How much base salary increases will CEOs and CFOs receive in 2022?
Compensation Advisory Partners (CAP), an executive compensation consulting firm, is exclusively shared fortune data on salaries, bonuses, and equity payments that provide views. The report’s data is based on 50 cross-industry S&P 1500 companies (with an average revenue of $4.6 billion and an average market cap of $7 billion) with fiscal years ending between September 30 and November 30.
About 80% of CEOs and CFOs in the research sample received a base salary increase. Of the companies that did increase, the average increase was 4.4% and 5.5% for the CEO and CFO. Looking deeper, the range of salary increases for the chief executive is 3.4% to 7.4%, while that of the finance chief partner is from 3.6% to 9.1%.
Courtesy of Compensation Advisory Partners
For S&P 1500 companies, the report’s findings may reflect a theme of salary increases, and lower bonus payments compared to the previous year, said Ryan Colucci, principal at CAP, and author of the report.
“CFOs generally receive higher pay increases when compared to CEOs,” Colucci said. “This past year, salary budgets across industries were higher than the historical norm, so we saw a marginal increase in the spread between CEOs and CFOs.”
I asked him if he had any thoughts on the possible reasons why the CFO received a higher salary increase. “Recently, the labor market for CFOs has been tighter than in the past with higher turnover rates,” Colucci said. “Over the years, the role of the CFO has evolved into a more strategic, decision-making role that has increased the criticality of the role for many organizations. With higher turnover rates and the importance of the role, companies must adjust their salary packages (including salary) to attract and retain talent CFO.
Although CFOs had higher base salary increases, CEOs fared better in bonuses and total compensation. Overall, the annual bonus declined compared to the previous year in just over half of the CEO (down 10% on average) and CFO (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 greater than 25% of the previous year’s total salary, and this was the case for one-third of CFOs.
The CAP report also found that equity awards (non-cash compensation) increased by 17%, on average, for chief executives and chief financial officers. And equity awards make up two-thirds of total CEO compensation, on average, and 56% of total compensation for CFOs. The research also found that CEOs generally saw “more dramatic swings” in incentive compensation compared to CFOs, with a higher percentage of chief executives experiencing increases or decreases of 25% or more.
More than 80% of the companies in the S&P 1500 have their fiscal year at the end of the calendar year, Dec. 31, Colucci said. Some of those filings will come out this week, but most will come out during the rest of March and early April, he said. The initial batch of filings offers up a preview, but so far it looks bright for CFOs, at least when it comes to pay.
See you tomorrow.
Sheryl Estrada
sheryl.estrada@fortune.com
big problem
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Deeper
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Leader board
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Hear
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—Bank of America economist Aditya Bhave warned in a note that the Fed may need to raise rates to somewhere between 5.25% and 5.5% to bring inflation back to its 2% annual growth target, and the Federal Reserve should “keep raising rates until it finds a tipping point.” pain for consumer demand,” fortune reported.
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