The year 2023 saw a significant rise in the median pay for Chief Financial Officers (CFOs) at U.S. companies, largely driven by stock-based incentives.
What Happened: According to a report by C-Suite Comp, an executive pay analytics firm, this upsurge in CFO pay aligns with historical trends, a contrast to the exceptional rise observed in 2021, reports The Wall Street Journal.
Leading the charge in executive compensation are CFOs from diverse sectors such as technology, financial services, and retail.
Notably, executives from companies like Walmart Inc.
In some instances, CFOs like Alphabet's Ruth Porat and Aon Plc's
Meanwhile, companies like Zoom
David Baff, a board member at C-Suite Comp, justified the higher CFO pay, stating that it is necessary for companies to attract and retain the right person to manage their finances amid an uncertain economic and geopolitical landscape.
Stock-based pay, which varies with the market, constitutes a significant portion of executive pay. As a result, the 24% rise in the S&P 500 last year led to a corresponding increase in executive pay. For instance, Charter Communications Inc.
Why It Matters: The dynamic economic and geopolitical landscape has firms prioritizing financial leadership, prompting them to offer competitive pay packages to retain top talent, according to industry experts.
While the surge in CFO pay has been significant, it has not been without controversy. High executive pay has come under scrutiny, particularly when companies underperform.
Shareholders often use votes on pay to voice their dissatisfaction with issues such as dividend policy or governance matters. This trend highlights the ongoing debate about executive compensation and the role of stock-based incentives in driving it.
