How much of a base salary increase did CEOs and CFOs receive in 2022?
Compensation Advisory Partners (CAP), an executive compensation consulting firm, exclusively shared with Fortune data on salary, bonuses, and equity payouts that provides a sneak peek. The report data is based on 50 cross-industry S&P 1500 companies (with median revenue of $4.6 billion and a median market cap of $7 billion) that have fiscal year ends between Sept. 30 and Nov. 30.
Approximately 80% of CEOs and CFOs in the research sample received base salary increases. Of the companies making increases, the median increase was 4.4% and 5.5% for CEOs and CFOs, respectively. Looking deeper, the range of salary increases for chief executives is 3.4% to 7.4% whereas their finance chief counterparts ranged from 3.6% to 9.1%.
Courtesy of Compensation Advisory Partners
For S&P 1500 companies, the report findings may reflect themes in salary increases, and lower bonus payouts compared to the prior year, says Ryan Colucci, principal at CAP, and author of the report.
CFOs have generally received slightly higher salary increases when compared to CEOs, Colucci says. This past year, salary budgets across industries were higher than historic norms, so we see a marginal increase in the spread between CEOs and CFOs.
I asked him if he had any thoughts on possible reasons why CFOs are receiving higher salary increases. Recently, the job market for CFOs has been tighter than in the past with higher turnover rates, Colucci says. Over the years, the CFO role has been evolving to generally become a more strategic, decision-making role which increases the criticality of the role for many organizations. With higher turnover rates and the increased importance of the role, companies have needed to adjust pay packages (including salary) to both attract and retain CFO talent.
Although CFOs had higher base salary increases, CEOs fared slightly better in bonuses and total compensation. Overall, annual bonuses declined compared to the prior year for just over half of CEOs (down 10% on average) and CFOs (down 12% on average). Total compensation increased modestly, on average, for both CEOs (4%) and CFOs (2%). However, 40% of CEOs experienced a change in total compensation that was greater than 25% of their prior year total pay, and this was the case for one-third of CFOs.
CAPs report also found that equity awards (non-cash compensation) increased by 17%, on average, for both chief executives and finance chiefs. And equity awards made up two-thirds of CEOs total compensation, on average, and 56% of total compensation for CFOs. The research also found that CEOs generally saw more dramatic swings in incentive compensation in comparison to CFOs, with a higher percentage of chief executives experiencing increases or decreases of 25% or more.
More than 80% of companies in the S&P 1500 have their fiscal year at the end of the calendar year, Dec. 31, Colucci says. Some of those filings are coming out this week, but the bulk of them will come out throughout the rest of March and early April, he says. The early batch of filings offer up a preview, but so far things are looking bright for CFOs, at least when it comes to pay.
See you tomorrow.
Sheryl Estrada
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Big deal
Morgan Stanleys E-Trade released data from its monthly sector rotation study. The top three sectors in January and February were energy, consumer discretionary (nonessential goods and services, like cars and entertainment), and utilities. The results are based on the trading platforms customer notional net percentage buy/sell behavior for stocks that comprise the S&P 500 sectors. All three sectors increased between January and February, with energy increasing from 7.92% to 14.85%, according to the report.
Going deeper
"Transformative Change Starts With Responsible Research," an opinion piece by Wharton Dean Erika James and INSEAD Dean Ilian Mihov, included in Wharton's business journal, explores how responsible research can help businesses and leaders gain a sustainable edge in the current volatile markets. "Responsible research isnt just about acting ethically when collecting data; it is about recognizing changing social values and the scientific realities faced by businessparticularly the idea that business cannot leave people, communities, or less resource-rich societies behind," James and Mihov write.
Leaderboard
Julie Swinney was promoted to CFO at Zendesk, a customer service platform. Swinney joined Zendesk in October 2021 as SVP of finance and strategy and has been serving as the companys acting CFO since November 2022. She was previously at Intel for over 25 years, including serving as CFO of the cloud and enterprise data center business. As Swinney assumes the role of CFO permanently, she will continue to focus on supporting the companys ability to "create and capture value for its customers and employees, building a sustainable cost structure and helping critical business functions maximize productivity," according to Zendesk.
Bill Wafford was named CFO at Qurate Retail Group (Nasdaq: QRTEA), the parent company of brands including QVC, HSN, and Zulily. James Hathaway, who had been serving as Interim CFO since August 2022, will become the CFO of QVC US. Wafford has more than 25 years of experience. He joins Qurate Retail Group from Everlane, where he was the CFO. Before Everlane, he served as CFO for retail companies such as JCPenney, The Vitamin Shoppe, and Thrasio. Wafford also previously served as a partner in the advisory practice group at KPMG, after holding various executive finance roles with Walgreens Boots Alliance, Target, and Archstone Consulting.
Overheard
"The resilience of demand-driven inflation means the Fed might have to raise rates closer to 6% to get inflation back to target."
Bank of America economist Aditya Bhave warned in a note the Fed may need to hike rates to anywhere between 5.25% and 5.5% to return inflation back to the targeted 2% increase year on year, and the Federal Reserve will have to "keep raising rates until it finds the point of pain for consumer demand," Fortune reported.
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