CHICAGO & MORRISTOWN, N.J.--()--Seventy-four percent of financial executives received an increase in their salary in the last year, compared to 66 percent in 2011 and 43 percent in 2010, according to the findings of an annual survey issued today by Grant Thornton LLP and Financial Executives Research Foundation (FERF). While the estimated average salary increase was 4 percent, versus the 3 percent last year, public companies were awarded a slightly higher increase than private companies.
“Executive compensation programs across all types of organizations continue to evolve in response to factors such as the economic and political climate, increased scrutiny by shareholders and the media, and compliance-driven increases in program transparency”
The sixth annual Financial Executives Compensation Survey provides a year-over-year comparison of compensation for finance professionals. The study reports the salaries, bonuses, long-term incentives and retirement benefits of CFOs, corporate controllers, treasurers and other financial executives in the U.S. among public and private companies. Nearly half of the respondents are CFOs.
“Executive compensation programs across all types of organizations continue to evolve in response to factors such as the economic and political climate, increased scrutiny by shareholders and the media, and compliance-driven increases in program transparency,” said Marie Hollein, President and CEO for Financial Executives International (FEI). “The findings from this year’s survey are reflective of slight improvements in the economy, resulting in a loosening in compensation restraints.”
CFOs Salary & Bonuses
The majority of public company corporate CFOs (88%) and private company CFOs (82%) received an annual bonus, according to the 2012 survey. The average base salary for public company corporate CFOs is $286,500, an increase from the prior year’s average of $277,400. After factoring in additional cash-based, long-term incentive awards, the average total cash compensation for the public company CFO is $459,301.
The average base salary for private company corporate CFOs, is $197,400, slightly less than last year’s average ($206,900). After factoring in additional cash-based, long-term incentive awards, the average total cash compensation for the private company CFO is $277,979.
Beyond the Paycheck
Related to areas of non-salary and bonus compensation, key findings from the 2012 survey include:
- Nearly four in five respondents (79%) participate in a defined contribution plan with a matching contribution from their employer; and consistent with last year’s results, the average employer match is 4 percent for both public and private companies.
- The “perks” financial executives report receiving have remained stable during the last couple of years, with 79 percent receiving a cell phone, 25 percent an airline club membership and 22 percent a company car or car allowance. Only 9 percent report receiving a country club membership and relocation assistance, and just 2 percent receive housing and other living expenses.
- Only a 26 percent of financial executives receive a long-term cash incentive, with nearly half (48%) of those executives reporting that it comes as some form of stock-based incentive compensation. The most common performance measurements used to determine the incentives are base salary (67%) and company goals and objectives (41%), with the use of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increasing to 33 percent from 20 percent in 2011.
“Pressure is increasing on officer performance management processes and performance tied to pay,” said Ken Cameron, a director in Grant Thornton’s Compensation & Benefits Consulting practice. “In response, organizations are making programmatic changes such as increasing the use of performance shares and applying more rigorous incentive goal-setting methodologies.”
The data for the Financial Executive Compensation Survey was compiled from responses received from a 38 question survey sent via email to active members of Financial Executives International in November and December 2011 and January 2012, with 714 members completing the survey. An active or executive FEI member is defined as an individual currently holding a position as a financial executive at an organization.
All survey results are also available online through PayCheck, FEI’s online benchmarking tool. Responses can be searched based on all criteria, including title, company industry, company type, company location, company annual revenue, base salary and annual bonus opportunity. PayCheck is available by clicking on research on the FEI Web site www.financialexecutives.org.
To download a full copy of the survey, Financial Executive Compensation Survey, please go to: www.GrantThornton.com/cfocompensationreport.
About Grant Thornton LLP
Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity. In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.
About Financial Executives Research Foundation, Inc.
Financial Executives Research Foundation (FERF) is the nonprofit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals, and publications can be ordered by logging onto www.ferf.org.