CEO-CFO Compensation Gap Growing

The gap between CEO and CFO pay in the U.S. is widening. No one has yet made a similar study in Asia, but the American findings may give an indication of the trend in this region as well.

 

Middle-market CFOs in the US earn an average of US$927,743, which seems high, but is equal only to around 40 percent of the average CEO pay of US$2,338,874, according to an analysis of 600 public companies conducted by BDO USA, LLP, an accounting and consulting organisation.

 

Both groups saw significant pay increases, with CFO pay up 19 percent and CEO pay up 25 percent over last year.

 

"CEOs have always earned significantly more than other executives, but we have seen an even greater divide in recent years due to an increase in CEO pay leverage tied to the performance of their company’s equity," says Randy Ramirez, a Senior Director in the Compensation and Benefits Practice at BDO.

 

"We expect CFO and other executives’ pay to start catching up within the next few years as the emphasis on pay-for-performance trickles down to other top executives."

 

Pay also varies greatly by industry, with real estate CEO and CFOs both earning the most of any industry at $3,362,145 and $1,295,864, respectively. This is about three times the average pay of the lowest-compensated CEOs and CFOs in the banking industry at $1,037,685 and $442,425, respectively.

 

Other top earners include executives in the technology and energy industries, while retail execs joined those in banking on the low end of the pay spectrum.

 

These findings are from the first edition of The BDO 600 CEO and CFO Pay Study which examines the CEO and CFO compensation trends in publicly-traded companies with annual revenues from $25 million to $1 billion in the energy, health care, manufacturing, real estate, retail and technology industries; and publicly-traded companies with assets between $50 million to $2 billion in the banking and financial services industries.

 

The study included proxy statements that were filed between 5/15/2010 and 5/15/2011. BDO also publishes the BDO 600 Survey – Board of Director Pay Study that includes Board of Director compensation for the same 600 public companies.

 

 

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