CEO compensation for financial services executives outside of the banking space jumped 31 percent from fiscal year 2012 to fiscal year 2013, according to the latest report from professional services firm BDO USA.
BDO’s analysis of 600 mid-market public companies reveals that the boost in CEO pay for nonbank financial services firms was the second highest year-over-year pay increase across eight industry groups examined. Only energy company CEOs experienced a higher increase—45 percent—while the average across all eight industry groups was a 12.6 percent jump.
In terms of compensation dollars, nonbank financial CEOs ranked fourth among the eight industry groups, with average compensation of $2.8 million.
BDO finds that total average CEO compensation, as in past surveys, remains significantly higher than that of its CFO counterpart, with CEOs pulling down over $3.0 million across all industries, and CFOs bringing home roughly $1.2 million.
A similar relationship holds for the nonbank financial services executives with CFOs receiving just one-third of their CEO counterparts—$960,820 versus $2.8 million.
Overall, CFO compensation across the eight industry groups studied experienced an 8.2 percent increase in fiscal year 2013, compared to fiscal year 2012.
More Pay-at-Risk Programs
In a statement about the figures, Randy Ramirez, a senior director in the Global Employer Practice at BDO, said that the increases for both CEO and CFO compensation “support the theory that the Great Recession is behind us, and businesses are once again investing in top executive talent,” explaining that executive compensation levels are often directly tied to national and global economic conditions.
“As anticipated, however, in stronger markets, companies are favoring pay-at-risk compensation programs, which directly tie executive compensation to company performance. This is especially true for CEOs who are receiving 60 percent or more of their compensation in the form of equity,” he said.
BDO also investigated relationships between executive compensation and company size. On average, CEOs at companies in the largest revenue group ($650 million to $1 billion) receive higher overall total direct compensation than those in the smallest revenue group ($25 million to $325 million), with compensation figures coming in at $3,355,050 for the largest companies and $2,824,121 for the smallest.
The same is true for CFO compensation, with those in the highest revenue category receiving 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.
Surprisingly, however, the smallest revenue category for CEOs experienced a substantial 39 percent increase in compensation, significantly larger than the 8 percent and 3 percent growth rates that CEOs within the middle revenue group ($325 million to $650 million range) and largest revenue group experienced.
For CFO compensation, this also holds true. The study finds that CFO compensation at companies in the smallest and middle revenue groups grew 15 percent and 10 percent, respectively. However, compensation for CFOs in the largest revenue group only grew 1 percent over fiscal year 2012.
About the Study
These findings are from the fourth edition of The BDO 600 CEO and CFO Pay Study, which examines CEO and CFO compensation trends in publicly-traded companies with annual revenues ranging from $25 million to $1 billion in the energy, healthcare, manufacturing, real estate, retail and technology industries; and publicly-traded companies with assets ranging from $50 million to $2 billion in the banking and financial services industries.
The study includes proxy statements that were filed between May 15, 2013 and May 15, 2014.
About BDO USA
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. The firm serves clients through 52 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,264 offices in 144 countries.