FERF

Financial Executives’ Salary Increases Taper Off

According to the recently released Financial Executive Compensation Survey 2016, the average salary increase for financial executives at both public and private companies dipped slightly this year compared to last year.

The report, a collaborative effort between Financial Executives Research Foundation (FERF) and Grant Thornton LLP, found public and private company senior-level financial executives saw an average reported salary increase of 4 percent for all respondents. Consistent with broader market data, public companies reported an increase of 3.7 percent, a decrease from 3.9 percent a year ago, while private companies saw a 4.1 percent increase in 2016 — down from 4.4 percent in 2015.

For the last decade, the Financial Executive Compensation Survey report has provided senior-level financial executives with valuable total compensation data to help them benchmark their own compensation. Important to note, unlike other compensation studies, the final results in this report are based on survey responses from financial executives themselves, rather than human resources or executive search firms.

“The demand for experienced financial and accounting executives is at its strongest in recent years,” says Ken Troy, director of Grant Thornton LLP’s Compensation and Benefits Consulting practice in Los Angeles. “Companies need to pay attention to changes in the competitive market for talent. They also should have a clear strategy that defines how they will best attract and retain the executives in these key roles.”

In a competitive market, some companies are offering sign-on and retention bonuses to attract and retain talent. For companies that offer a sign-on bonus, the most common form was a cash bonus (46 percent), followed by stock options or restricted stock (28 percent), and a combination of cash and restricted stock or options (26 percent).

More than half (60 percent) of respondents indicated they have a target bonus opportunity. Further, more than one-quarter (28 percent) of companies reported they are targeting bonuses specifically for retention purposes.

Additional highlights from the 2016 report include:

  • Nearly all (95 percent) of public and private company respondents’ organizations had a defined contribution plan and 23 percent had a defined benefit plan — of those that did, about half (47 percent) restrict new entrants or have frozen benefit accruals;
  • Eighty-nine percent of public company respondents received some form of stock-based incentive compensation, compared to just more than a third (35 percent) of private company respondents; and
  • For the 84 percent of financial executives who reported receiving one or more perquisites, by far the most popular was cellphone, cellphone allowance or cellphone reimbursement (94 percent). The majority (86 percent) of those receiving perquisites reported that those perquisites have not been reduced in the past year.
  • Forty-five percent of companies reported the CEO/ management make all pay decisions, while 44 percent reported their board of directors makes pay decisions for senior executives.
  • Of those companies that offer long-term incentive compensation (cash, stock-based, other), 19 percent of both public and private companies used company strategic goals/ objectives as their performance measure.

To read the full survey findings, download the complete 2016 report now!