US CFO salaries swell to fill bonus vacuum

According to US-based executive compensation research outfit Equilar, the annual median base salary for S&P-500 CFOs increased by 6.6% in 2008, from $500,000 to $532,758. But aggregate bonus compensation (the sum of all bonuses CFOs received) dropped by 26.2%, falling from $287.2m to $211.8m in the year.

That is compared with Equilar’s figures for 2006-07, which showed an even steeper rise in salary, but a fall in bonus compensation ­ median base salary for S&P-500 CFOs rose by 9.1% to $525,000 in the year, while median aggregate bonus compensation fell 3.4% to $576,880.

A separate survey conducted by Equilar on chief executive officer pay and compensation revealed that CEOs saw a salary increase of 5.7% in 2008, from median of $1m to $1,057,118.

“CFOs’ salaries are rising at a faster rate than other executives and though salaries are not linked to performance, CFO salaries rose more in 2008 than you’d expect,” says Equilar spokesman Alex Cwirko-Godycki. “In part, salary increases offset compensation losses elsewhere, but CFOs have increasingly complex roles and can get larger salaries in today’s marketplace.”

The research also found that annual incentive plan payouts for CFOs fell by 18.4% from 2007 to 2008, from a median annual incentive plan payout of $332,800.

The value of other forms of compensation awarded to CFOs in 2008, including “prerequisites” such as travel on corporate jets, relocation expenses, financial planning assistance and personal and home security, fell 3.9% to a median $60,648. That compares with a 9.1% increase, to $63,152, in the award of these types of compensation to CFOs between 2006 and 2007.

Cwirko-Godycki believes CFO compensation will continue its decline in 2009 and that the trend in curbing excessive compensation packages will spread from the financial services sector to the economy at large. “Ultimately, shareholders will need to stay interested in this topic long enough to keep the pressure on companies,” he says.