The 9th annual report, a collaborative effort between Financial Executives Research Foundation (FERF) and Grant Thornton LLP shows a continuing trend of higher salary increases for senior-level financial executives. As the U.S. economy improves, higher demand for financial executives is driving a steady rise in salary and benefits.
On the public company side, the average salary increase is 3.9 percent in 2015, an increase from 3.4 percent a year ago. These numbers are higher than average salary increases in the marketplace, which have held steady since last year, trending at 3 percent.
In spite of higher base salary increases than those at public companies, private company total compensation still lags behind public company total compensation overall. Differences between the two groups are greater than 10 percent among smaller organizations, and the gap widens as the size of the companies increase. Survey results show that eligibility for long-term incentives is more than double for public company financial executives compared with private company executives.
“We see the need to attract and retain top talent across all organizations becoming more of an urgent concern,” said Ken Troy, director in Grant Thornton’s Compensation & Benefits Consulting practice. “The need for strong financial executives is always of the utmost importance to an organization. As the economy improves, so do the opportunities for an organization to expand, which requires strong finance and accounting talent.”
In an effort to attract and retain talent, some companies are offering sign-on and retention bonuses. Of those companies offering a sign-on bonus, 27 percent reported they are targeting bonuses specifically for retention purposes. The most common offering was a cash bonus (52 percent) as opposed to equity. Slightly more than half (57 percent) of survey respondents indicate that they have a target bonus opportunity.
“Organizations are shifting their focus toward growth, and there is a renewed emphasis on strengthening the finance function and retaining the right talent,” said Bill Sinnett, Senior Director of Research at FERF. “The increase in salaries demonstrated in this year’s survey results indicates that those in the profession will likely see improved compensation packages in the near future. We are seeing a particular increase in compensation packages for finance professionals at private companies.”
Other highlights of the report include:
- More than three-fourths (84 percent) of both public and private company respondents’ organizations have a defined contribution plan and 22 percent have a defined benefit plan — of those that do, about half (48 percent) restrict new entrants or have frozen benefit accruals;
- More than three-fourths (86 percent) of public company respondents receive some form of stock-based incentive compensation, compared to just more than one-third (35 percent) of private company respondents; and
- Of the 77 percent of executives who reported receiving perquisites, the most popular was a cell phone, cell phone allowance or reimbursement (81 percent), followed by a company car or car allowance (19 percent), paid parking (17 percent) and health/fitness club dues (12 percent).
- Forty-three percent of companies reported that the CEO/ management make all pay decisions, while 40% reported that their board of directors makes pay decisions for senior executives.
- Of those companies that offer long-term incentive compensation (cash, stock-based, other), 26 percent of both public and private companies use company goals/ objectives as their performance measure.
The data for the Financial Executive Compensation Survey was compiled from responses received from a 35-question survey sent via email to active members of Financial Executives International (FEI) and Grant Thornton clients between November 2014 and February 2015, with 346 total responses.
An active or executive FEI member is defined as an individual currently holding a position as a financial executive at an organization. More than half (51 percent) of respondents hold the title of chief financial officer. Sixty-nine percent of respondents are from private companies and 23 percent are from public companies. The remaining eight percent were non-profit organizations.
For nearly a decade, the Financial Executive Compensation Survey report has been providing senior-level financial executives with valuable total compensation data to help them benchmark their own compensation. It is important to note that, unlike other compensation studies, this survey was completed by the executives themselves rather than by human resources or executive search firms.
To see the complete survey findings, please download your copy of Financial Executive Compensation Survey 2015 now.