Cash compensation for CFOs at large companies increased a median 6.7% in 2014, reflecting strong corporate results that boosted performance-driven bonus payouts, according to a Mercer survey released Monday.
Mercer’s latest analysis of compensation for CFOs at 159 companies in the S&P 500 shows that all pay elements increased last year. Short-term incentives led the way with a median increase of 8%, followed by long-term incentives and base salary at 7.2% and 3.2%, respectively.
Median base salary increased to $624,000 while the median for CFOs at S&P 100 companies rose to nearly $800,000. In 2013, total direct compensation increased a median 5.6%.
“Bonus payouts for the CFO and other top executives at most organizations were largely based on corporate results,” John Cummings, a principal with Mercer specializing in executive compensation, said in a news release. “Companies and investors are paying significant attention to ensuring that payouts are aligned with corporate performance levels that boost share prices.”
The pay gap between CEOs and CFOs continued to shrink in 2014, according to Mercer. As a percentage of median CEO pay, compensation for CFOs increased to 35% in 2014 from 32% in 2012.
“A number of factors are likely at play, but the chief impetus may be pressure on the CFO position due to increased regulatory requirements and focus on financial risk,” said Ted Jarvis, Mercer’s global director of executive compensation data, research and publications.
“To a lesser extent, proxy advisors’ scrutiny of CEO pay doesn’t extend to CFO pay, which may fly below the radar,” he added. “Thus, demand for qualified CFOs pushes up their compensation while scrutiny by governance watchdogs tends to curb that of CEOs.”
The narrowing gap may also reflect an elevation in the CFO’s status, as the role is viewed increasingly as a strategic one rather than simply tactical, Jarvis said.
“I don’t predict there will be pay parity between the roles, but the prestige of the CFO role has risen since the onset of the current economic recovery,” he said.