Middle Market CEOs See 20% to 50% Reduction in Base Pay During COVID-19

For Board Directors, COVID-19 Poses Complexities to Compensation

CHICAGO--()--Executive and board director compensation practices have come under more scrutiny as a result of the pandemic. BDO USA, LLP has released two separate reports, one on CEO and CFO compensation and one on board compensation, which explore how compensation levels and practices changed in 2019 and the extent to which the global health crisis has altered compensation practices.

2020 Study of CEO and CFO Compensation Practices of 600 Mid-Market Public Companies

Executive compensation has not been spared by the global pandemic. The CEOs and CFOs of middle market companies who disclosed their salary reductions indicated reductions in base pay of between 20% to 50%, according to The BDO 600: 2020 Study of CEO and CFO Compensation Practices of 600 Mid-Market Public Companies, which analyzed the BDO 600 companies' 8K SEC filings filed between March and June of 2020.

For some companies experiencing reduced cash flow, reductions in pay, staff or both have been necessary to remain financially viable. In addition to these measures, companies have also modified goals, changed payout schedules or implemented deferral arrangements in order to manage cash flow more effectively.





Percent disclosing salary reductions




Median decrease




Median number of months




*NEO=named executive officer

These reductions came after increases in total direct compensation (TDC) for CEOs and CFOs of 4.7% and 4.4%, respectively, in 2019. This represents a greater increase in TDC than 2018, when CEOs saw a 3.6% and CFOs a 3.7% increase.

“Reductions in executive pay have been necessary across sectors and industries in order for companies with pinched cash flow to keep financially viable but also to reinforce a sense of solidarity with employees outside the C-suite,” Judy Canavan, Managing Director of BDO’s Global Employer Services, said. “With ever more scrutiny on executive pay, companies that have eschewed making compensation changes at the C-level may face blowback from stakeholders and employees during what is an already volatile and unstable time.”

The onset of the global pandemic has magnified a growing trend of scrutinizing executive pay levels, further challenging compensation committees to align the interests of executives with shareholders and other stakeholders. While incentives pay, including both short-term incentives (STI) and LTIs, is generally considered an effective approach for linking the financial interests of the top executives to that of the company and other stakeholders, developing metrics and setting goals can be incredibly challenging.

“Greater incentive compensation, which is more common among larger companies, underscores that compensation committees increasingly are looking to link compensation to company performance,” Terry Adamson, BDO’s Managing Director and Compensation Consulting Services Leader, said. “In a COVID-19 climate, that becomes more challenging as company performance may be out of sync given the financial turbulence so many have experienced in the last six months. The question then becomes: which metrics are appropriate and how can we set goals with reasonable rigor?”

As addendums to the BDO 600 CEO and CFO survey, BDO categorized performance metrics into five dimensions and examined executive pay and company performance alignment among the 600 companies surveyed for the BDO 600 report. A significant relationship between the portion of CEOs’ total compensation delivered through incentives and a change in at least one measure of company performance was evident in seven of the eight industry groups assessed.

Other items of note:

  • Healthcare CEOs see largest YOY increase while technology CEOs are highest paid: CEOs in the healthcare industry experienced the largest year-over-year increase, 8.4%, in average TDC. Technology company CEOs ranked as the most highly compensated among all industry groups, earning on average about $5.7 million per year.
  • Larger companies put more pay at risk: Approximately 80% of CEO pay was tied to incentive compensation. Variable compensation increased in tandem with company size for both CEOs and CFOs.
  • Should the idea of the peloton be applied to executive compensation? Translating the formation of a peloton, or the body of cyclists in a race, into corporate leadership, BDO arrived at three tiers of compensation that could be applied to major public companies. Click here to read more.

For more in-depth data and insights download The BDO 600: 2020 Study of CEO and CFO Compensation Practices of 600 Mid-Market Public Companies.

2020 Study of Board Compensation Practices of 600 Mid-Market Public Companies

The global health crisis has amplified the already-evolving role of boards of directors across industries and sectors. Directors’ workloads and time invested to support the organizations they serve, while already on the rise, have increased dramatically as a result of the pandemic, according to The BDO 600: 2020 Study of Board Compensation Practices of 600 Mid-Market Public Companies While board directors contend with greater demands on their time and greater challenges, their compensation tracks typical cost-of-living increases.

Director compensation in 2019 rose 3.1% over 2018, slightly lower than the annualized increases in total compensation of 3.4% since 2015. Since the start of the global pandemic, 14% of organizations reduced board member compensation by 50% or more for an average of six months.

“To navigate this incredibly difficult time, companies have leaned on the experience and foresight of their boards of directors to help manage supply chain disruptions, cyber threats and risks, and workflow and business interruptions, to name a few” Canavan said. “COVID-19 has magnified the rising number of issues boards have been contending with, from corporate strategy to audits and emergency preparedness and response tactics.”

In 2019, total compensation, including board retainers and fees and committee retainers and fees, averaged $175,546. The study found that board compensation strongly correlates with company size: Companies with revenues (or assets, in the case of financial services) of between $100 million­–$500 million paid board members an average of $129,756; those with revenues of between $500 million and $1.25 billion paid $179,024, and companies with revenues of between $1.25 billion and $3 billion an average of $204,820.

Fiscal Year

Board Retainers &

Retainers & Fees

Total Equity Pay







Change over prior year





The actual range of pay is significant. Some of the smaller companies pay less than $10,000, typically through a cash stipend, while some of the larger companies offer their directors a package worth more than $400,000, which is largely equity-based (more than 75% of their pay package).

By industry, board directors in the technology and healthcare industries receive the highest compensation, $235,000 and $228,000, respectively. The energy industry takes third place with $200,000 in board compensation. On the other end of the spectrum, financial services–banking directors are paid the least on average, at $52,747.

Equity awards are a major component of compensation across industries. The financial services industries, both banking and nonbanking, offer the highest level of fixed compensation (71% and 56%, respectively), while healthcare and technology offer the lowest (33% and 34%, respectively). The study also found that representation of women on boards grew in 2019: On an aggregate basis, women now represent 21% of the directorship on boards, up from 19% from 2018, and 94% of companies have women on their boards, up from 89% in 2018. The retail industry has the highest representation of women board members, 24%.


% of Female Directors

% Companies with
Female Directors

% Companies with >35%
Female Directors

















Real Estate




















For more in-depth data and insights download The BDO 600: 2020 Study of Board Compensation Practices of 600 Mid-Market Public Companies.

*Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.

About the BDO 600: 2020 Study of CEO and CFO Compensation Practices of 600 Mid-Market Public Companies and the BDO 600: 2020 Study of Board Compensation Practices of 600 Mid-Market Public Companies:

The reports examined the compensation practices of publicly traded companies in the energy, financial services–banking, financial services–nonbanking, healthcare, manufacturing, real estate, retail, and technology industries. Companies in the six non-financial service industries in our study have annual revenues between $100 million and $3 billion. Companies in the two financial services industries in our study have assets between $100 million and $6 billion. Data sources include data provided by Salary.com and public company data collected from proxies and other sources.

About BDO’s Global Employer Services Practice

BDO’s Global Employer Services practice consists of an experienced and dedicated team of professionals who are committed to assisting leadership and boards with developing strategies and compensation programs designed to attract, retain, and reward the executive team. Our services include designing and benchmarking executive compensation programs including cash- and equity-based programs, board remuneration, board and executive talent reviews, compensation committee development, non-qualified and deferred compensation plans, advising on tax and accounting issues, and other related services.

Our services are tailored and scalable, designed to accommodate the unique needs of public, private, and nonprofit clients of all sizes and across all industries including multinational Fortune 500 companies.


BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 700 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of more than 80,000 people working out of 1,600 offices across 162 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.


Rosy Lum
Bliss Integrated Communication
(646) 846-0809


Rosy Lum
Bliss Integrated Communication
(646) 846-0809