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2000 CFO Pay: CFOs Versus CEOs

How the compensation of top financial executives stacked up against that of their bosses over the past five years.
David KatzJuly 19, 2001

Click here for a story on top-earning CFOs.

Click here for tables showing a snapshot of the compensation of top-earning senior financial executives and an analysis of CFO compensation.

Nothing like keeping up with your boss—especially in terms of your compensation.

In fact, as whole, the CFOs in a sample of 350 of the largest public companies that filed proxy statements between July 28, 2000 and April 6, 2001 held that enviable position with regard to their CEOs for the entire second half of the 1990s.

For the companies in the sample, which was assembled by William M. Mercer Inc. and analyzed by the consulting firm at CFO.com’s request, CFO median total direct compensation (TDC) as a percentage of CEO TDC held steadily between 35 percent and 40 percent from 1996 through 2000.

TDC is the sum of total annual compensation (TAC) and total long-term incentive compensation (LTI). TAC is base salary plus bonus, while LTI is the gain on options exercised plus the value of restricted- stock grants plus long-term incentive plan payouts. (The Mercer analysis traced relative CEO and CFO compensation for the same companies studied in 2000 through the previous four years, without regard to the people occupying the positions.)

CFOs in the sample, in fact, earned a steadily higher percentage of their bosses’ median salary than they did of the CEO’s salary, with CFO salary as a percentage of CEO salary hovering around 47 percent and 49 percent for the second half of the ’90s.

That’s to be expected, since CEO compensation depends less on salary and yearly bonus and is “a little more tied to shareholder return,” notes Peter Oppermann, a Mercer principal in New York City.

The analysis of the sample bears this out, showing that median CFO LTI as a percentage of CEO LTI ranged from about 28 percent to near 34 percent for the period.

CFO compensation increased 12.2 percent at the median within the Mercer sample, while base salary rose 6.5 percent, according to another analysis of the sample . Similarly, for CEOs, TDC increased 13.7 percent and base salary 6 percent at the median in 2000, according to Oppermann.

That suggests that the compensation of CFOs is developing a “similar tie to total shareholder return” that CEOs have long held, he said.

CFO Compensation as a Percentage of CEO Compensation
2000
Salary TAC LTI TDC
75th Percentile 57.6% 50.0% 59.3% 50.5%
Median 47.5 40.4 33.5 37.5
25th Percentile 41.3 32.2 21.7 26.8
Average 54.9 44.3 77.0 50.0
Valid Cases 204 205 127 205
1999
Salary TAC LTI TDC
75th Percentile 56.1% 51.3% 50.1% 51.1%
Median 48.5 41.3 31.2 40.0
25th Percentile 41.1 35.1 16.5 29.9
Average 54.4 46.2 67.9 53.9
Valid Cases 194 195 120 195
1998
Salary TAC LTI TDC
75th Percentile 55.1% 50.2% 48.2% 53.4%
Median 47.1 40.3 28.5 39.1
25th Percentile 41.2 35.7 14.4 28.2
Average 50.8 45.2 72.8 58.0
Valid Cases 202 202 127 202
1997
Salary TAC LTI TDC
75th Percentile 55.9% 50.9% 67.3% 58.9%
Median 47.4 41.0 33.4 39.6
25th Percentile 41.0 34.9 19.8 28.4
Average 50.8 45.6 75.4 52.7
Valid Cases 188 188 123 188
1996
Salary TAC LTI TDC
75th Percentile 54.2% 49.4% 44.3% 45.3%
Median 46.8 39.8 28.3 35.1
25th Percentile 37.9 31.8 20.6 28.8
Average 48.4 41.2 46.5 39.2
Valid Cases 33 33 17 33

Based on a sample of 350 of the largest public companies in terms of revenue that filed corporate proxy statements prior to April 6, 2001. Figures do not include “All Other Compensation” or “Other Annual Compensation.” Total Direct Compensation is the sum of Total Annual Compensation(TAC) and total long-term incentive compensation(LTI). TAC is base salary plus bonus, while LTI is the gain on options exercised plus the value of restricted-stock grants plus long-term incentive plan payouts.

Compiled by William M. Mercer Inc.

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