Competitive compensation is essential for organizations looking to hire and retain solid C-suite leadership, and market demand for impact CFOs remains strong. Additionally, CFOs and leadership have recently expressed personal financial concerns, placing total compensation and benefits as a critical factor for recruitment and retention.
According to new data from Rho, CFO compensation, severance packages, and cash bonuses are all up in 2024. Most CFOs are in the low- to mid-six-figure range for salary bands, with nearly three-quarters (73%) reporting they're set to earn between $201k-400k this year.
Compensation Breakdown
In 2021, 35% of CFOs said they earned between $151k-200k, a figure now reported by less than a quarter (17%). Instead, the number of CFOs earning over $250k has risen dramatically; 23% earn between $201k-250k and 22% earn $251k-300k. The most common salary band, between $301-400k, is earned by nearly three in 10 (28%) CFOs. In 2021, barely 10% received this type of compensation.
Inflation, talent retention, and rising prices may play into why CFOs have seen increases in recent years. While U.S. Treasury Secretary Janet Yellen insists wage increases among U.S. workers are pacing with rising prices — she may be right when it comes to executive pay — lower-level employees aren't getting the same compensation increases. Unlike executives, most employees received or expect to receive an average 4% increase in 2024.
Bonuses and Severance
A rising number of CFOs (77% in 2024 versus 65% in 2021) said they received a performance-based cash bonus this year. Researchers suggest this is a result of the increasing value perception of cash versus equity. For those earning over $300k, they expect or received a cash bonus of 32% in 2024. For those in the next lowest salary band, between $200-300k, their expectations for their bonus were on average 20% of their salary this year.
Some CFOs, likely at smaller companies or those earlier in their careers, have a compensation structure that relies on an incentive bonus to pay a large portion of their salary. For those earning less than $200k, 82% expect a cash bonus of 20%. In 2021, only 64% of CFOs in this range expected a similar-sized bonus.
Severance packages have largely remained the same in recent years. An identical amount (42%) of respondents said they have a severance agreement. The average severance length for CFOs was six months, up from four months in 2021. A few CFOs said their severance deals were as long as 24 months, doubling 2021's findings as the highest length of severance.
Those working below the CFO in director roles had significantly less lengthy severance agreements, with an average package of just two months should they be let go.
Equity Awards
Outside of cash incentives, CFOs want to be direct beneficiaries of organizational growth. Equity awards are mostly unchanged and have stayed consistent YoY, as just over two-thirds (67%) of respondents were awarded equity of 0.5% or more as an initial award. Forty-seven percent also said they were awarded more than 1% at some point after. Most respondents reported a one-year cliff. The typical vesting after that is "skewed" towards monthly vesting; 63% monthly, 20% quarterly, and 18% annually.
Median equity among CFOs hovered at around 1%, remaining unchanged as far back as 2019. The figures remained mostly unchanged for both SVPs, VPs, and directors. "The path to CFO for both accountant and finance folks is fairly linear from a cash perspective but equity looks much more exponential," said a CFO in a written response to surveyors.
118 U.S.-based respondents participated in the survey. They primarily consist of CFOs at venture-backed businesses in the Greater New York area. Still, the population extends into some middle-market public companies and those in other geographies, such as Greater Boston, the Bay Area, the Southeast, the Southwest, the Midwest, and smaller regions.