CFO Journal: CEOs Paid Three Times More Than CFOs
Half of all companies in the S&P 500 paid their CEO three times more than their CFO, according to findings from Steven Hall & Partners LLC, an executive compensation consultancy. The research examines proxy statements filed through the first nine months of 2014, and comes as the U.S. Securities and Exchange Commission prepares rules requiring companies to report the CEO’s compensation package versus the median-paid employee.
The SEC has yet to decide when the rule, required under the 2010 Dodd-Frank law would go into effect. However, shareholders have been paying attention to the ratio of a CEO’s pay to other named executive officers for some time, said Steven Hall Sr., managing director of the firm.
Compensation information for the top-five paid executives is provided in every public company annual proxy. The median CEO’s pay was 2.9 times that of all named executive officers, including the CFO, chair of the board and chief operating officer.
“Most investors would tell you this would tell you this is a more meaningful analysis looking at this ratio,” he said.
Still, dollar figures matter. The median CEO pay was $10.4 million compared to the median CFO’s $3.1 million, in the proxies examined.
Instances where there’s a large gap between CEO and CFO compensation could a signal a wide disparity in the way the board views the leadership skills of the company. High executive compensation ratios at companies could also be an indication that the board wants to retain its chief executive, Mr. Hall said.