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Treasury & Risk
May 3, 2012
CFOs See Moderate Pay Gains in 2011 as Boards Focus on Aligning Compensation Packages More Closely with Company Results
Overall [CFO] compensation should be up 7% to 10% in 2012, predicts Steven Van Putten, managing director of Pearl Meyer & Partners, a New York-based compensation consulting firm. However, Van Putten expects gains to vary by industry. Sectors like manufacturing that are more linked to overall economic improvement will see pay increases at the higher end. There also should be more variation from company to company in volatile industries such as life sciences and technology.
Boards are more involved in evaluating performance goals and making sure metrics are aligned with shareholder value. And they’re using increasingly more rigorous goal-setting methods, not just comparing targets to those used by other companies in their industry, but often considering the impact specific situations would have on pay. “They’re doing stress tests,” says Van Putten. “They’re looking at, for instance, if performance were to go south, what impact that would have on bonus plans.”
Part of that effort involves continuing to eliminate such perks as tax gross-ups and overly generous severance packages. “If you go back a year or so, board action was around low-hanging fruit,” Van Putten says. “Those have been tossed out.”
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