The Advisors' Blog

A recent memo from Compensation Advisory Partners looks at 2022 CFO pay relative to CEOs, based on 130 companies with median revenue of $14 billion. Like CEOs, it’s safe to say that CFOs are doing pretty well this year, due to strong 2021 performance. Here’s what the data shows for total compensation:

– 2021 saw the largest year over year increases at median in the last 10 years; the last time we saw increases in the 15% – 20% range was after the financial crisis in 2008/2009.

– Median 2021 increases in actual total direct compensation (i.e., cash plus equity) for CEOs and CFOs were 18% and 17%, respectively, substantially higher compared to 2020 (3% and 4%, respectively) driven by large increases in variable incentives (annual incentive payouts and long-term incentive awards).

– As in prior years, CFO total compensation continues to approximate one-third of CEO total pay.

The report also looks at 10 years of changes in total comp. Here’s an excerpt:

CFO pay has generally tracked with CEO pay, though CEO pay has had higher highs and lower lows, as is expected for the top role. There is only one year – 2012 – that CEO pay fell compared to the prior year, but increases at median were less than 5% for most of the last 10 years for both CEOs and CFOs. 2021 saw by far the largest increases in total compensation, reflective of strong 2021 performance and compounded by below-average increases in 2020.

With 2022 being a more difficult year for stock price performance, the report says that payouts to CFOs are not expected to jump by as much next year.

– Liz Dunshee