2007 Financial Executives Compensation Survey

2007 Financial Executives Compensation Survey

Financial Executives Research Foundation (FERF) would like to acknowledge and thank FEI Career Services for their contributions to this project.

Congratulations to Al from the FEI Boston Chapter on receiving the 2007 FEI Distinguished Service Award!

ALAN L. FABER

Al can be best characterized as a “role model.” He has served, and continues to serve the FEl Boston Chapter. He has proven himself to be an essential addition to the Nominating Committee, Professional Development Committee, Career Services Committee, Recruitment & Membership Committee, Membership Involvement Committee, Partner Committee and Board Resource Committee. In his involvement with Career Services, Al has counseled and helped so many people that his effect is almost immeasurable. He’s hosted literally thousands of one-on-one counseling breakfasts throughout the years - out of his own pocket - a testament to his generosity. He pioneered the use of Career Services as a way of mentoring and recruiting members. And it is no coincidence that the Boston Chapter’s period of greatest growth took place when Al chaired this important committee, resulting in a third of the new members retained through this committee’s efforts. Much of Al’s work, dedication and his pioneering ideas have been incorporated into the National Chapter Toolkit. An FEI member since 1993, Al is a seasoned professional with more than 40 years as a senior executive in private industry and professional services. He is an active officer and director of many professional and civic organizations, including Financial Executives International and the Treasurers’ Club of Boston, and is as an advisor to management and board members. He is also a frequent speaker and seminar panelist at business association and industry meetings. Al is regarded as such a vital member of the Boston Chapter, that a permanent Officer VP position was created for him, so he can continue to contribute to chapter governance, continuity and values. The Boston Chapter believes that if the legacy of FEI Hall of Fame award recipient F. Gorham Brigham Jr. is to survive, it will be through Alan Faber and this is what makes him so deserving of the Distinguished Service Award. Financial Executives Research Foundation (FERF) would like to acknowledge and thank the FEI Boston Chapter for underwriting this congratulatory message.

Congratulations to Ron from the FEI Cincinnati Chapter on receiving the 2007 FEI Distinguished Award!

RONALD S. STOWELL Ron is seen by his peers as a person with a passion for FEI. He demonstrates his dedication with character and integrity. A member since 1987, Ron’s FEI roots run deep, having been named the recipient of the Student Recognition Award from the Toledo Chapter in 1975. Ron’s energy and enthusiasm are boundless when it comes to the Cincinnati Chapter, where he has provided superior leadership throughout his tenure on various committees, and as Vice President, Programs and as Chapter President (2000-01). He was committed to increasing the quality of the monthly meetings and speakers. He worked diligently to arrange interesting “behind-the-scenes” tours for the chapter at places like Paul Brown Stadium, Grand Victoria Casino, Playhouse in the Park and the General Electric Facility. Ron strengthened Cincinnati Chapter activities by initiating, organizing and developing the Chapter Partnership/Sponsorship Program. In the first five years of the program, the chapter received approximately $127,000 from its partners, paving the way for the chapter’s future. The chapter now boasts 17 Chapter Partners, and enjoys healthy growth and very little turnover in this groundbreaking initiative. Because of Ron’s efforts, he has taken the financial position of the chapter from one that breaks-even from membership dues to one that is fiscally strong and that is now able to offer scholarships to six colleges and universities. At the FEI national level, Ron has served as Area Director (North Central Region) and as an active volunteer on the Pension & Investment Committee, Budget & Finance Committee and as an FEI Board Member. Throughout his FEI career as an active and contributing member – first with the Cleveland Chapter and later the Cincinnati Chapter, Ron has been an outstanding volunteer. His leadership and distinguished service have raised the bar for those who follow him. Financial Executives Research Foundation (FERF) would like to acknowledge and thank the FEI Cincinnati Chapter for underwriting this Distinguished Tribute Ad

Congratulations to Jerry from the FEI Central Pennsylvania Chapter on receiving the 2007 FEI Distinguished Service Award

GERALD URICH

Jerry joined FEI and the Central Pennsylvania Chapter in 1997, and has made immeasurable contributions as Chapter President, Vice President and Director. A dedicated volunteer, he has also chaired the Local Sponsorship Committee Outstanding Student Award program. When Jerry arrived, the chapter was wrestling with the same issues as many chapters: slow or stymied growth, low attendance, little visibility, uncertain finances, etc. The possibility of merging or folding the chapter was on the table for discussion more than once. In true form, Jerry arranged and offered the Hershey corporate headquarters as a central meeting location. This provided a desirable location for meetings at a reasonable cost. It also offered a more intimate setting than the public venues of the past. The chapter has found this location to be supportive of its needs and of interest to prospective members. Through his participation at regional and national FEI activities, Jerry began introducing new ideas to the chapter. The most triumphant of these is the Local Partnership Program. Jerry grew this program from a thought seed to seven Partners; and more are waiting, if needed. This new fiscal strength has enabled the chapter to initiate the Outstanding Student Award Program, which has grown to encompass seven schools and to expand Academic membership to include representatives from those schools -- all while maintaining the “No Local Dues” tradition of the chapter. Nationally for FEI, Jerry has been a contributing member of the Nominating Committee, Membership Committee, Planning Committee, Pension & Investment Committee, Budget & Finance Committee and Audit Committee. He currently serves on the Board of Directors as Treasurer. Jerry’s hard work and imaginative leadership has guided the Central Pennsylvania Chapter successfully through a critical period of change. Now, membership is the highest in chapter history and finances are sound. His fervor for FEI and his consistent volunteerism truly earns Jerry the Distinguished Service Award. Financial Executives Research Foundation (FERF) would like to acknowledge and thank the Central Pennsylvania Chapter for underwriting this congratulatory message.

2007 Financial Executives Compensation Survey

Cheryl de Mesa Graziano Vice President, Research and Operations Financial Executives Research Foundation

the source for financial solutions 200 Campus Drive P.O. Box 674 Florham Park, New Jersey 07932-0674 www.ferf.org

an affiliate of

financial executives international

Copyright © 2007 by Financial Executives Research Foundation, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher. International Standard Book Number 1-933130-49-0 Printed in the United States of America First Printing Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Financial Executives Research Foundation, Inc. provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For further information please check Copyright Clearance Center online at http://www.copyright.com.

2007 Financial Executives Compensation Survey TABLE OF CONTENTS Purpose and Executive Summary

1

Research Methodology

3

Demographics

3

Public Companies Overview Corporate CFO VP Finance Corporate Controller Treasurer Divisional/Regional CFO Divisional/Geographic/Regional Controller Other

6 8 11 13 15 16 18 19

Private Companies Overview Corporate CFO VP Finance Corporate Controller Treasurer Divisional/Regional CFO Divisional/Geographic/Regional Controller Other

20 22 25 26 28 30 31 32

Nonprofit Entities

33

Governmental Entities

33

Long-Term Incentives

33

Retirement and Other Benefits

34

About the Author and Financial Executives Research Foundation, Inc.

35

2007 Financial Executives Compensation Survey Purpose This study provides benchmark information for senior financial executives on their salaries, bonuses, long-term incentives and retirement benefits. It is based on a survey of over 9,000 active members of Financial Executives International (FEI), conducted during October and November of 2006. Over 1,800, or 20%, responded. This research report is an analysis of the responses.

Executive Summary How does your pay, and that of your staff, stack up against peers? This research study presents the results of a survey of financial executives regarding their salaries, bonuses, long-term incentives and retirement benefits. The survey was completed by the financial executives, rather than human resources executives or executive search firm executives. The base salaries of public company chief financial officers (CFOs) were proportionate to the annual revenues of their employers. For example, only three public company CFOs from companies with annual revenues of less than $25 million earned more than $275,000 per year, while no public company CFOs from companies with annual revenues of more than $10 billion earned less than $350,000. The median annual base salary of a public company CFO was in the $251,000 to $275,000 range. Similarly, the base salaries of private company CFOs were also proportionate to the annual revenues of their employers. No private company CFO from companies with annual revenues of less than $25 million earned more than $275,000 per year, while no private company CFO from companies with annual revenues of more than $5 billion earned less than $300,000. The median annual base salary of a private company CFO was in the $176,000 to $200,000 range, less than that of a public company CFO. The annual bonuses of public company CFOs were also proportionate to the annual revenues of their employers. For example, the median target award of public company CFOs from companies with annual revenues of less than $25 million was between 31% and 40% of their base salaries, while the median target award of public company CFOs from companies with annual revenues of more than $10 billion was between 91% and 100% of their base salaries. In comparison, the annual bonuses of private company CFOs were lower than those for public company CFOs. However, bonuses were still somewhat proportionate to the annual revenues of employers with the median target award between 31% and 40% of base salary. When estimated in total dollar figures, total annual compensation could equate to up to $751,000 for a CFO working for a public company with over $5 billion in revenues and up to $621,453 for a CFO of a $5 billion private company—not including any long-term incentives, such as stock awards or retirement pay. For other financial executive positions, base salaries were also proportionate to the annual revenues of their employers. Two notable exceptions were private company controllers and private company divisional controllers. Median base salaries for these positions were in the $100,000 to $125,000 range, regardless of the size of the company For some of these other titles, the annual bonus is directly proportionate to the size of the company, meaning the larger the company in terms of its annual revenues, the greater the percentage target award. But for other positions, such as the VP finance of public companies and public company divisional CFOs and controllers, the bonus is about the same, regardless of the size of the company. A common median target award is 31% to 40% of base salary.

Title/position/board-management discretion is the primary driver of determining whether a financial executive is eligible for either cash or stock-based long-term compensation. Meanwhile, individual and company goals and objectives (1,107 respondents) continue to be the most frequently used performance measures for making awards. Only 384 of those financial executives surveyed are eligible to receive monthly benefits from their company’s defined benefit plan. A significant majority (1,388 respondents) are not entitled to receive additional monthly retirement benefits. Of this majority, 908 responded “No,” suggesting that their company might have a defined benefit plan in which they were not yet vested, and 547 responded “Not applicable,” suggesting that their company did not offer a defined benefit retirement plan. Of those respondents who receive additional retirement benefits, the prevalence of supplemental plans are as follows: • Supplemental defined benefit/pension plan (148 responses) • Supplemental defined contribution/401(k) plan (171 responses), and • Both supplemental defined benefit and contribution plan (76 responses). The most common perquisite is a company car or car allowance (578 responses). Finally, for those executives who have an employment contract, the most prevalent element provides for severance benefits due to a change in company control.

2

Research Methodology The data for this research report was compiled from responses received to two electronic surveys, sent via e-mail during October and November 2006 to 9,062 active FEI members. An active, or executive, FEI member is defined as an individual currently holding a position as a financial executive at an organization. Members were asked 27 questions in five key areas: 1. 2. 3. 4. 5.

Demographics, Compensation, Long-Term Incentives, Retirement Benefits and Other Compensation Benefits.

A total of 1,844 members completed the survey, representing a 20% response rate. Of the total respondents, 1,580 members based their responses on their 2006 fiscal year compensation and 264 on 2005 fiscal year compensation. Medians were calculated for numerical responses by ordering the data responses from lowest to highest and selecting the figure in the middle of the data group. Thus, 50% of the respondents reported numbers higher than the median, and 50% of the respondents reported lower than the median.

Demographics Respondent Profile - Title and Company Type Number of Responses by Company Type

Title Corporate CFO VP Finance Corporate Controller Treasurer Divisional/Geographic/Regional CFO Divisional/Geographic/Regional Controller Other, please specify Total

Public

Private

Nonprofit

Government

Total

306 89 125 43

554 87 97 19

41 8 5 3

15 1 1

916 185 228 65

64

15

4

83

41

12

2

55

174

123

13

2

842

907

76

19

46%

49%

4%

1%

312 1,844 100%

50% 10% 12% 4% 5% 3% 17% 100%

As indicated above, half of the responses were from Corporate CFOs. Meanwhile, responses were almost evenly split between members from publicly held and privately held companies. The tables on the following two pages provide additional detail by industries and location of company headquarters. Almost one third (598) of the responses came from members from three industries: Banking/Financial Services, Manufacturing and Technology. Not surprisingly, 42% (771) of responses came from members who worked for companies headquartered in the following five states: California, Illinois, Massachusetts, New York and Texas. The top industries and states are highlighted in each respective table.

3

Industry and Company Type Table

Private

Public

Nonprofit

Advertising Aerospace/Defense

11 10

3 25

Ag/Forestry/Fishing/Hunting Arts/Entertainment/Media Automotive Banking/Financial Services

3 13 8 37

9 14 9 63

2 17 7 40 21 24 28 9 8 23 1 13 24 1 29 10 4 177

2 7 7 11 5 45 13 7 14 47 2 13 23 4 35 12 4 141

Medical/Pharmaceutical Metals Mineral/Mining Non-Profit Organizations Other Payroll Personal Service Printing Professional Services Real Estate Research & Development Retail Service Technology

30 3 9 2 27

52 12 10 12

2 11 35 41 5 26 31 84

2 17 21 2 39 18 90

Telecommunications Transportation Venture Capital Wholesale Total

26 25 5 25

17 16

907

842

76

49%

46%

4%

Capital Products (Equipment) Chemicals/Plastics Computer Services Construction/Engineering Consulting/Employment Agency Consumer Goods Distribution Education Electronic Energy/Utilities/Oil & Gas Environmental Food/Restaurant Healthcare Services Hotel/Motel Insurance Internet/Multimedia Leasing Manufacturing

0.8% 2.0%

12 29 17 105

1

43 42 5 45

0.7% 1.6% 0.9% 5.7% 0.2% 1.3% 0.8% 2.8% 1.4% 3.7% 2.2% 1.7% 1.2% 4.3% 0.2% 1.4% 3.3% 0.3% 3.6% 1.2% 0.4% 17.3% 4.4% 0.8% 1.0% 2.1% 2.3% 0.1% 0.1% 0.7% 2.8% 3.4% 0.4% 3.5% 2.7% 9.4% 2.3% 2.3% 0.3% 2.4%

19

1,844

100%

1%

100%

2 4

1

12

3

3

7

12

2

3

1

36 1 1

Total 14 36

1

1 2

1

1

19

4

Government

4 24 14 51 26 69 41 31 22 80 3 26 61 5 67 22 8 319 82 15 19 39 42 1 2 13 52 63 7 65 49 174

Company Headquarters Location

Public

Private

3 10 3 137

4 1 7 1 127

Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii

13 26 1 4 31 25 3

18 10 5 3 23 23 5

Idaho Illinois

4 53

1 49

Indiana International Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts

24 37 3 10 10 1 4 40

22 12 11 14 4 8 1 13 74

Michigan Minnesota Mississippi Missouri Nebraska Nevada New Hampshire New Jersey New Mexico New York

13 20 2 12 1 4 1 32 2 56

North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas

Alabama Alaska Arizona Arkansas California

Utah Vermont Virginia

Nonprofit

Government

4 11 2

2

1

1 1

8 3

2 1

2 2

4

3

26 27 2 27 6 5 2 17 1 49

1 3

1

12 1 28 4 8 37 3 1 9 73

17 1 37 7 25 39 3 2 17 76

1

4

3 1 20

28

5

2 1 1

1

3 5

3

1

1 2 2 1 4

2

3 2

Total 7 1 21 4 275

0.4% 0.1% 1.1% 0.2% 14.9%

33 36 6 9 54 49 10

1.8% 2.0% 0.3% 0.5% 2.9% 2.7% 0.5%

5 110

0.3% 6.0%

51 50 16 24 16 9 1 17 121

2.8% 2.7% 0.9% 1.3% 0.9% 0.5% 0.1% 0.9% 6.6%

40 51 4 41 9 10 3 52 3 110

2.2% 2.8% 0.2% 2.2% 0.5% 0.5% 0.2% 2.8% 0.2% 6.0%

30 2 69 11 34 78 8 3 30 155

1.6% 0.1% 3.7% 0.6% 1.8% 4.2% 0.4% 0.2% 1.6% 8.4%

7 1 50

0.4% 0.1% 2.7%

Washington

26

26

West Virginia Wisconsin Wyoming Total

3 20

2 32 1

6

1

1

59

3.2%

5 53 1

0.3% 2.9% 0.1% 100%

842

907

76

19

1,844

46%

49%

4%

1%

100%

Public Companies Overview The annual compensation of financial executives from public companies includes a base salary and a bonus opportunity. A total of 842 responses were received from financial executives from publicly held companies. VP Finance 11%

Respondent Title

Divisional CFO 5%

Corporate CFO 35%

Other 21%

Treasurer

5% 8%

15% Corporate Controller

Divisional CFO

Of those public company respondents, job responsibilities are depicted in the following chart. Responsibilities were more specialized at public companies. Job Responsibilities

82% 70% 61% 52%

45% 34% 25% 15%

ce ng rti an o n p fi re d d an n a ry g su in t a n e u Tr co Ac

x Ta

32% 23%

e it s g gy te ion nc lo ud ce tin r o a sta at e ra u r n l e t g u o a s d s ch al rn ins ini re te Bu te d Re m n n d In o an i A ta m at en Hu rm m o f e In ag an m sk Ri

6

When asked to indicate all applicable eligibility criteria for annual salary increases and bonuses, the most frequently cited was title/position, (584 responses), goals and objectives (550) and board/management discretion (465). The most common performance measures used to determine annual compensation were company and individual goals and objectives. The following list depicts prevalence of various performance measures: • • • • • • • • • • •

Company Goals/Objectives (721 responses or 86.10%) Individual Goals/Objectives (670 or 80%) Department, Group or Business Unit Goals/Objectives (307 or 36.70%) Revenue growth (268 or 32%) Net income (203 or 24.30%) Earnings per share growth (193 or 23.10%) Earnings before interest and taxes (175 or 20.90%) Earnings before interest, taxes, depreciation and amortization (138 or 16.50%) Performance against companies within the same industry (92 or 11%) Return on assets (90 or 10.80%) Return on equity (70 or 8.40%)

Based on a detailed analysis of all titles for the top three industries: Banking, Manufacturing and Technology, median base salaries for CFOs and Controllers were fairly consistent at $226,000 to $250,000 and $176,000 to $200,000, respectively. Looking at the median salaries for the top five public company headquarters, New York is the highest paying market for all but the divisional CFO title, which is led by Illinois. Detailed tables of base salary and annual bonus are provided for each major title in the following pages.

7

Corporate CFO, Public Company The annual compensation for the 306 corporate CFOs from public companies includes both a base salary and a bonus opportunity. On average, the base salaries of public company CFOs were proportionate to the annual revenues of their employers. The median base salary of a public company CFO from a company with less than $25 million in annual revenues was in the $176,000 to $200,000 range, and the median base salary of a public company CFO from a company with over $10 billion in annual revenues was over $401,000. The median annual base salary of all public company CFOs responding to the survey was in the $251,000 to $275,000 range. It is interesting to note that only three public company CFOs from companies with annual revenues of less than $25 million earned more than $275,000 per year, while no public company CFOs from companies with annual revenues of more than $10 billion earned less than $350,000. The annual bonuses of public company CFOs were also proportionate to the annual revenues of their employers. For example, the median target award of public company CFOs from companies with annual revenues of less than $25 million was between 31% and 40% of their base salaries, while the median target award of public company CFOs from companies with annual revenues of more than $10 billion was between 91% and 100% of their base salaries. For those public company CFOs indicating a specific percentage target bonus award, the median was between 41% and 50% of base salary. The total number of employees (or full-time equivalents) in a company’s finance and accounting function were also proportionate to the annual revenues of their employers. The median number of employees at companies with less than $25 million in annual revenues was less than 10, while the median number of employees at companies with more than $10 billion in annual revenues was between 500 and 999. The most commonly cited range of employees was 10 to 50.

CFO, Public Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 $351,000 - 400,000 >$401,000 Total

Company Annual Revenue Less than $25 million 3 4 5 3 2 5 1 2

$25-99 million 3 7 7 12 12 5 3 4 1

25

54

$100499 million 2 3 6 10 23 16 17 13 10 3 1 104

NOTE: Medians are bolded and shaded

8

$500999 million

1 4 5 6 6 10 11 4 47

$1-4.9 billion

2 3 4 6 11 13 12 13 64

Over $5 billion

Over $10 billion

2 1 1 2 6

1 5 6

Total 8 14 19 31 45 36 34 40 36 22 21 306

CFO, Public Company Annual Bonus As Percentage of Base Salary No response No bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 More than 100 Total

Company Annual Revenue Less than $25 million

$25-99 million 1

$100499 million

$500999 million

1

8 1 4 7 3 2

25

$1-4.9 billion 1

14

5

4

2

10 1 4 7 8 9 6 2 1

9 1 2 14 18 21 14 1 5 1 7 5 104

2

3

3 11 11 8 1 5

1 3 15 10 4 7 2 7 9 64

1 1 47

Over $10 billion

Total 1 2

3

2 54

Over $5 billion

1

1

1 1

1

2 2 6

2 1 6

34 2 7 29 47 59 41 8 20 3 19 20 306

CFO, Public Company

Company Annual Revenue Less $100$500Over $1-4.9 than $25 $25-99 499 999 $5 million million million billion billion million Total employees/full-time equivalents in company finance/accounting function 8 Fewer than 10 20 28 14 3 10-50 5 26 76 13 51-99 17 18 100-249 3 15 32 3 250-499 15 2 500-999 1 1 Over 1,000 25 54 104 47 64 6 Total NOTE: Medians are bolded and shaded

9

Over $10 billion

1 1 1 3 6

Total

56 124 48 54 18 3 3 306

In order to estimate a total annual compensation number for the public company CFO, responses for the 306 respondents were cross tabulated by salary, bonus and company size category. Any respondent indicating a discretionary bonus or one based on another calculation was removed from the sample, resulting in a smaller population of 255 responses. Looking at only total respondents for each company size category, the median response was identified. Assuming that each median salary was exactly at the midpoint of each range, salary and bonus amounts were calculated. For salaries of $401,000 and over, and bonuses over 100% calculations are based on $401,000 and 100% respectively, though actual amounts may have been higher. Results are depicted in the following table. Note that the 100% bonus used for the $25-99 million and over $5 billion company respondents are skewing the total to be higher than the category preceding it. However, with smaller samples, it is difficult to make firm conclusions.

Corporate CFO, Public Company Median Total Annual Compensation

Company size Less than $25 million $25-99 million $100-499 million $500-999 million $1-4.9 billion Over $5 billion Over $10 billion

Midrange salary $163,000 $188,000 $238,000 $288,000 $325,500 $375,500 $401,000

Midrange bonus (%) 56% 100% 46% 36% 96% 100% 76%

Based on smaller sample of 255 respondents.

10

Midrange bonus ($) $90,465 $188,000 $108,290 $102,240 $310,853 $375,500 $302,755

Total $237,165 $376,000 $346,290 $390,240 $636,353 $751,000 $703,755

Number of responses 17 40 89 41 58 5 5

VP Finance, Public Company The annual compensation for the 89 vice presidents, finance from public companies includes both a base salary and a bonus opportunity. The base salaries of public company vice presidents, finance were somewhat proportionate to the annual revenues of their employers. The median base salary of a VP Finance from a public company with annual revenues between $25 million and $99 million was in the $126,000 to $150,000 range, and the median base salary of a VP Finance from a company with over $10 billion in annual revenues was in the $226,000 to $250,000 range. These median annual salaries were both less than the median salaries of the respective CFOs, as would be expected. (The only VP Finance from a company with less than $25 million who responded to the survey had a salary in the $201,000 to $225,000 range.) The median annual base salary of all public company vice presidents, finance responding to the survey was in the $176,000 to $200,000 range. The annual bonuses of public company vice presidents, finance, were about equal, regardless of company size, primarily between 31% to 50% of base salary.

VP Finance, Public Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 $351,000 - 400,000 >$401,000 Total

Less than $25 million

$25-99 million 3 1

1

1

Company Annual Revenue $100$500Over $1-4.9 499 999 $5 million million billion billion 1 1 4 2 2 1 5 1 7 11 3 3 2 4 3 2 2 1 2 2 1 4 1 1 1 1 1 1

4

19

11

14

26

11

Over $10 billion

1 3 1 4 2 2 1 14

Total 2 12 26 15 10 9 5 3 5 1 1 89

VP Finance, Public Company Annual Bonus As Percentage of Base Salary No response Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 81-90 91-100 More than 100 Total

Less than $25 million

$25-99 million

Company Annual Revenue $100$500Over $1-4.9 499 999 $5 million million billion billion 1

Over $10 billion

1

1

1 4 1 6 4 3

1 1

2

1 1 2 5 3 2

1 2 3 6 5 3 4

5 3 1 1

1 3 2 5 2 1

1 1 1

Total

4

19

NOTE: Medians are bolded and shaded

12

14

26

1 11

14

6 3 5 23 19 18 9 1 1 1 1 89

Corporate Controller, Public Company The annual compensation for the 125 corporate controllers from public companies also includes, with two exceptions, both a base salary and a bonus opportunity. The base salaries of public company corporate controllers were also proportionate to the annual revenues of their employers. One of the two corporate controllers from a public company with less than $25 million in annual revenues had a salary in the $126,000 to $150,000 range, and the other’s salary was in the $151,000 to $175,000 range. The median base salary of a controller from a public company with over $10 billion in annual revenues was in the $301,000 to $350,000 range. The median annual base salary of all public company controllers responding to the survey was in the $176,000 to $200,000 range, the same as that of the public company VP Finance. In each case, the median salary was somewhat less than that of the corresponding CFO, as would be expected. The annual bonuses of public company controllers were also somewhat proportionate to the annual revenues of their employers, but for each size company, the target bonus of the controller was less than that of the CFO. For example, the median target award of public company controllers from companies with annual revenues of less than $25 million was between 11% and 20% of base salary, while that of the public company CFOs was between 31% and 40%. For those public company controllers indicating a specific percentage target bonus award, the median was between 31% and 40% of base salary, the same as that of the public company VP Finance, compared to 41% and 50% of base salary for the CFOs.

Controller, Public Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 >$401,000 Total

Company Annual Revenue Less than $25 million 1 1

$25-99 million 6 1 2 1

$100499 million 5 3 4 8

$500999 million 2 8 5 1 2

2

10

20

13

18

$1-4.9 billion 5 8 7 11 7 4 4

46

Over $5 billion 1 1 1 1 1 2 1 2 1 11

Over $10 billion

2 1 1 1 3 7 3 18

Total 12 13 23 24 14 9 9 8 9 4 125

Controller, Public Company Annual Bonus As Percentage of Base Salary No response No Bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 More than 100 Total

Company Annual Revenue Less than $25 million

$25-99 million

$100499 million

$500999 million

$1-4.9 billion 1

Over $5 billion

Over $10 billion

1

1 1

2 2 3 1 1

6 4 7 2 1

1 9 5 3

1 1

1

1 11 16 9 3 1 1

1 1

2

5 2

2 4 3 3 2

1 1 2

10

20

NOTE: Medians are bolded and shaded

14

18

46

11

1 1 18

Total 1 1 2 11 2 11 30 26 22 8 4 3 1 2 1 125

Treasurer, Public Company The annual compensation for the 43 treasurers from public companies includes both a base salary and a bonus opportunity with base salaries directly proportionate to the annual revenues of their employers. The one treasurer from a company with less than $25 million in annual revenues who responded to the survey had a salary in the $126,000 to $150,000 range, which was in line with the base salary for a public company controller, but somewhat less than the median base salary of a public company CFO. The median base salary of a public company treasurer from a company with over $10 billion in annual revenues was in the $276,000 to $300,000 range, somewhat less than that of the public company CFO. The median annual base salary of all public company treasurers responding to the survey was in the $176,000 to $200,000 range. The annual bonuses of public company treasurers were about equal, regardless of company size, primarily in the 41% to 50% of base salary range, the same as that of the public company CFO. Treasurer, Public Company Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 $351,000 - 400,000 Total

Treasurer, Public Company Annual Bonus As Percentage of Base Salary No bonus Bonus based on other calculation 11-20 21-30 31-40 41-50 51-60 61-70 71-80 More than 100 Total

$25-99 million

$100-499 million 1

1 1 1

1

Company Annual Revenue $500-999 $1-4.9 Over $5 million billion billion 1 1 1 6 4 4 1 4 4 2 1 1 1 2

3

8

22

3

Over $10 billion

1

1 1 2 1 6

Total 2 2 8 10 5 6 4 3 2 1 43

Company Annual Revenue $25-99 million

$100-499 million 1

$500-999 million

1 1 1 1

1

3

NOTE: Medians are bolded and shaded

15

4 3

8

$1-4.9 billion 1

Over $5 billion

Over $10 billion

Total 2

1

1

1 6 4 5 2

2 7 10 13 4 1 2 1 43

1 1 22

1 2

3

2 2 1 1 6

Divisional/Regional CFO, Public Company The annual compensation for the 64 divisional/geographic/regional CFOs from public companies also includes, with two exceptions, both a base salary and a bonus opportunity. The base salaries of public company divisional CFOs were somewhat proportionate to the annual revenues of their employers, but the median base salaries topped out at $225,000. The median base salary of a divisional CFO from a public company with less than $25 million in annual revenues was in the $100,000 to $125,000 range and the median base salary of a public company divisional CFO from a company with over $10 billion in annual revenues was in the $201,000 to $225,000 range. The median annual base salary of all public company divisional CFOs responding to the survey was a bit less, in the $176,000 to $200,000 range, which was the same as that of the corporate controller. The annual bonuses of public company divisional CFOs were also about equal, regardless of company size, primarily in the 31% to 40% of base salary range. Interestingly, this was also the median target bonus award of the public company VP Finance and public company corporate controller.

Divisional/Geographic/ Regional CFO, Public Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 $351,000 - 400,000 >$401,000 Total

Company Annual Revenue Less than $25 million 3

$25-99 million 1 2

$100499 million

1

1 2 2 1

$500999 million 1 1 1 4 1

1 1

1

$1-4.9 billion 2 1 1 2 3 3 2

Over $5 billion

Over $10 billion

1 3 2 1 1

2 2 2 3 1 2 1

3 1 3

4

8

16

9

17

9

1 14

Total 7 8 9 12 9 5 3 5 4 1 1 64

Divisional/Geographic/ Regional CFO, Public Company Annual Bonus As Percentage of Base Salary No Bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 81-90 More than 100 Total

Company Annual Revenue Less than $25 million 1

2

$25-99 million 1

$100499 million

1

3

2

2 2 1

$500999 million

$1-4.9 billion

Over $5 billion

1

1

Over $10 billion

2 1 1

2 5 1 1

3 2 6 3

1 1 5 1

3 1 3 2 2

2 3

4

8

NOTE: Medians are bolded and shaded

17

9

17

9

Total 2

1 14

7 1 4 12 19 9 3 2 2 1 64

Divisional/Regional Controller, Public Company The annual compensation for the 41 divisional/geographic/regional controllers from public companies includes both a base salary and a bonus opportunity. The base salaries of public company divisional controllers were somewhat proportionate to the annual revenues of their employers. The median base salary of a divisional controller from a public company with less than $25 million in annual revenues was in the $100,000 to $125,000 range, the same range as the median base salary of a public company divisional CFO, and the median base salary of a public company divisional controller from a company with over $10 billion in annual revenues was in the $176,000 to $200,000 range, just slightly less than that of the public company divisional CFO. The median annual base salary of all public company divisional controllers responding to the survey was somewhat less, in the $126,000 to $150,000 range. The annual bonuses of public company divisional controllers were also about equal, regardless of company size, primarily in the 21% to 30% of base salary range, somewhat less than the median target bonus award of the public company divisional CFO. Divisional/Geographic/ Regional Controller, Public Company Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 >$401,000 Total Divisional/Geographic/ Regional Controller, Public Company Annual Bonus As Percentage of Base Salary Bonus based on other calculation Up to 10 11-20 21-30 31-40 41-50 51-60 More than 100 Total

$25-99 million 2

$100-499 million 1 1 1 1

Company Annual Revenue $500-999 $1-4.9 Over $5 million billion billion 1 4 4 7 3 1 1 1

Over $10 billion 1 3 1 2 4

1 2

4

6

Total 9 18 3 4 1 4 1 1 41

5

1 12

Over $5 billion

Over $10 billion

Total

1

2

12

Company Annual Revenue $25-99 million

$100-499 million

$500-999 million

$1-4.9 billion 1

2

1 1 1

1 1 3 1

1 5 2 2

4 1

2 4 1 4

1 12

5

12

1 2

4

NOTE: Medians are bolded and shaded

18

6

1 11 12 8 5 1 1 41

Other, Public Company Of the 174 public company respondents that indicated a title of “other,” seven distinct titles were identified based on an aggregation of similar titles. Chief Accounting Officers have a median salary in the $201,000 to $225,000 range. Also, the chief tax officers surveyed indicated a median salary range of $301,000 to $350,000—higher than the corporate CFO median. Finally, directors and managers indicated the same median salary range of $125,000 to $150,000 as divisional controllers. However, based on the small sample of these other titles, it is difficult to make firm conclusions. A table providing additional detail follows:

Other Titles, Public Companies

Number of Responses

%

Median Base Salary

Median Annual Bonus As a Percentage of Base Salary*

Assistant Controller

13

7%

$176,000 – 200,000

21-30

Assistant Treasurer

9

5%

$151,000 – 175,000

31-40

Chief Accounting Officer

22

13%

$201,000 – 225,000

31-40

Chief Auditor/VP Internal Audit

13

7%

$201,000 – 225,000

31-40

5

3%

$301,000 – 350,000

31-40

35

20%

$126,000 – 150,000

21-30

7

4%

$126,000 – 150,000

11-20

70 174

40% 100%

Chief Tax Officer Director title (i.e. Director of Finance, Director of Accounting, etc.) Manager title (i.e. Manager of Finance, Accounting, etc.) Various** Total

*Separately determined based solely on the number of respondents that indicated a specific target award percentage. **Could not be aggregated into single title.

19

Private Companies Overview The annual compensation of financial executives from private companies includes a base salary and a bonus opportunity. A total of 907 responses were received from financial executives from privately held companies. VP Finance

Respondent Title

10% Treasurer Other Divisional Controller Divisional CFO Corporate Controller

2%

14% Corporate CFO

1%

60%

2% 11%

As the following chart shows, private company respondents had more diverse job responsibilities than their public company counterparts, particularly in the areas of treasury, tax, human resources, administration and risk management/insurance. Job Responsibilities

90% 92%

88% 78%

76% 59% 44%

37%

46%

45%

Ta x Bu dg H et um in an g re so ur ce I s n In t e fo rn rm al at au io di n t Te ch no lo Ad gy m in R i st isk ra m tio an n R ag ea em le en st at ta e nd i n O su th ra er nc -In e di ca te ar ea

Tr ea su r

y Ac an co d un fin tin an g ce an d re po rti ng

24%

20

When asked to indicate all applicable eligibility criteria for annual salary increases and bonuses, the most frequently cited criteria were title/position (606 responses), goals and objectives (576 responses) and board/management discretion (551 responses). The most common performance measures used to determine annual compensation were individual/company goals/objectives. The following list depicts prevalence of various performance measures: • • • • • • • • • • •

Company Goals/Objectives (732 responses or 82.2%) Individual Goals/Objectives (658 or 73.9%) Net income (263 or 29.6%) Department, Group or Business Unit Goals/Objectives (252 or 28.3%) Revenue growth (234 or 26.3%) Earnings before interest, taxes, depreciation and amortization (210 or 23.6%) Earnings before interest and taxes (134 or 15.1%) Return on equity (64 or 7.2%) Return on assets (57 or 6.4%) Earnings per share growth (41 or 4.6%) Performance against companies within the same industry (37 or 4.2%)

Based on a detailed analysis of the top three industries: Banking, Manufacturing and Technology, median base salaries for private company CFOs and corporate controllers were consistent with overall medians at the $176,000 to $200,000 and $100,000 to $125,000 ranges, respectively. Looking at the median salaries for all titles for the top five private company headquarters, New York and California are the highest paying markets. Detailed tables of base salary and annual bonus are provided for each major title in the following pages.

21

Corporate CFO, Private Company The annual compensation for the 554 corporate CFOs from private companies who responded to the survey includes, for most, both a base salary and a bonus opportunity. Sixteen said that they do not receive a bonus. On average, the base salaries of private company corporate CFOs were proportionate to the annual revenues of their employers. The median base salary of a private company corporate CFO from a company with less than $25 million in annual revenues was in the $126,000 to $150,000 range, significantly less than the median salary of a CFO from a similar-sized public company, which was in the $176,000 to $200,000 range. The base salary of the one responding private company corporate CFO whose company had annual revenues of over $10 billion was in the $301,000 to $350,000 range, again significantly less than the median salary of public company corporate CFOs from companies with annual revenues of over $10 billion, which was over $401,000. The median annual base salary of all private company corporate CFOs responding to the survey was in the $176,000 to $200,000 range, also significantly less than that of the public company corporate CFOs, which was in the $251,000 to $275,000 range. The annual bonuses of private company CFOs were also somewhat proportionate to the annual revenues of their employers. For example, the median target award of private company CFOs from companies with annual revenues of less than $25 million was between 21% and 30% of their base salaries, while the target award of the one private company CFO from a company with annual revenues of more than $10 billion was between 51% and 60% of their base salaries. For all private company CFOs indicating a specific percentage target bonus award, the median was between 31% and 40% of base salary. Most median targets were less than those for public company CFOs. The total number of employees (or full-time equivalents) in a company’s finance and accounting function were also proportionate to the annual revenues of their employers. The median number of employees at companies with less than $25 million in annual revenues was less than 10, while the number of employees at the one company with more than $10 billion in annual revenues was between 100 and 249. The most commonly cited range of employees was 10 to 50, which was identical to that of public company finance organizations.

CFO, Private Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 $276,000 – 300,000 $301,000 – 350,000 $351,000 - 400,000 >$401,000 Total

Company Annual Revenue Less than $25 million 28 35 19 22 12 2 2

120

$25-99 million 36 44 32 44 18 9 7 1 3

194

$100499 million 14 26 31 35 40 18 11 8 6 2 191

22

$500999 million

$1-4.9 billion

4 3 4 2 4 4 2 3 26

1 2 2 3 2 1 4 3 3 21

Over $5 billion

Over $10 billion

1 1 1

1

Total 78 105 83 107 75 36 24 14 18 8 6 554

CFO, Private Company Annual Bonus As Percentage of Base Salary Discretionary bonus No bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 More than 100 Total

Company Annual Revenue Less than $25 million

$25-99 million

$500999 million

$1-4.9 billion

5

$100499 million 1 4

7 6

10

14

4

1

35

31 7 20 25 11 10

27

1

2 1

3 5 8 4

1

46 6 18 36 36 17 8 3 2

1 3 4 3 2 3

1 1 120

3 4 194

107 14 50 94 93 74 25 10 11 1 9 14 554

CFO, Private Company

12 29 38 35 9 4 5 1 4 8 191

Over $5 billion

Over $10 billion

1 1

1 1 26

21

1

1

Total 1 16

Company Annual Revenue

Less $100than $25 $25-99 499 million million million Total employees/full-time equivalents in company finance/accounting function 28 Fewer than 10 111 114 10-50 7 80 149 51-99 2 11 100-249 3 250-499 120 194 191 Total NOTE: Medians are bolded and shaded

23

$500999 million

11 10 5 26

$1-4.9 billion

1 4 5 5 6 21

Over $5 billion

Over $10 billion

1

1

1

1

Total

254 251 28 15 6 554

In order to estimate a total annual compensation number for the private company CFO, responses for the 554 respondents were cross tabulated by salary, bonus and company size. Any respondent indicating a discretionary bonus or one based on another calculation was removed from the sample, resulting in a smaller population of 395 responses. Looking at only total respondents for each company size category, the median response was identified. Assuming that each median salary was exactly at the midpoint of each range, salary and bonus amounts were calculated. For salaries of $401,000 and higher and bonuses over 100% calculations are based on $401,000 and 100% respectively, though actual amounts may have been higher. Results are depicted in the following table. Note that with the categories that have small samples, particularly with the one respondent from the over $5 billion company and the one respondent from the over $10 billion company, it is difficult to make firm conclusions. Generally speaking, however, when comparing totals, private company CFOs earn lower total compensation than their public company counterparts, which is consistent with the overall survey results.

Corporate CFO, Private Company Median Total Annual Compensation

Midrange salary $163,000 $163,000

Midrange bonus (%) 16% 46%

Midrange bonus ($) $25,265 $74,165

Total $188,265 $237,165

Number of responses 76 133

$100-499 million $500-999 million

$188,000 $288,000

76% 26%

$141,940 $73,440

$329,940 $361,440

145 21

$1-4.9 billion

$288,000

46%

$131,040

$419,040

18

Over $5 billion

$375,500

66%

$245,953

$621,453

1

Over $10 billion

$325,500

56%

$180,653

$506,153

1

Company size Less than $25 million $25-99 million

Based on smaller sample of 395 respondents.

24

VP Finance, Private Company The annual compensation for the 87 vice presidents, finance, from private companies includes both a base salary and a bonus opportunity. The base salaries of private company vice presidents of finance, were also proportionate to the annual revenues of their employers. The median base salary of a VP Finance from a private company with annual revenues between $25 million and $99 million was in the $126,000 to $150,000 range, and the base salary of the one VP Finance from a company with over $10 billion in annual revenues was in the $176,000 to $200,000 range. These median annual salaries were both less than the median salaries of the respective CFOs, as would be expected. The median annual base salary of all private company vice presidents, finance, responding to the survey was in the $126,000 to $150,000 range. Again, these median ranges tended to be less than those for vice presidents, finance, from public companies. The annual bonuses of private company vice presidents, finance, were about equal, regardless of company size, primarily between 21% to 30% of base salary, somewhat less than the median target bonus award of the private company CFOs, which was 31% to 40%. VP Finance, Private Company Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 Total VP Finance, Private Company Annual Bonus As Percentage of Base Salary No response No bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 91-100 Total

Company Annual Revenue Less than $25 million 11 5 2 2

20

$25-99 million 12 6 4 2 1 25

$100-499 million 6 10 4 6 2 2 30

$500-999 million

$1-4.9 billion

Over $10 billion

2 1 1

1 3 2 1

4

7

1

$1-4.9 billion

Over $10 billion

1

Total 29 24 14 13 5 2 87

Company Annual Revenue Less than $25 million 1 2

$25-99 million

1

2

2

5

4 2 3 9 3 2

2

1

6 9 5 3 1 1 30

1

4 4 2 1

20

$100-499 million

$500-999 million

1

25

NOTE: Medians are bolded and shaded

25

1

6

1

13 2 14 24 12 7 2 3 87

2 2 1 1 1 4

Total 1 3

1 7

1

Corporate Controller, Private Company The annual compensation for most of the 97 corporate controllers from private companies who responded to the survey includes a base salary and a bonus opportunity. Nine said that they do not receive a bonus. Unlike their public company counterparts, the base salaries of private company corporate controllers were relatively equal, regardless of the size of their company. For example, the median base salary for the corporate controllers of private companies with less than $100 million in annual revenues was in the $100,000 to $125,000 range, and the median base salary for the corporate controllers of private companies with more than $100 million in annual revenues was in the $126,000 to $150,000 range. The median annual base salary of all private company corporate controllers responding to the survey was in the $100,000 to $125,000 range, compared to a median salary in the $176,000 to $200,000 range for their public company counterparts. Interestingly, the median annual base salary of all private company corporate CFOs responding to the survey was also in the $176,000 to $200,000 range. The annual bonuses of private company corporate controllers were largely proportionate to the annual revenues of their employers. For example, the median target award of private company corporate controllers from companies with annual revenues of less than $100 million was between 11% and 20% of base salary. The median target award of the one private company corporate controller from a company with annual revenues of more than $5 billion was between 41% and 50% of base salary.

Controller, Private Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 >$401,000 Total

Company Annual Revenue Less than $25 million 14 2 1 1

$25-99 million 15 6 1 0

$100499 million 11 9 4 4

$500999 million 5 3 2

$1-4.9 billion 5 2 1 3

Over $5 billion

2 0

18

0 0 0 22

NOTE: Medians are bolded and shaded

26

2

30

12

1 1 1 14

1

1

Total 50 22 9 8 2 4 1 1 97

Controller, Private Company Annual Bonus As Percentage of Base Salary No Bonus Bonus based on other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 More than 100 Total

Company Annual Revenue Less than $25 million 3

$25-99 million 3

1

2

6 1 5 1 1

5 2 4 4 1

$100499 million 1

$500999 million 2

$1-4.9 billion

Over $5 billion

3 5 3 4 12 5

1 5 1 3

2 4 6 1

1

1 14

1

1 18

22

NOTE: Medians are bolded and shaded

27

Total 9

30

12

17 6 20 22 16 2 1 1 97

Treasurer, Private Company The annual compensation for the 19 treasurers from private companies includes both a base salary and a bonus opportunity. The base salaries of private company treasurers were somewhat proportionate to the annual revenues of their employers, but, some company size categories only included one or two respondents. For example, there were only two private company treasurers from companies with less then $25 million in annual revenues, and they both had base salaries in the $126,000 to $150,000 range, and there was only one private company treasurer from a company with more than $10 billion in annual revenues, and he or she had a base salary in the $251,000 to $275,000 range. Interestingly, the median base salary of all private company treasurers responding to the survey was in the $151,000 to $175,000 range, which was greater than the median base salary of all private company vice presidents, finance ($126,000 to $150,000) and also greater than the median base salary of all private company controllers ($100,000 to $125,000). The annual bonuses of private company treasurers were about equal, regardless of company size, primarily in the 21% to 30% of base salary range, the same as that of both the private company vice president, finance, and the private company corporate controller. Treasurer, Private Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $251,000 – 275,000 Total

Less than $25 million 2

2

Company Annual Revenue $100$500$25-99 499 999 $1-4.9 million million million billion 1 1 1 1 4 1 1 1 1 1 1 1 1 3 4 7

28

Over $5 billion

Over $10 billion

1

1

1 1

Total 2 4 4 2 3 2 2 19

Treasurer, Private Company Annual Bonus As Percentage of Base Salary Other calculation Discretionary bonus Up to 10 11-20 21-30 31-40 41-50 51-60 61-70 Total

Company Annual Revenue Less than $25 million

$25-99 million 1

$100-499 million

$500-999 million

$1-4.9 billion

Over $5 billion

Over $10 billion

1

1

1 1 1

1

1 1

1 5

3 1 1

2

Total

1

3

NOTE: Medians are bolded and shaded

29

4

1 7

1

1

1 2 7 4 1 1 1 19

Divisional/Regional CFO, Private Company The annual compensation for the 15 divisional/geographic/regional CFOs from private companies also includes both a base salary and a bonus opportunity. The base salaries of private company divisional CFOs were proportionate to the annual revenues of their employers. The median base salary of a divisional CFO from a private company with less than $25 million in annual revenues was in the $100,000 to $125,000 range, which was less than that of the private corporate controller, and the median base salary of a private divisional CFO from a company with over $1 billion in annual revenues was in the $176,000 to $200,000 range, which is actually more than that of private company controllers. The median annual base salary of all private company divisional CFOs responding to the survey was a bit less, in the $126,000 to $150,000 range. The annual bonuses of private company divisional CFOs were proportionate to the annual revenues of their employers. For example, the median target award of private company controllers from companies with annual revenues of less than $100 million was between 11% and 20% of base salary, and the median target award of private company controllers from companies with annual revenues of more than $1 billion was between 41% and 50% of base salary. Divisional/Geographic/Regional CFO, Private Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $201,000 – 225,000 $226,000 – 250,000 $301,000 – 350,000 Total Divisional/Geographic/Regional CFO, Private Company Annual Bonus As Percentage of Base Salary Bonus based on other calculation Discretionary bonus 11-20 21-30 31-40 41-50 71-80 More than 100 Total

Company Annual Revenue Less $100than $25 $25-99 499 $1-4.9 million million billion million 2 4 1 2 1 1 1 1 1 1 2 5 3 5

Total 6 3 1 2 1 1 1 15

Company Annual Revenue Less $100$1-4.9 than $25 $25-99 499 million million billion million 1 1 1 2 1 2 1 1 1 2 1 1 2 5 3 5

Total 1 1 3 4 2 2 1 1 15

NOTE: Medians are bolded and shaded

30

Divisional/Regional Controller, Private Company The annual compensation for the 12 divisional/geographic/regional controllers from private companies includes both a base salary and a bonus opportunity. The base salaries of private company divisional controllers were about equal, regardless of company size, although the four private company divisional controllers from companies with annual revenues or $5 billion and greater did have an annual base salary greater than the median, which was in the $100,000 to $125,000 range—identical to corporate controllers. However, with only 12 private company divisional controllers responding to the survey, it is difficult to make firm conclusions. The annual bonuses of private company divisional controllers varied with no discernible trend, unlike that of corporate controllers. The median target bonus award of the private company divisional controller was in the 21% to 30% of base salary range, the same as both the median target bonus award of the private company controller and the private company divisional CFO. Divisional/ Geographic/ Regional Controller, Private Company

Annual Base Salary $100,000 – 125,000 $126,000 – 150,000 $151,000 – 175,000 $176,000 – 200,000 $226,000 – 250,000 Total

Company Annual Revenue Less than $25 million 1 1

$25-99 million 1

$500999 million 1

$1-4.9 billion 1

Over $5 billion

Over $10 billion 2

1

2

1

Divisional/ Geographic/ Regional Controller, Private Company Annual Bonus As Percentage of Base Salary Discretionary bonus Up to 10 11-20 21-30 41-50 51-60 Total

$100499 million 2

3

1

1 1 2

1

2

Total 6 3 1 1 1 12

Company Annual Revenue Less than $25 million

$25-99 million

$100499 million 1

$500999 million

$1-4.9 billion

Over $5 billion

Over $10 billion

1 2 1

2

1 1 3

1

NOTE: Medians are bolded and shaded

31

1

1 1

1 1

1 1

2

2

Total 1 1 4 3 1 2 12

Other, Private Company Of the 123 private company respondents that indicated a title of “other,” four distinct titles were identified, based on an aggregation of similar titles. Of course, private company CEOs and COOs had higher median salaries than private company corporate CFOs. Interestingly, directors received higher median salaries than private company corporate controllers, though it is hard to make a firm conclusion based on only 21 aggregated responses. A table providing additional detail follows:

Other titles, Private Companies President and/or Chief Executive Officer Chief Operating Officer (COO) Director title (i.e. Director of Finance, Director of Accounting, etc.) Manager title (i.e. Manager of Finance, Accounting, etc.) Various** Total

Number of Responses

%

Median Base Salary

17

14%

$201,000 – 225,000

7

6%

$201,000 – 225,000

21

17%

$126,000 – 150,000

Median Annual Bonus as a Percentage of Base Salary* 41-50 61-70

21-30 7

6%

$100,000 – 125,000 21-30

71 123

58% 100%

*Separately determined based solely on the number of respondents that indicated a specific target award percentage. **Could not be aggregated into single title.

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Nonprofit Entities Of the 76 respondents from nonprofit entities, a majority (41 members or 54%) held the title of corporate CFO at companies with revenues below $999 million. For those 41, median annual base salary was proportionate to the annual revenues of their employers with an overall median in the $151,000 to $175,000 range—below their public and private company counterparts. Of the 13 members that indicated “other” as a title, four held a director title and received an annual salary between $100,000 and $125,000, and only two of those were eligible to receive bonuses. Most nonprofit financial executives (55 or 72%) receive a bonus, which in many cases is discretionary (22 or 29%). Regardless of individual title, most of the nonprofit respondents (62 or 82%) oversee a finance/accounting function of 50 or less employees. When asked to indicate all applicable eligibility criteria for annual salary increases and bonuses, the most frequently cited is title/position (48 responses), goals and objectives (47 responses) and board/management discretion (42 responses). The most common performance measures used to determine annual compensation are individual and/or company goals and/or objectives.

Governmental Entities The annual compensation for the 19 financial executives from government consists primarily of a base salary. Most of the respondents had a title of corporate CFO (15 or 79%). Regardless of individual title, most of the governmental respondents (15 or 79%) oversee a finance/accounting function of 50 or less employees. The median annual salary of financial executives in government is between $126,000 and $150,000. Almost half (9) of respondents were not eligible to receive an annual bonus. When asked to indicate all applicable eligibility criteria for annual salary increases and bonuses, the most frequently cited is title/position (13 responses). The most common performance measures used to determine annual compensation are individual/company goals/objectives.

Long-Term Incentives Respondents were asked to identify whether or not they were eligible to receive cash-based and stock-based long-term incentive compensation. A total of 409 members (almost evenly split between public and private companies) were eligible to receive cash-based long-term incentive awards. The types of long-term incentives from publicly held companies included: • • • • • •

Payment based on non-equity targets, Payment based on 125% salary x 60% = cash award, Deferred compensation plans, Payment based on earnings growth, Payments based on percentage of three-year results, and Retention payments.

The private company members cited the following types of long-term cash-based incentives: • • • • • •

Payment based on portion of the profits upon sale of the company, Deferred compensation annuities, Payment based on profits for specific projects, Payment based on profit sharing and 401(k) match equal to 10% of compensation, Real estate equity participation, and Payment based on rolling three-year long-term bonus target of 20%.

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Meanwhile a total of 665 respondents (428 from public companies, 237 from private companies) receive stock-based long-term incentives in based on a fixed number of shares or units. Another 430 (279 from public companies, 151 from private companies) executives receive stock-based compensation based on another basis/calculation, including: • • • • • • •

Management discretion, Up to 50% of phantom stock, Fixed number of shares allocated by value of contributions, Stock grant at hire date, Return on net assets with a vesting period, Shares equal to a percentage of pay, and Value creation plan based on three-year revenue/net income growth-no cap.

The form of stock-based incentives typically come in the form of stock options (777 respondents) followed by restricted stock/restricted stock units (523 respondents). Only 309 respondents receive dividends or dividend equivalents on stock-based awards. Title/position/board-management discretion is the primary driver of determining whether a financial executive is eligible for either cash or stock-based long-term compensation. Meanwhile, individual and company goals and objectives (1,107 respondents) continue to be the most frequently used performance measures for these types of awards.

Retirement and Other Benefits Only 384 of those surveyed (a majority, 60%, from public companies) are eligible to receive monthly benefits from their company’s defined benefit plan. A significant majority (1,388 respondents) are not entitled to receive additional monthly retirement benefits. Of those who do receive additional retirement benefits, the prevalence of supplemental plans are as follows: supplemental defined benefit/pension plan (148 responses), supplemental defined contribution/401(k) plan (171 responses), both supplemental defined benefit and contribution plan (76 responses). A majority of those who have these supplemental plans work for public companies. The following list details the prevalence of perquisites for all respondents. Company type had no bearing on perquisites received. • Company car or car allowance (578 responses or 34%) • Executive physicals (350 or 20%) • Health/fitness club (237 or 14%) • Personal financial or tax advice (225 or 13%) • Country club membership (136 or 8%) • Dining club membership (75 or 4%) • Personal use of property owned or leased by the company (61 or 4%), and • Housing and other living expenses (33 or 2%) Finally, for those financial executives with an employment contract the following list details the prevalence of specific elements in that contract: • Change-in-control severance benefits (604 or 35%) • Severance benefits (other than change-in-control) (544 responses or 32%) • Minimum or guaranteed level of compensation (186 or 11%) • Housing and other living expenses (21 or 1%), and • Tax gross-ups or other reimbursement of taxes owned with respect to compensation and benefits (92 or 5%)

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About the Author Cheryl de Mesa Graziano is a certified public accountant and Vice President of Research and Operations at Financial Executives Research Foundation, Inc. She has a Bachelor of Business Administration from Baruch College, City University of New York and a Master of Science in Journalism from Iona College. She began her career at Coopers & Lybrand and went on to several private-sector positions, including controller and CFO. She has worked for CNBC, Perseus Books and Bi-Logix, Inc. Acknowledgements Special thanks to William M. Sinnett, FERF Director of Research, Diane Albergo, Director, Member Career Services and Human Resources and Susan Cully, Career Services Associate, for their contributions to this report. Also thanks to Tableau Software for providing the software used to analyze the survey results.

About Financial Executives Research Foundation, Inc. Financial Executives Research Foundation, Inc. is the research affiliate of Financial Executives International. Financial Executives Research Foundation is the non-profit 501(c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non- members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals. The views set forth in this publication are those of the author and do not necessarily represent those of the Financial Executives Research Foundation Board as a whole, individual trustees, employees, or the members of the Advisory Committee. Financial Executives Research Foundation shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. This and more than 80 other Research Foundation publications can be ordered by logging onto http://www.ferf.org

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Financial Executives Research Foundation, Inc. would like to acknowledge the following for their support and generosity:

PRESIDENT’S CIRCLE CORPORATE FISCAL YEAR 2007 Platinum President’s Circle $15,000+ The Coca-Cola Company Exxon Mobil Corporation Microsoft Corporation Gold President’s Circle $10,000 Abbott Laboratories, Inc. Bristol-Myers Squibb Company Silver President’s Circle $5,000+ ALCOA Cisco Systems, Inc. Comcast Corp. Corning Incorporated Cummins, Inc. CVS Corporation Dow Chemical Company Duke Energy Corporation E. I. du Pont de Nemours & Company El Paso Corporation Eli Lilly and Company General Electric Company, Inc. General Motors Corporation Halliburton Company Hewlett-Packard Company IBM Corporation Johnson & Johnson Kimberly-Clark Corporation Maple Leaf Foods Inc. Medtronic, Inc. Motorola, Inc. Pfizer Inc. Procter & Gamble Siemens AG Sony Corp. of America Tenneco Tyco International (US) Inc

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