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A new survey shows how divergent pay packages among CFOs can be.
Alix Stuart, CFO Magazine
July 15, 2010
Looking to bring home substantially more bacon? Go public.
According to the Financial Executives Research Foundation's 2010 financial executive compensation survey, public-company finance chiefs make an average base salary of $285,000, compared with $204,800 for their private-company counterparts. But when goodies like stock options and retirement benefits are thrown in, the average total compensation of public-company CFOs soars to $680,407, far outpacing the average total compensation of $367,311 for private-company finance chiefs.
The latter can take some solace in the fact that, for the first time in the survey's four-year history, both groups received virtually identical base-salary increases — around 2%. In past years, public companies have awarded their CFOs bigger pay increases, says study author Cheryl de Mesa Graziano, vice president of financial research and accounting policy for FERF.
While almost all CFOs received an annual bonus, most public-company ones (88%) also got some type of stock-based long-term incentive award, like stock options. Fewer than half of private-company CFOs saw those. Besides their increased prevalence, "long-term incentives [at] a public company have more-identifiable values associated with them, and probably higher values," notes Robin Ferracone, executive chair of compensation consultancy Farient Advisors.
Supplemental retirement plans are also about twice as common among public-company CFOs, with 25% receiving one versus 13% of private-company finance chiefs.
Public-company CFOs might also have more job security, according to the survey, with about 75% being covered by employment contracts compared with 50% at private companies. Ferracone, however, warns that CFOs switching jobs shouldn't necessarily expect the same treatment at a new company, as governance gurus continue to press for companies to drop what they consider guaranteed pay for executives.
Compensation varies quite a bit by company size (see the tables below). One anomaly, possibly statistical: CFOs at private companies with revenues between $500 million and $999 million substantially outearned CFOs at public companies of the same size — $1,020,237 versus $715,706.
FERF's survey was conducted between December 2009 and January 2010. Of the CFOs who responded, 126 were from public companies and 390 were from private companies.