Will Financial Executives Salary Increases Continue to Outpace Marketplace Trends?

by FEI Daily Staff

Download the results of the Financial Executive Compensation Survey 2015 of public and private company financial executives.

The Financial Executive Compensation Survey 2015 report, a collaborative effort between Financial Executives Research Foundation (FERF) and Grant Thornton LLP showed a continuing trend of higher salary increases for senior-level financial executives. 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, our annual survey is completed by senior financial executives themselves rather than by human resources or executive search firms.

In 2015, the average salary increase for financial executives at private companies was 4.4 percent, an increase from 3.3 percent in 2014. On the public company side, the average salary increase was 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 has been 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 showed that eligibility for long-term incentives is more than double for public company financial executives compared with private company executives

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, Chief Operating Officer at FERF. “The increases in salaries seen in the 2015 survey results indicate that those in the profession will likely see improved compensation packages in the near future.”

Other highlights of the 2015 report include:

  • More than three-fourths (84 percent) of both public and private company respondents’ organizations had a defined contribution plan and 22 percent had a defined benefit plan — of those that did, about half (48 percent) restrict new entrants or have frozen benefit accruals;
  • More than three-fourths (86 percent) of public company respondents received 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 used company goals/ objectives as their performance measure.
Download the complete 2015 report and read all the results.

The data used in the annual report is compiled from responses to our annual Financial Executive Compensation Survey. If you have not already done so, please be sure your data is included by taking the 10th annual Financial Executive Compensation Survey now!