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CFO Pay Drops 4.0% to $2.7 Million. Bonuses Fall 22.6%
New Equilar study tracks S&P 500 CFO pay trends
For Release: May 5, 2009
Redwood Shores, Calif. - According to a new study published today by Equilar, a leading information services firm which tracks executive and director compensation, median CFO pay fell by 4.0% from 2007 to 2008. Declines in overall compensation levels were principally driven by a steep drop in median cash bonus payouts, which fell by 22.6% over the same period.
Equilar's study includes data for 309 S&P 500 CFOs at companies with fiscal years ending between June 2008 and January 2009. To be included in the study, a CFO must have been in place for at least two full fiscal years.
Although not directly comparable because of changes in the S&P 500 index, a similar study conducted by Equilar last year on 313 S&P 500 CFOs, found that median compensation increased by 5.2% from 2006 to 2007.
Key findings from the study are presented below:
- Total Compensation: From 2007 to 2008, median total compensation for S&P 500 CFOs decreased by 4.0%, falling from $2,838,754 to $2,725,791. Aggregate compensation, the sum of all compensation for all CFOs, also fell, dropping by 8.3%.
- Base Salary: From 2007 to 2008, the median base salary for S&P 500 CFOs increased by 6.6%, rising from a median of $500,000 to $532,758.
- Total Bonus Payouts: In 2008, S&P 500 CFOs received a median cash bonus of $431,300, down 22.6% from a median payout of $557,316 in 2007. The prevalence of CFOs receiving a bonus also dropped from 93.9% in 2007 to 88.0% in 2008. Aggregate bonus compensation, the sum of all bonuses for all CFOs, dropped by 26.2%, falling from approximately $287.2 million to $211.8 million.
- Annual Bonus Payouts: Annual incentive plan payouts — which are most directly linked to corporate performance during the year and typically account for the greatest share of bonus compensation — fell by 18.4% from 2007 to 2008. The median annual incentive plan payout in 2008 was $332,800.
- Stock Awards: In 2008, the median value of CFO stock awards at S&P 500 companies moved upward by 4.4%, rising from a median of $669,001 to a median of $698,400. However, the prevalence of CFOs receiving stock grants was down, falling from 82.5% in 2007 to 80.9% in 2008.
- Option Awards: From 2007 to 2008, the value of S&P 500 CFO stock option grants fell by 3.7% to a median of $612,473. The median option grant in 2007 was valued at $635,761. The prevalence of CFOs receiving stock options remained flat at 75.1%.
- Other Compensation: The median value of other compensation for CFOs at S&P 500 companies was $60,648 in 2008, a 3.9% decline from a median of $63,139 in 2007. Other compensation includes executive perquisites like travel on corporate jets, relocation expenses, financial planning assistance and personal and home security, among others.
Readers should take note of the following methodology items:
- Equilar defines total compensation as the sum of base salary, cash bonus payouts, the grant date value of stock awards, the grant date value of option awards and other compensation like benefits and perquisites. Bonuses include both discretionary and performance-based payouts. Stock and option awards include grants with both service-based and performance-based vesting requirements.
- Equilar defines cash bonus payouts as the sum of any discretionary bonuses, annual incentive plan payouts and long-term incentive plan payouts paid in cash.
- Equilar values stock awards on their original grant date, not by their current value. For many CFOs, the current value of their stock awards is significantly less than on its original grant date.
- Equilar values option awards on their original grant date, not by their current value. For many CFOs, the current value of their stock awards is significantly less than on its original grant date. Equilar uses its own standard Black-Scholes methodology to value option grants.
About Equilar, Inc. (www.equilar.com)
Equilar is a leading information services firm with products focused on analyzing and benchmarking executive and director compensation. Equilar's award-winning suite of online databases, search tools, and custom research services empower informed compensation decisions through direct access to trusted data. These offerings enable corporations, human capital consulting firms, law firms, investors, individual executives, and members of the media to accurately compare pay packages across thousands of public companies using SEC and survey data. Equilar's research is featured frequently in Bloomberg, BusinessWeek, Reuters, The New York Times, The Wall Street Journal and other leading media publications. Equilar (Redwood Shores, CA) was recognized recently as one of the fastest-growing private companies in America by Deloitte, Inc. magazine, and the Silicon Valley Business Journal.
Media Contact
Alexander Cwirko-Godycki
(650) 286-4567
press@equilar.com
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