CFOs Grow Payday With Growth Companies

Chief financial officers at small, high growth companies are seeing the biggest boost in their total compensation as stock-based pay gets a jolt with market volatility and bidding wars for talent are waged in specific industry sectors.

“Growth companies are not afraid to bid and up and pay for well-qualified talent,” says Randy Ramirez, a senior director in the Global Employer Services Practice at BDO, which released its 600 CEO and CFO Pay Study on Wednesday. “This group wants people that are known for learning on their feet and being comfortable in rapidly changing, high-growth environments.”

CFO compensation at companies in the smallest ($25 to $325 million) and middle revenue ($325 million to $650 million range) groups grew 15 percent and 10 percent, respectively, according to the study. That’s compared to compensation for CFOs in the largest revenue group ($650 million to $1 billion), which only grew 1 percent over fiscal year 2012. Those CFOs in the highest revenue category received an average of $1,248,338 in overall direct compensation and an average of $1,006,746 in total direct compensation in the smallest revenue range, the study reveals.

“I think there are two main reasons for the big uptick in CFO pay at smaller companies: because, historically, their stock price is more volatile and with the performance of the equity markets, that mix in compensation would show up as an increase,” Ramirez says. “Also, these companies are smaller with significant bets on growth that includes a great deal of spending, logistics and creating jobs. They need CFOs with the expertise to take the firm to the next level.”

The highest-paid CFOs were in the energy industry, with average compensation at $1,788,635, a 21 percent increase from last year, according to BDO. The study cites improving economic conditions and domestic shale opportunities in the energy sector as fostering a “highly competitive business environment, creating a need for strong senior leadership. “

“You are also seeing significant upside compensation movement on healthcare, technology and non-bank financial services,” Ramirez says, adding that retail has been one particular group that has suffered a pay downfall over the year with CFO compensation dropping an average of 11 percent.

“Retail has been burned in the past by bad technology bets and its a very difficult environment in a cyclical downturn,” he adds.