ANYONE who says that money can’t buy you happiness should take a look at the latest findings from Financial Director’s annual CFO salary survey.
According to the latest survey of the remuneration packages of finance chiefs at the UK’s largest listed companies, total average pay for chief financial officers who are plying their trade in the FTSE 100 and FTSE 250 reached £2.4m and £1.1m, respectively.
Indeed, calculations by the High Pay Centre (HPC) think-tank found that, by the end of 6 January, Britain’s most senior executives will have picked up more money in 2015 than the average UK worker earns in an entire year. Our survey – compiled from companies’ 2014 annual accounts – found that finance chiefs at the UK’s largest companies saw their base salaries fall, reflecting shareholder pressure on executive pay. The base salaries of FTSE 100 FDs fell 6.2%% to £478,592, while bonuses increased by 4.4%% to £554,264. Lower down in the FTSE 250, CFOs saw their salaries jump 5.4% to 315,085, while bonuses increased 9.9%% to £307,188.
This year’s iteration of the survey is more comprehensive than ever and includes more data related to other forms of remuneration, including pensions and long-term and short-term incentive plans. As such, overall salaries appear larger than in previous surveys.
The results also appear to have been improved further by the strong performance of the FTSE in late 2013 and early 2014. London’s FTSE 100 index ended the year having recorded its biggest annual gain since 2009, with the benchmark closing up 14.4% for the year. The FTSE 250, meanwhile, closed at an all-time high – up 28.8% for the year. Both long- and short-term incentive plans received a welcome boost.
“Bonus outcomes were lifted by the headwinds of share price increases,” explains Alastair Woods, a director in PwC’s rewards team.
The survey also finds CFOs were individually taking home improved pay deals. In the past financial year, five finance chiefs took home a base salary of £800,000 or above – compared to none in last year’s survey – while 160 finance directors took home total earnings of more than £1m. The previous year only 64 chief financial officers in the index achieved this feat.
The number of women working within the FTSE 350 increased to 19 from 17 – still woefully underrepresented despite attempts to make boardrooms more diverse. Nevertheless, remuneration terms for women improved on average in the past financial year. But women are still some way from achieving parity of pay with their male peers.
Indeed, the highest-paid woman in the FTSE 100 in 2013/14 – Diageo’s Deirdre Mahlan – took home £3.8m in total earnings. By comparison, Paul Richardson, CFO at WPP and the highest-paid chief financial officer in the past financial year, received an eye-watering £9.2m for services rendered to the advertising giant. However, Richardson’s pay is somewhat of an anomaly – it is almost £4m higher than that of David Keens, who retires from Next later this year – so perhaps a better benchmark for gender comparison is the consideration that Mahlan was paid less than any of the top ten earners in the index.
A full breakdown of the remuneration packages of every single chief financial officer in the FTSE 350 is available on www.financialdirector.co.uk ?
The 2015 FD Salary Survey has been produced using data based on disclosure in 2013/14 annual reports. Bonuses include cash and share-based bonuses, as well as deferred bonuses. Constituents of the FTSE 350 are correct as of November 2014. Remuneration information is provided for all companies where the finance director sits on the board of directors. In instances where the finance director is part of the management, but does not sit on the board, no information has been provided.
Some finance directors featured in the list resigned from their roles during 2014, but feature in the list as remuneration terms were provided in their company’s annual accounts. Except as noted, data may exclude that of finance directors who have not served a full year. Individual FDs listed may have left their company or been promoted since the balance sheet date.