Equilar attributes its cited 6.6% rise in median CFO salaries to incumbency. "The longer you stay, the more salary you typically get," says Boyd.
George Paulin, chairman and CEO of compensation consultancy Frederic W. Cook & Co., says the rise in CFO salaries "recognizes the contribution of the CFO to management in this difficult economic period." He adds that according to Cook's own data, rising CFO salaries in 2008 are part of a larger trend. "Since passage of the Sarbanes-Oxley Act and the added regulatory and governance burdens it imposed, CFO salaries have gone up at a higher rate than commensurate salaries for the rest of the C-level suite," says Paulin.
Nevertheless, salary is typically only about a quarter of overall CFO pay, according to Mercer (Equilar puts it at a fifth). Even with salary increases, the substantial drop in cash bonuses took a toll on overall compensation. "The big part of a CFO's compensation is the annual cash bonus and the long-term incentive grant — not salary," Paulin says. "The numbers in 2008 indicate bonuses are down because performance generally is down."
CEOs, of course, will always rule the roost when it comes to income. But the gap between CEO and CFO pay narrows in some years, widens in others. Whereas Mercer's 2007 survey indicated that CFOs had gained a little on CEOs in terms of total direct compensation, no new ground was gained in 2008. "I'm not exactly sure why this is so," Oppermann says, "other than it shows that the true long-term performance and overall running of the operation is clearly the job of the CEO. They are the ones who are ultimately accountable for performance."
According to Salary.com, however, the CEO-CFO gap narrowed in 2008. Median total direct compensation for CEOs fell 16.5%, versus a 7% decline for CFOs. Chief operating officers, on the other hand, enjoyed a 22% increase in total direct compensation, in large part because of higher equity awards.
Don't Cry for Me
Salary.com also provides data on the 30 highest-paid CFOs. Tops on the list in 2008 is Randall T. Mays, president and CFO of CC Media Holdings Inc., with total direct compensation of $45.9 million. Mays, whose company is the parent of Clear Channel Communications, is new to the top 30 list. Last year's highest-paid CFO, David A. Viniar of still-high-flying Goldman Sachs, fell to number two this year, as his total pay dropped from $42.2 million to $37 million.
Number three on the list is a relative unknown: William Restrepo of Seitel, a seismic-data provider to the oil-and-gas industry. How did the CFO of a $172 million firm take home $34.6 million in total compensation? Answer, in part: stock options and a retention bonus granted in the wake of a 2007 merger. Number four on Salary.com's list, and the final CFO earning more than $30 million in total compensation, is Safra A. Catz of software giant Oracle.
Four finance chiefs of companies that received money from the federal Troubled Asset Relief Program were among the 30 highest-paid finance officers: Goldman's Viniar, Colm Kelleher of Morgan Stanley ($11.1 million), Gary Crittenden of Citigroup ($10.6 million), and Michael Cavanagh of JPMorgan Chase ($9.7 million). "I'm not sure if Merrill Lynch's CFO will make the list, as the firm did not file its proxy yet, so we don't have the data," Nielsen says. "That said, there are fewer TARP recipients on the list in 2008 than in 2007, which would lead one to believe that TARP companies are reeling back their compensation. Moreover, there is significant turnover from the top 20 CFOs in 2007 to the top 20 in 2008, another possible indication of pay-for-performance taking a toll."
Reeling back executive pay was the topic du jour in the early part of this year, but the Obama Administration's focus on health care has put the subject on the back burner. Aside from the pay restrictions levied against executives at TARP firms (see "Fray on Pay," June) and the "say on pay" provision giving shareholders a nonbinding advisory vote on the executive compensation package, few changes are anticipated.
Regarding congressional action on executive pay, Oppermann says he doesn't see anything coming forth "that looks like it will have some oomph. Certainly, we will not see the TARP constrictions broadened to affect all companies. The bottom line is that we don't expect anything earth-shattering."
Surely nothing as momentous as the financial crisis of the past 18 months, which affected everyone's personal bottom line. But CFOs can take some consolation in the fact that their base salaries are still climbing. And, if the stock market continues to rise, it may be only a matter of time before their total pay begins to rise as well.
Russ Banham is a contributing editor of CFO.
For a look at 2008's average compensation in common finance jobs, 30 highest-paid CFOs, and CFO compensation medians in 10 sectors, click here.
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