CFO Pay Trends 2023

Dissecting the Compensation of Top Finance Officers

November 9, 2023

Joyce Chen

The chief financial officer (CFO), often known as the chief executive officer’s (CEO) right-hand person, plays a key role within the C-suite, guiding the CEO through strategic financial decision-making. Their core responsibilities encompass the management and leadership of the company’s financial decisions, including ensuring the accuracy of financial reports, tracking cash flow and driving revenue growth. Additionally, a large part of their role is to analyze the financial strengths and weaknesses of the company and hold accountability for its financial outcomes, whether they be successes or failures. CFOs also serve as valuable advisors to other executives and department heads across the organization, providing insights on maximizing revenue and controlling expenses while safeguarding the company’s reputation. 

Given the complex nature of the CFO role, compensation for top finance officers has steadily risen over the last several years. To shed light on key CFO compensation trends, this publication analyzes the compensation packages of top finance officers at S&P 500 companies since 2018.

The median total reported compensation for CFOs remained stable at $4.7 million across 2021 and 2022. However, both the 25th and 75th percentiles experienced a 2.9% drop in 2022. For the 25th percentile, the figure decreased from $3.5 million to $3.4 million, and for the 75th percentile, it dropped from $7 million to $6.8 million. The reasons for compensation fluctuations can be complex and involve a combination of various factors, but some potential causes may include changes in industry performance and compensation restructuring, which will be discussed in greater detail.

Year	25th	Median	75th
2018	2.7	3.8	5.7
2019	3.0	4.2	6.1
2020	3.0	4.2	6.0
2021	3.5	4.7	7.0
2022	3.4	4.7	6.8

Six out of eleven sectors observed an uptick in median compensation, whereas the remaining five sectors saw a decline. Specifically, the communication services sector witnessed a substantial surge in median pay, soaring from $9.7 million to $11.4 million, marking an impressive 17.5% increase in 2022. Conversely, the consumer cyclical sector experienced a notable surge from $4.5 million to $6 million in 2021, but in 2022, it regressed to $4.7 million.

When dissecting the elements of pay, options, which had experienced a 7.1% decline in prevalence in the prior year, rebounded significantly, increasing by 11.5% in 2022. Stock-based compensation also saw a notable uptick of 9.7% since 2018, highlighting an increasing reliance on stock grants as a component of executive remuneration. In contrast, other aspects of executive pay, such as salary, bonuses and non-equity awards, saw declines. These reductions may signal a shift in corporate compensation strategies, placing greater emphasis on long-term stock-based incentives while moderating fixed and short-term compensation.

	2018	2019	2020	2021	2022
S&P 500	3.80	4.20	4.20	4.70	4.70
Basic Materials	3.90	4.30	3.90	4.60	3.60
Communication Services	7.80	7.70	9.00	9.70	11.40
Consumer Cyclical	4.50	3.80	4.50	6.00	4.70
Consumer Defensive	4.00	4.10	4.40	4.20	5.00
Energy	4.00	6.20	4.90	5.40	5.90
Financial Services	3.80	4.60	4.90	4.60	4.80
Healthcare	3.50	4.30	4.20	4.80	5.40
Industrials	3.50	4.00	3.60	4.10	4.00
Real Estate	3.30	3.50	3.40	4.20	4.30
Technology	4.00	4.00	3.80	5.30	4.80
Utilities	3.00	3.10	3.10	3.60	3.20

	Other	Non-Equity Awards	Options	Stock	Bonus	Salary
2018	2.0	18.0	16.5	38.2	10.8	14.5
2019	2.4	16.0	16.4	38.5	13.3	13.3
2020	2.2	17.0	16.9	41.9	7.4	14.6
2021	1.6	18.8	15.7	40.4	10.8	12.7
2022	1.4	16.4	17.5	41.9	10.3	12.5

Although there was a slight reduction in the proportion of equity, moving from 64.4% to 63% between 2020 and 2021, it has generally been on an upward trajectory as a part of CFO compensation. In contrast, cash has seen an overall decline in its share within compensation packages. This trend further highlights the industry's transition towards emphasizing long-term, equity-based shareholder value, while reducing reliance on immediate cash payouts. 

	Equity	Cash
2018	62.3%	37.7%
2019	64.9%	35.1%
2020	64.4%	35.6%
2021	63.0%	37.0%
2022	66.5%	33.5%

In regards to gender breakdowns, women remain underrepresented in the CFO community, but there is encouraging progress on this front. Over the past year, there has been a significant increase of 7.4%, raising representation from 14.9% to 16% female. While achieving gender parity among CFOs may still be a distant goal, this increase over the last few years signifies a promising trend of ongoing improvement.

	Males	Females
2018	86.1%	13.9%
2019	87.7%	12.3%
2020	88.4%	11.6%
2021	85.1%	14.9%
2022	84.0%	16.0%

Among the small sample size, female CFOs continue to earn more than their male counterparts, with their compensation being 10.6% higher in 2022. Despite experiencing greater fluctuations in their pay compared to male CFOs, female CFOs have witnessed a significant overall increase of 20.9% in their total compensation since 2018. This is in contrast to male CFOs, who have also seen consistent growth, with a 23.7% increase since 2018. While this growth for male CFOs was somewhat anticipated, the progress made by female CFOs represents a noteworthy and positive trend toward more equitable compensation in executive positions.

Male	Male	Female
2018	3.8	4.3
2019	4.2	4.7
2020	4.2	4.3
2021	4.7	4.8
2022	4.7	5.2

Looking forward, the role of CFOs and their compensation packages will likely continue to evolve. As the business environment becomes increasingly complex, we can anticipate a greater emphasis on aligning executive pay with long-term performance and shareholder value.

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