Top executives of large, publicly held companies rode strong performance metrics to big pay hikes in 2017, according to just-released data from Compensation Advisory Partners.

Median total direct compensation — the sum of salary, actual bonus, and long-term incentives (LTI), as reported in 2018 proxy statements — shot up 9.9% for CFOs and 10.9% for CEOs.

Those gains far outpaced the ones reaped in 2016. That was the result of median 7% growth in both revenue and operating income in 2017, compared with 1% and 4% growth, respectively, the prior year.

CAP used those metrics to quantify companies’ annual performance because they’re the ones companies use most often for determining annual performance-based pay awards.

According to a separate study, also recently released by CAP, in 2017 45% of companies used either operating income (or similar operating profit metrics like EBITDA or EBIT) for such annual awards, and 43% of companies used revenue.

For performance-based LTI awards, the most prevalent metrics were total shareholder return, used by 58% of companies offering such awards. Also used by more than half (53%) of companies were return metrics, including return on equity, return on investment, return on invested capital, and return on assets.

CAP’s data set for the first study referenced above included the 119 U.S. companies that met four conditions:

  • At least $5 billion in revenue for fiscal year 2017
  • A fiscal year-end between Sept. 1 and Jan. 1
  • Proxy statement filed by March 31, 2018
  • No change in CEO and CFO incumbents for the previous three years

Breaking down pay hikes for finance chiefs by category of compensation, the median salary, actual bonus, and long-term incentives rose by 3.1%, 12.7%, and 10.3%, respectively.

Among nine industry sectors represented in the data set, CEOs’ median pay increase surpassed that for CFOs in six sectors, most notably in utilities (17.3% to 11.4%).

The sectors where finance chiefs fared better were energy, consumer discretionary, and consumer staples.

However, executives in the two consumer sectors received the least compensation growth, by far. While all other sectors showed double-digit median pay increases for both CFOs and CEOs, in consumer staples they went up by only 3.9% and 2.0%, respectively. And in the consumer discretionary sector, median CFO pay rose by just 2.3%, and CEOs actually suffered a 0.5% decline.

“The underperformance of consumer staples companies is partially attributed to the pressure on sales volume as a result of taxes on soda, competition from store brands and smaller upstarts, battles for shelf space, and health-conscious consumers,” CAP wrote in its study report.

For consumer discretionary companies, the trend was less clear, as the sector is more diverse and covers many more subsectors (including media and entertainment, distributors, retail, hotels, and automobiles, among others).

Long-term trends in the mix of pay elements in LTI plans continued in 2017. For CFOs, stock options accounted for only 17% of LTI pay, after eroding steadily since 2011, when the figure was 32%. Over the same time period, performance-based pay awards swelled to 59% of finance chiefs’ LTI pay, compared with 46% six years earlier.

The prevalence of time-vested restricted stock in such plans has stayed stable over time: it accounted for 22% of CFOs’ LTI pay in 2011, and 24% in 2017.

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