Survey: CFO compensation rose 3.6% last year

CFO DIVE
By Robert Freedman

Dive Brief:

  • CFOs earned a 4% median salary increase in fiscal year 2019, down from 4.8% in 2018 but well above inflation, which was 1.75% last year, according to a survey by Compensation Advisory Partners.
  • Bonuses were also down, by 3.2%, largely due to slowed financial growth from 2018 to 2019. However, long-term incentive (LTI) plans were up 8.3%.
  •  As a result of the drop in salary and bonuses, and factoring in LTI plans, overall CFO compensation last year increased 3.6%. 

Dive Insight:

“We expect the trend in reduced bonuses to continue in 2020 in light of the COVID-19 pandemic,” the report said.

In 2018, typical revenue and income growth for companies increased by 9%, while for 2019 revenue growth dropped to 3% and income growth to 5%. That downward trend is expected to accelerate this year due to the pandemic.

CFO Dive, data from CAP

The findings are expressed in percentage changes, so the report provides no insight into average or median compensation last year but a 2020 compensation survey by Robert Half found the 2019 median income for CFOs was $202,750. For CFOS in financial services, the median was a little higher, $208,250.

On pay mix, the Compensation Advisory Partners survey found the emphasis on variable CFO pay over fixed pay continues, as does the emphasis on performance-based equity compensation over time-based equity compensation.

Because of the pandemic, though, companies might start shifting to more time-based equity compensation arrangements, since performance is expected to plummet this year. 

“Performance goals become difficult to forecast in an uncertain economy,” the report says. “Since many equity grants were finalized by the time the pandemic started, we may not see the impact in pay or long-term incentive (LTI) mix until 2021 grants are disclosed.”

The survey was based on a sample of 110 companies with a median revenue of $13 billion. As in years past, CFOs earn about a third of what CEOs make.

Source: CFO Dive (2020)

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