By Keith Kefgen and Rosemary Mahoney, May 1996
There is little doubt that casino executives are well paid. But is their pay commensurate with the complexity, size, and performance of their respective businesses? We believe the answer lies in the results of our recent gaming industry compensation study. The study represents data collected from 62 companies, or approximately 58 percent of the entire industry. Highlights of the study are delineated below in two distinctive sections - one comparing corporate gaming executives, the other analyzing land-based casino executives. The corporate section reveals results for seven key positions, and the property section depicts five.
Table 1 illustrates the
average total compensation for seven corporate gaming positions. We have
ranked the positions by total dollar amounts, with COOs at the top and
Vps of Marketing at the bottom.
We then compared these averages with other business indices.
The first index we looked at was company size, which was determined by
gross revenue. When we compared compensation based solely or size, irrespective
of business type, casino executives earned 11 percent more in average
total compensation.
The second index we considered was business type (in this case travel/entertainment). Gaming executives out-earned their hotel and restaurant counterparts by almost 10 percent, but lagged behind the entertainment industry by a sizable 16 percent. It seems that when you negotiate your next employment contract, emulating the entertainment industry is an advisable strategy.
Table 2 represents the range in total compensation for each position. As you will note, there are some extremely wide ranges, due in large part to the value of stock options. In many cases, we saw relatively meager base salaries combined with large annual and long-term incentives.
Table 3 illustrates the average salaries (with a minimum and maximum spread) and the average bonuses for five land-based gaming positions. At an average salary $301,040, the GMs earned the most while the VPs of Human Resources, at $96,780, the least.
When broken down by geographical region (Table 4), GMs in Atlantic City earned an average of $314,800, 17 percent more than their peers in Las Vegas. Relative to the mature gaming markets, we found pay differences due in large part to the Northeast's higher cost of living and the Trump Organization's pervasive representation in the Atlantic City market. Private companies, such as Trump by nature cannot offer stock options and must therefore offer higher salaries to compensate.
Table 5 shows the relationship
between the size of a casino (square footage of casino floor) and executive
salaries. Not surprisingly, an increase in size tends to result in an increase
in compensation. Salaries for GMs and VPs of Casino Operations increased
the most in accordance with the size of the casino, whereas the salaries
for VPs of Human Resources and CFOs increased to a much smaller degree.
When comparing executive perks, the gaming industry was much more generous than its hotel and restaurant counterparts. Reimbursements for club memberships, auto and housing allowances, entertainment expenses, and use of company aircraft, were liberally dispensed. The nature of the business and the rapid expansion of gaming have been at the heart of this generosity. We also believe that as more conservative companies, such as ITT, become accustomed to the gaming industry and expansion slows down, there will be some constriction of the availability of such benefits.
These results are only a snapshot of our comprehensive study, but our general conclusion is that gaming executives do earn their keep. Today's casino is a complex web of entertainment options-hotels, gaming, restaurants, shows, and more all of which need to be run by sophisticated, knowledgeable management teams. Salaries are still higher in other key areas of the entertainment industry, but time may very well close the gap.
Mr. Kefgen is President of HVS Executive Search and Ms. Mahoney' its Director of Research. The firm specializes in retained executive search and human resource consulting for the gaming and hospitality industries. If you are interested in participating in the survey or purchasing the results, contact HVS Executive Search at 3 72 Willis Avenue, Mineola,, NY 11501, (516) 24h-8828, ext. 220; Fat (516) 742-1905.
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