The Advisors' Blog

Emily blogged last month that CEO pay is back on the rise. A new ISS Corporate Solutions whitepaper (available for download) says that the rebound is widening the gap between CEOs and CFOs, who are often the second highest paid NEO. Interestingly, while the gap is increasing on a dollar-by-dollar basis, the ratio of CEO to CFO pay has remained constant over the past decade. One has to wonder whether this is the only thing in the world that has been the same since 2012.

Here are the key takeaways from the research:

– The gap between CEO and CFO pay widened substantially between fiscal 2020 and 2021 in each of the four indices examined

– CFOs were the second highest paid Named Executive Officer after CEOs at 37% of the companies in the Russell 3000 in 2020

– The analysis of median CEO pay as a multiple of median CFO pay by industry shows a marked level of volatility

– CEO pay tends to be a higher multiple of CFO pay at larger companies. For example, the CEO pay multiple in the S&P 500 is around 3.0 over the whole 10-year period examined; it is relatively close to that for much of the period in the S&P 400. By contrast, it is around 2.6 in the S&P 600 and around 2.2 in the Russell 3000 excluding the S&P 1500. In contrast to the dollar differences in pay, which have increased over the period, CEO pay as a multiple of CFO pay has remained fairly constant.

We’ve posted benchmarking surveys and other resources that track CEO-to-CFO pay trends in our “Determining How Much Pay Is Appropriate” Practice Area.

– Liz Dunshee