate for the period 1 January 2006 through 31 December 2006 as reported on www.oanda.com.

1.3285 Australian dollar (AUD) 0.7536

0.5435 British pound (GBP) 1.8430

1.1346 Canadian dollar (CAN) 0.8821

7.9819 Chinese yuan (CNY) 0.1256

0.7970 Euro (EUR) 1.2562

7.7690 Hong Kong dollar (HKD) 0.1287

116.3366 Japanese yen (JPY) 0.0086

0.6296 Singapore dollar (SGD) 0.6296

6.7042 South African rand (ZAR) 0.1492

1.2536 Swiss franc (CHF) 0.7986

1 U.S. dollar (USD) 1

Appendix C: Questionnaire Changes from 2005 to 2007


Due to the extensive changes to the survey instrument from 2005 to 2007, direct comparisons are not possible. Below is a summary of the changes made from 2005 to 2007.

2005 2007

Eligibility for inclusion Currently employed full-time - Employed on a full-time basis throughout 2006 - Not covered under expatriate pay arrangements in 2006 - In the same position at the same company for the whole of 2006

Organizations 1 Bank 2 Pension plan sponsor or

endowment/foundation 3 Insurance company 4 Investment counseling firm/investment

management company (institutional or individual separate account managers)

5 Mutual fund organization 6 Securities broker/dealer 7 Hedge fund 8 Pension/investment consulting firm 9 Other

1 Investment management firm 2 Insurance company 3 Investment bank, commercial bank, or brokerage firm 4 Hedge fund or fund of hedge funds 5 Endowment or foundation 6 Corporate plan sponsor 7 Family office 8 Consulting, accounting, or law firm 9 Rating agency 10 Government agency or government department 11 Educational institution (e.g., college or university) 12 Other

Assets under Management Asked of all respondents

Assets under Management (buy side)

1 Under $100 million 2 $100 million to 499 million 3 $500 million to $4.9 billion 4 $5 billion to $49.9 billion 5 $50 billion or more Revenues (sell side)

6 Under $10 million 7 $10 million to $49.9 million 8 $50 million to $499 million 9 $500 million to $4.9 billion 10 5 billion or more

Only asked of executives/top management and buy-side

professionals

Assets under Management (AUM)

1 Under $500 million 2 $500 million to less than $2 billion 3 $2 billion to less than $10 billion 4 $10 billion to less than $50 billion 5 $50 billion to less than $100 billion 6 $100 billion or more 7 Not sure 8 Not applicable



2005 2007 Occupations 1 Chief executive officer

2 Chief administrative officer/chief operating officer 3 Chief investment officer 4 Head of equities 5 Head of fixed income 6 Portfolio manager – domestic equities 7 Portfolio manager – global/international equities 8 Portfolio manager – domestic fixed income 9 Portfolio manager – global/international fixed income 10 Strategist (market strategist, portfolio strategist, investment

strategist, etc.) 11 Director of research 12 Securities analyst – domestic equities 13 Securities analyst – global/international equities 14 Securities analyst – domestic fixed income 15 Securities analyst – global/international fixed income 16 Marketing/sales/client service 17 Pension officer/asset allocator/manager of outside managers 18 CFO/controller/treasurer 19 Risk manager 20 Trader 21 Other

See full list of occupations above



2005 2007

Base Salary

What is your 2005 annual base salary?

Base Salary

What was your 2007 annual base salary rate (e.g., monthly salary multiplied by 12) as of 1 March 2007? NOTE: If applicable, include fixed bonuses and/or other payments that are part of your annual salary (e.g., 13th or 14th month salary) but exclude year-end cash bonuses.

Cash Bonus

What was your total pre-tax cash bonus for 2004 performance?

Cash Bonus

What was your total cash bonus awarded for 2006 performance? Include all cash payments related to the 2006 performance year, including commission payments (submit amounts in gross or pre-tax terms). (a) Exclude prior year deferrals paid out in 2006 and long-term incentive grants (if applicable). (b) Exclude pension and other retirement funds. (c) For members based in Japan, include any contributions to supplementary retirement allowances plans (SRAPs).

Compensation Calculation

Non-Cash Compensation

What would you estimate to be the total annual value of your non-cash compensation, that is all other incentives exclusive of salary and bonus (including the Black-Scholes value of options granted, present value of deferred compensation, current market value of restricted stock awards granted, profit sharing, etc.) for 2004?

Long-Term Incentives

What is the expected cash equivalent value of share options granted for 2006 performance? In submitting this amount, please report either: (a) the expected value communicated to you by your firm or (b) if an expected value was not communicated, the amount equal to: number of shares multiplied by strike price multiplied by 0.25 (modified Black-Scholes value).

What is the expected cash equivalent value of restricted shares granted for 2006 performance? Report the value of restricted share awards (or equivalent units) as follows: number of shares/units granted multiplied by the price per share/unit at the time of grant.

What is the expected cash equivalent value of other long-term incentives (excluding share options or restricted share awards or pension and other retirement funds) granted for 2006 performance? Report the combined value of: (a) the portion of 2006 cash bonus mandatorily deferred, (b) phantom shares, (c) performance units, (d) investment partnership payments.



Asked in 2005, Not Asked in 2007 New in 2007 Questions excluded in 2007 or new in 2007

• Expectation for CFA charter in your organization

• Perceived value of the CFA charter

• Number of companies worked for

• Extended leave / duration of leave

• Native or expatriate / length of time as an expatriate

• Company headquarters

• Bonus above/below/on target

• Weight given to factors in determining bonus

• Bonus based on relative or absolute performance Summary of items included in non-cash compensation

• Vesting period of largest source of non-cash compensation

• Has proportion of compensation that is non-cash increased/decreased/stayed the same

• Percentage of total cash compensation deferred beyond the current year

• Perceived to be underpaid, overpaid, fairly paid

Change in compensation from 2005 to 2006 – increase/decrease/same

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CFA Institute 2007 Member Compensation Survey - Summary

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