CFO compensation generates considerable interest among Compensation Committees, investors and other interested parties. Interest is high given the intrinsic importance of the role but also because CFOs tend to act as a bellwether for trends in other (non-CEO) compensation practices. This Meridian Insight considers CFO compensation among S&P 500 companies from 2020 through 2023 (based on proxy statements filed in 2021-2024).
Executive Summary
Key Takeaways:
Median Pay of S&P 500 CFOs
Compound annual growth of median total compensation for S&P 500 CFOs was 5.9%. However, this growth rate was likely distorted somewhat due to the impact of the pandemic and reported pay levels for 2020. In contrast, CAGR for 2021-2023 was 3.2%.
The chart illustrates the median total compensation for S&P 500 CFOs for 2020-2023:
Importantly, annual incentives (unlike long term incentives) are reported at their earned value reflecting performance for each year. Median annual incentives increased from 2020 to 2021 and then dropped by ~10% for 2022 and remained relatively flat through 2023. The increase from 2020 was as expected given impact of pandemic in 2020. The decrease from 2021 to 2022 may have been due to companies moving back to more rigorous annual incentive plan goals as economic conditions improved.
The average mix of LTI has remained largely unchanged for this period and for the last decade or more but varies by industry, individual company outlook. and industry-specific macroeconomic conditions.
CFO Transition
About 10% of S&P 500 had new CFOs each year, though that rose to nearly 13% in 2022.
The median total compensation of new CFOs for their first full year of employment was lower from 2021 to 2022 and then remained relatively flat into 2023. This suggests that during the height of the pandemic (2020), it required higher compensation to attract a new CFO than it did post-pandemic. A similar pattern was observed for CEOs as well during this period.
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This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.