CFO compensation at small- to medium-sized firms has been surging over the last four years, both in absolute terms and in comparison to what CEOs are making, according to a survey of executive compensation by Frederick, Maryland-based Panel Publishers.
A breakdown of the top five earners among the chief financial and accounting executives at the 885 firms studied shows two from the electrical and electronics industry. The firms analyzed for the study ranged from about $2 million to $200 million in annual sales.
“Total compensation” (or “total direct compensation”) refers to either the sum of base salary and bonus or the total compensation amount reported for the period by the survey respondent. (Tables 1 through 4 were provided to CFO.com by executives of The Segal Company in New York who worked on the survey; the remaining tables are based on those found in the 2001 Officer Compensation Report, recently published by Panel.)
Table 1: The Top 5 Highest-Paid CFOs Surveyed*
Total Comp. | Base Salary | Bonus | Industry Group | State | Company Revenues (000) | Profit Margin/ Loss | |
1. | $984,000 | $353,000 | $631,000 | Electrical & Electronics | New York | $157,104 | 11% |
2. | 758,000 | 319,000 | 439,000 | Heavy Equip & Trans | Ohio | 187,400 | 5 |
3. | 668,000 | 400,000 | 400,000 | Business Services | Florida | 4,952 | 8 |
4. | 542,000 | 175,000 | 367,000 | Electrical & Electronics | Michigan | 229,261 | 16 |
5. | 463,000 | 300,000 | 161,000 | Tech Services | New York | 185,154 | 50 |
*Figures are projections for 2000.
Source: Panel Publishers
Over the last four years, CFOs’ median total direct compensation as a percentage of what their CEOs earn rose 10 percentage points at the surveyed firms.
Table 2: CFO’s Median Pay as a % of CEO’s Pay
Year | % of Base Salary (incentive/bonus ineligible) | % of Base Salary | % of Bonus | % of Total Direct Compensation |
2000* | 73% | 60% | 34% | 56% |
1999 | 70 | 59 | 36 | 52 |
1998 | 62 | 58 | 34 | 49 |
1997 | 61 | 53 | 31 | 46 |
* Projected
Source: Panel Publishers
In absolute terms, CFO median pay has been surging at the companies analyzed for the Panel survey.
Table 3: CFO Pay Trends from 1997 to 2000
Median Pay | ||||
Year | Base Salary | Base Salary | Bonus | Total Direct Compensation |
2000* | $116,000 | $120,000 | $25,000 | $144,000 |
1999 | 114,000 | 113,000 | 27,000 | 145,000 |
1998 | 108,000 | 101,000 | 25,000 | 132,000 |
1997 | 116,000 | 95,000 | 25,000 | 128,000 |
* Projected
Source: Panel Publishers
CFO stock option awards as a percentage of salary have shown strong growth
Table 4: CFO Stock Option Awards from 1997 to 2000
Year | Average Options Awarded | Options as a % of Salary |
2000* | 41,457 | 248% |
1999 | 322,235 | 1,873 |
1998 | 32,226 | 276 |
1997 | 21,213 | 129 |
* Projected
Source: Panel Publishers
Like other top executives, CFOs tend to own a smaller piece of the firm the larger the firm gets.
Table 5: % of Company Stock Ownership by Officer*
Company Size by Sales (in $Millions ) | |||||||||
Title | <$2 | $2- 5 | $5- 9 | $10- 14 | $15- 24 | $25- 39 | $40- 59 | $60- 99 | $100+ |
CEO/ Pres. | 34.8% | 30.4% | 22.6% | 20.3% | 18.8% | 15.6% | 18.9% | 12.0% | 15.0% |
COO | 20.2 | 10.1 | 16.2 | 6.8 | 7.9 | 5.2 | 5.3 | 3.4 | 5.3 |
CFO | 10.6 | 4.0 | 6.6 | 5.4 | 4.8 | 2.8 | 2.3 | 1.4 | 3.9 |
Sales/ Mktg Exec | 7.5 | 14.2 | 10.1 | 4.2 | 3.1 | 2.1 | 1.2 | 1.7 | 4.2 |
Mfg/ Prod Exec | 16.3 | 7.6 | 5.5 | 4.0 | 6.0 | 12.6 | 0.9 | 1.0 | 3.2 |
*Median Figures
Source: 2001 Officer Compensation Report, Panel Publishers
The same percentage of eligible CFOs as that of CEOs were awarded stock options last year.
Table 6: Incentive Plan Eligibility and Payout by Officer
Short-term Plans | Long-term Plans | |||||||
Title | Total Sample Size | Sample SizeEligible | % Receiving Annual Bonus | Sample SizeEligible | % Eligible Awarded Stock Options | |||
CEO/President | 879 | 751 | 71% | 572 | 58% | |||
COO | 358 | 329 | 66 | 230 | 52 | |||
CFO | 583 | 527 | 72 | 394 | 58 | |||
Sales/Mktg Exec | 390 | 353 | 74 | 226 | 60 | |||
Mfg/Prod Exec | 207 | 191 | 75 | 84 | 38 |
Source: 2000 Officer Compensation Report, Panel Publishers.
Bonuses paid to CFOs were much higher at companies above $100 million in yearly sales.
Table 7: Compensation of CFOs by Company Size
Company Size by Sales (in $Millions ) | |||||||||
<$2 | $2-5 | $5-9 | $10-14 | $15-24 | $25-39 | $40-59 | $60-99 | $100+ | |
Incentive/Bonus Ineligible | |||||||||
Base Salary 2000* (000’s) | |||||||||
Sample Size | 5 | 12 | 9 | 13 | 8 | 9 | 2 | 5 | 2 |
Average | $155 | $103 | $89 | $105 | $134 | $129 | $151 | $144 | $149 |
Median | 135 | 105 | 98 | 106 | 129 | 120 | 151 | 148 | 149 |
1st Quartile | 133 | 84 | 68 | 75 | 109 | 97 | 140 | 125 | 140 |
3rd Quartile | 185 | 122 | 108 | 125 | 157 | 165 | 162 | 155 | 157 |
Incentive/Bonus Eligible | |||||||||
Base Salary 2000* (000’s) | |||||||||
Sample Size | 18 | 38 | 55 | 57 | 65 | 43 | 62 | 54 | 101 |
Average | $118 | $89 | $93 | $108 | $111 | $129 | $131 | $134 | $172 |
Median | 100 | 69 | 82 | 104 | 110 | 126 | 130 | 126 | 170 |
1st Quartile | 75 | 52 | 60 | 70 | 79 | 107 | 104 | 109 | 137 |
3rd Quartile | 134 | 110 | 120 | 135 | 128 | 146 | 156 | 156 | 197 |
Bonus 2000* (000’s) | |||||||||
Sample Size | 14 | 34 | 41 | 44 | 48 | 31 | 46 | 44 | 77 |
Average | $35 | $35 | $32 | $28 | $30 | $33 | $48 | $200 | $81 |
Median | 23 | 8 | 12 | 15 | 11 | 12 | 14 | 20 | 62 |
1st Quartile | 10 | 4 | 6 | 7 | 11 | 12 | 14 | 20 | 25 |
3rd Quartile | 34 | 20 | 33 | 32 | 43 | 41 | 52 | 64 | 100 |
Total Direct Compensation 2000* (000’s) | |||||||||
Sample Size | 18 | 39 | 54 | 57 | 65 | 43 | 62 | 54 | 99 |
Average | $143 | $120 | $119 | $131 | $133 | $156 | $168 | $299 | $239 |
Median | 118 | 81 | 106 | 117 | 124 | 146 | 150 | 155 | 210 |
1st Quartile | 85 | 56 | 70 | 80 | 98 | 125 | 130 | 131 | 168 |
3rd Quartile | 177 | 130 | 161 | 157 | 157 | 186 | 194 | 205 | 273 |
* Projected
Source: 2001 Officer Compensation Report, Panel Publishers.
CFOs were paid much more in the Northeast than in any other region of the country last year.
Table 8: Avg. 2000 Total Direct Compensation of Incentive/Bonus Eligible Execs By Region*
Title | Northeast | Mid- Atlantic | Southeast | Midwest | South | West | |||
CEO/ President | $329,000 | $204,000 | $264,000 | $334,000 | $365,000 | $293,000 | |||
Sample Size | 177 | 22 | 55 | 147 | 57 | 192 | |||
COO | $220,000 | $198,000 | $239,000 | $242,000 | $277,000 | $218,000 | |||
Sample Size | 56 | 5 | 30 | 67 | 16 | 69 | |||
CFO | $238,000 | $105,000 | $163,000 | $169,000 | $163,000 | $170,000 | |||
Sample Size | 112 | 14 | 30 | 88 | 26 | 130 | |||
Sales/Mktg Exe | $176,000 | $120,000 | $150,000 | $180,000 | $131,000 | $171,000 | |||
Sample Size | 64 | 13 | 17 | 62 | 14 | 75 | |||
Mfg/Prod Exec | $143,000 | $126,000 | $186,000 | $118,000 | $101,000 | $148,000 | |||
Sample Size | 32 | 6 | 12 | 23 | 8 | 24 |
* Projected
Source: 2001 Officer Compensation Report, Panel Publishers.
Tables compiled by Joseph McCafferty