August 13, 2024
CFOs: 2023 Pay Changes Relative to CEOs
Earlier this month, I shared this Semler Brossy article noting that say-on-pay assessments have gotten more rigorous for non-CEO NEO pay. The article pointed to the “increasing levels of executive pay for roles other than the CEO” as one potential reason for the heightened attention.
A recent Compensation Advisory Partners insight that spotlights compensation actions for CFOs – using 2023 data from 132 companies with median revenue of $14.6 billion – provides supporting evidence. The report compares compensation changes between CFOs and CEOs in 2023. Here are some highlights:
– The median change in base salary in 2023 was 4.0% for CFOs, similar to last year’s 3.8% increase. For CEOs, the median salary change was 0%, well below last year’s 2.9% median increase. Among executives who received salary increases, the median increase was 5.0% for CFOs and 4.0% for CEOs.
– Median target bonus opportunities remained consistent for CEOs at 160% of salary and for CFOs at 100% of salary. 32% of CFOs and 27% of CEOs had an increase in target bonus for 2023.
– LTI awards increased at a higher rate in 2023 than 2022, reflective of competitive pressures to deliver market competitive pay. LTI awards increased 11% for CFOs and 9% for CEOs (vs. 7% and 5% last year, respectively). The increase in LTI awards in 2023 is not driven by special one-time awards, which we found very low prevalence of in our sample. LTI awards have increased 6% for both CFOs and CEOs annually, on average, between 2013 to 2023.
– CFO turnover is higher than CEO turnover. In 2023, median CEO tenure is 7 years versus 5 years for CFOs.
– Meredith Ervine