August 31, 2016
CFO Pay Trends: Higher & More “At-Risk”
– John Jenkins
A recent Equilar blog reviewing S&P 500 CFO pay trends notes rising overall compensation and a strong push for performance based awards. Median CFO compensation has grown substantially in recent years, reflecting the growing responsibilities of senior financial executives:
The chief financial officer (CFO) role has evolved alongside overall economic growth, political dynamics and corporate governance reform, and these financial executives are paramount to every company’s success. In response to these growing responsibilities, median CFO reported total compensation in the S&P 500 increased 18.7% from $2.9 million in 2011 to $3.4 million in 2015.
As overall CFO compensation has grown, so has the portion of pay that’s at-risk:
A stronger push toward pay for performance brought on by shareholder scrutiny, Dodd-Frank and Say on Pay has led to more CFO pay being at-risk, as opposed to fixed. Overall, 78.7% of S&P 500 companies granted performance awards to their CFOs in 2015, up from 64.1% in 2011. Meanwhile, time-based options awards became less prevalent over the study period, with the number of companies offering this type of equity decreasing by nearly 20%.