CAP's recent report on executive compensation reveals distinct trends in 2023 for Chief Financial Officers and Chief Executive Officers across 132 companies with median revenues of $14.6 billion. CFOs saw a median base salary increase of 4%, consistent with the previous year, while CEOs experienced no median salary increase, a notable drop from 2022's 2.9%. Over 70% of CFOs received salary hikes compared to 50% of CEOs, with CFOs receiving a median increase of 5.0% and CEOs 4.0%. Bonus payouts remained flat due to stable financial performance, with median target bonus opportunities unchanged at 100% of salary for CFOs and 160% for CEOs. Despite this, actual bonuses for companies with improved operating income were slightly higher than in 2022, emphasizing the alignment of compensation with performance.
Long-term incentive (LTI) awards rose significantly, driven by competitive pressures, with CFOs receiving an 11% increase and CEOs 9%. LTI awards have grown annually by 6% on average over the past decade. Total Direct Compensation for CFOs increased by 8%, while CEOs saw a 5% rise, largely due to higher LTI awards. Performance-based equity plans continue to dominate, comprising 60% of total LTI for CFOs and 70% for CEOs. Despite higher turnover among CFOs, their compensation remains approximately one-third of the CEO's total compensation, highlighting a consistent pay structure over the past ten years. As companies navigate the current economic landscape, compensation committees are expected to balance performance outcomes with the need to retain key executive talent.
