CEOs experienced a bigger hit in fiscal 2020 pay compared to CFOs, and now committees are making them whole again.

May 5, 2022

U.S. CEOs Widen Pay Gap With CFOs

Below is an excerpt from ISS Corporate Solutions’ recently released paper “U.S. CEOs Widen Pay Gap with CFOs’’ The full paper is available for download from the ISS Corporate Solutions (ICS) online library.


Pay levels for CFOs are a matter of careful consideration for compensation committees, especially as large internal pay differentials may be indicative of potential succession-planning issues. In this white paper, we conduct a detailed comparison between U.S company CFO and CEO pay by index and by industry.

Key Takeaways

  • The gap between CEO and CFO pay widened substantially between fiscal 2020 and 2021 in each of the four indices examined
  • CFOs were the second highest paid Named Executive Officer after CEOs at 37% of the companies in the Russell 3000 in 2020
  • The analysis of median CEO pay as a multiple of median CFO pay by industry shows a marked level of volatility
  • CEO pay tends to be a higher multiple of CFO pay at larger companies

Fiscal 2021 pay increases were higher for CEOs than CFOs in three of the four indexes examined, which suggests a rebound from fiscal 2020 pay decisions,” said Brian Johnson, executive director at ISS Corporate Solutions. “In other words, CEOs experienced a bigger hit in fiscal 2020 pay compared with CFOs, and now committees are making them whole again.”

As noted in the last key takeaway above, CEO pay as a multiple of CFO pay increases as companies in the indexes get larger. For example, the CEO pay multiple in the S&P 500 is around 3.0 over the whole 10-year period examined; it is relatively close to that for much of the period in the S&P 400. By contrast, it is around 2.6 in the S&P 600 and around 2.2 in the Russell 3000 excluding the S&P 1500. In contrast to the dollar differences in pay, which have increased over the period, CEO pay as a multiple of CFO pay has remained fairly constant.

“The ratio of CFO to CEO pay has remained relatively constant for S&P 500 companies over the past 10 years, which suggests the role of the Finance group relative to a company’s strategic business focus has also remained constant,” said Johnson. “Indeed, other corporate functions such as Information Technology and Legal have largely retained ownership of the growing investor focus on cybersecurity and ESG-related matters, and this also may be contributing to a stable CFO pay ratio over this period.”

By Paul Hodgson, Senior Editor, ISS Corporate Solutions

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