Competitive compensation is essential for organizations looking to hire and retain solid C-suite leadership, and market demand for impact CFOs remains strong. Additionally, CFOs and leadership have recently expressed personal financial concerns, placing total compensation and benefits as a critical factor for recruitment and retention.
According to new data from Rho, CFO compensation, severance packages, and cash bonuses are all up in 2024. Most CFOs are in the low- to mid-six-figure range for salary bands, with nearly three-quarters (73%) reporting they're set to earn between $201k-400k this year.
Compensation Breakdown
In 2021, 35% of CFOs said they earned between $151k-200k, a figure now reported by less than a quarter (17%). Instead, the number of CFOs earning over $250k has risen dramatically; 23% earn between $201k-250k and 22% earn $251k-300k. The most common salary band, between $301-400k, is earned by nearly three in 10 (28%)CFOs. In 2021, barely 10% received this type of compensation.
Inflation, talent retention, and rising prices may play into why CFOs have seen increases in recent years. While U.S. Treasury Secretary Janet Yellen insists wage increases among U.S. workers are pacing with rising prices— she may be right when it comes to executive pay —lower-level employees aren't getting the same compensation increases. Unlike executives, most employees received or expect to receive an average 4% increase in 2024.
Bonuses and Severance
A rising number of CFOs (77% in 2024 versus 65% in 2021) said they received a performance-based cash bonus this year. Researchers suggest this is a result of the increasing value perception of cash versus equity. For those earning over $300k, they expect or received a cash bonus of 32% in 2024. For those in the next lowest salary band, between $200-300k, their expectations for their bonus were on average 20% of their salary this year.
Some CFOs, likely at smaller companies or those earlier in their careers, have a compensation structure that relies on an incentive bonus to pay a large portion of their salary. For those earning less than $200k, 82% expect a cash bonus of 20%. In 2021, only 64% of CFOs in this range expected a similar-sized bonus.
Severance packages have largely remained the same in recent years. An identical amount (42%) of respondents said they have a severance agreement. The average severance length for CFOs was six months,up from four months in 2021. A few CFOs said their severance deals were as long as 24 months, doubling 2021's findings as the highest length of severance.
Those working below the CFO in director roles had significantly less lengthy severance agreements, with an average package of just two months should they be let go.
Equity Awards
Outside of cash incentives, CFOs want to be direct beneficiaries of organizational growth. Equity awards are mostly unchanged and have stayed consistent YoY, as just over two-thirds (67%) of respondents were awarded equity of 0.5% or more as an initial award. Forty-seven percent also said they were awarded more than 1% at some point after. Most respondents reported a one-year cliff. The typical vesting after that is "skewed" towards monthly vesting; 63% monthly, 20% quarterly, and 18% annually.
Median equity among CFOs hovered at around 1%, remaining unchanged as far back as 2019. The figures remained mostly unchanged for both SVPs, VPs, and directors. "The path to CFO for both accountant and finance folks is fairly linear from a cash perspective but equity looks much more exponential," said a CFO in a written response to surveyors.
118 U.S.-based respondents participated in the survey. They primarily consist of CFOs
at venture-backed businesses in the Greater New York area. Still, the population extends into some middle-market public companies and those in other geographies, such as Greater Boston, the Bay Area, the Southeast, the Southwest, the Midwest, and smaller regions.
FAQs
CFO Salary Bands for 2024
What percentage of revenue should a CFO be paid? ›
What percentage of revenue should a CFO be paid? A CFO might expect to receive between 1% and 3% of a company's value, with the possibility of receiving more depending on the company's stage or the CFO's entry point. Consider the company's situation and stage to determine appropriate compensation for a CFO.
What is the average bonus percentage for a CFO? ›
Median actual bonuses as a percentage of target were 122% for CFOs and 117% for CEOs in 2023, almost identical to 2022.
What is the average salary of a CFO in the Fortune 500 industry? ›
The median total reported compensation for CFOs remained stable at $4.7 million across 2021 and 2022. However, both the 25th and 75th percentiles experienced a 2.9% drop in 2022.
How much should a CFO make compared to CEO? ›
CEO in salaries. In most companies, the CEO earns much more than the CFO. According to Salary.com, the average annual salary of a CFO in the US is $420,000, usually ranging from $319,000 to $537,000, while the average salary of a CEO is $800,000 ranging from $420,000 to $1,200,000.
What is the CFO to income ratio? ›
The cash flow from operations to net income ratio reveals the percentage of a company's total net income that is available as cash for investing and financing ongoing operations. A decline in this ratio over time may indicate that the company is experiencing cash flow problems.
How much does a CFO make for a $1 billion company? ›
For medium-sized companies with revenue between $50 million and $1 billion, the salary range typically falls between $170,000 and $450,000. Large companies with revenue over $1 billion tend to offer the highest salaries, with the average CFO salary often exceeding $500,000.
Why are CFOs paid so much? ›
This lucrative salary makes sense, because a CFO has such an impact on the financial success of the company, and requires a lot of education, experience, and dedication.
How much should I pay my CFO? ›
According to CFO-search.com, the average cash compensation for a CFO in a private company with between $10MM in annual revenue and $40MM in annual revenue is between $161,808 and $254,392. CFOs for private companies with $21-$99MM in annual revenue make an average of $237,983 in base salary.
What is the severance package for the CFO? ›
For a CFO of a $70 million company in California, a reasonable severance package could range from six to nine months of salary, depending on the factors mentioned above...
10 Fastest growing CFO compensation (Y-o-Y)
| Company | CFO | Total Compensation |
|---|
| COMCAST CORP | Michael J. Cavanagh | $40,481,722 |
| WALMART INC | John David Rainey | $39,725,601 |
| APPLE INC | Luca Maestri | $27,151,798 |
| MICROSOFT CORP | Amy E. Hood | $26,319,581 |
51 more rowsJan 15, 2024
The report found 51% of CFOs in Fortune 500 and S&P 500 companies hold MBA degrees, compared to just 38% with CPA credentials.
How much does a CFO make at Microsoft? ›
According to salary.com, Amy Hood (CFO of Microsoft) has a base salary of $995,833. Further, her bonus last year was $4,543,490. This makes her total cash compensation $5,539,323. On top of the salary and bonuses, she received $17,864,404 in stock awards, and $62,414 in other compensation.
How much does a CFO make at Bank of America? ›
The estimated total pay range for a Chief Financial Officer at Bank of America is $252K–$452K per year, which includes base salary and additional pay.
What percentage of CFO bonuses are given? ›
Median actual bonuses as a percentage of target were 122% for CFOs and 120% for CEOs in 2022. While above target, the actual payouts as a percentage of target are lower than 2021 (160% for CFOs and 152% for CEOs in 2021). Bonus payouts were generally aligned with performance outcomes for most companies.
What is the lowest salary for a CFO? ›
While ZipRecruiter is seeing annual salaries as high as $400,000 and as low as $52,000, the majority of Entry Level Cfo salaries currently range between $141,000 (25th percentile) to $400,000 (75th percentile) with top earners (90th percentile) making $400,000 annually across the United States.
At what revenue do you need a CFO? ›
Traditionally, a company would not hire a CFO until they were making $50 million in annual revenue. At least, not in-house. If you plan to hire in-house, you will usually first hire a controller if your annual revenue is between $1 million and $10 million.
What is the CFO to sales ratio? ›
The Cash From Operations to Sales is a ratio that tells investors how capable a company is of generating cash from sales. Investors often see a higher value of the ratio to be better for the company, similar to how they view high profit margins as better than low profit margins.
What is CFO financial ratio? ›
CFOs analyze the D/E ratio to strike a balance between optimizing capital structure and demonstrating financial stability to shareholders and potential investors. In private companies, the D/E ratio serves as a strategic tool for capital allocation decisions, risk assessment, and long-term financial planning.
