Good morning. At many large U.S. companies, salary increases for CFOs continue to outpace those of CEOs. There is clearly a high demand for good finance chiefs.
New data released this morning by Compensation Advisory Partners (CAP), a consulting firm, examines 2023 pay outcomes for CFOs compared to CEOs at 132 U.S. companies across various industries with a median revenue of $14.6 billion.
In 2023, the median change in base salary for the CFO position was 4%, similar to last year’s 3.8% increase. For the CEO position, however, the median base salary change was 0%, well below the 2.9% median increase in 2022.
For those executives who received a bump to their salary, the median increase was 5% for CFOs and 4% for CEOs.
“We generally see CFO and CEO pay move together,” said Kelly Malafis, founding partner of CAP. “Although CFOs in recent years have received slightly higher overall increases.” This is occurring as companies compete to attract and retain good CFO talent in an uncertain and evolving environment, she said.
Total direct compensation, largely driven by higher long-term incentive (LTI) awards, was up 8% for CFOs and 5% for CEOs. LTI awards increased 11% for CFOs and 9% for CEOs (compared to 7% and 5% last year, respectively). LTI awards increased at a higher rate in 2023 than 2022, reflecting competitive pressures to deliver market competitive pay, according to CAP.
And CFO turnover outpaced CEO turnover. In 2023, the median tenure for CEOs was seven years, compared to five years for CFOs, according to CAP’s data set. The CFO role is continuing to evolve with a more strategic focus, including becoming a strong partner to the board and senior management team, Malafis said. “Companies are willing to recruit that talent externally, which has increased turnover,” she said.
Looking back at 2023, one of the most prominent CFO hires was Hugh Johnston, who became the CFO and senior executive vice president of The Walt Disney Co. Johnston was a 34-year veteran of PepsiCo, and finance chief since 2010. At Disney, he was awarded an annual base salary of $2 million, according to an SEC filing. The compensation committee set a target bonus each year of not less than 200% of Johnston’s annual base salary. He will be granted a long-term incentive award having a target value of 575% of the base salary.
CFO turnover is continuing this year. Taking a look at the S&P 500, for example, 4.8% of CFOs left their jobs in Q1 2024, compared with 2.8% who did so at the same time last year. Meanwhile, the incoming CFO figure of 5.8% was higher than last year’s 3.8%, according to Russell Reynolds Associates.
Will pay bumps for CFOs continue? As companies navigate the current labor market, CAP expects that “salary increases will trend back toward 3% that was the norm for many years,” Malafis said.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Some notable moves this week:
Tracey T. Travis, EVP and CFO at The Estée Lauder Companies Inc. (NYSE: EL), has decided to retire, effective June 30, 2025, after more than 12 years of leadership and service at the company. A successor for the CFO role has been identified and will be named in the coming weeks. Since joining The Estée Lauder Companies (ELC), Travis has led the company’s global finance, accounting, tax, treasury, investor relations, information technology, and strategy and new business development organizations. She developed ELC’s Finance and Strategy Leadership Development Program, which identifies, trains, and places top talent. Travis has also worked to advance racial equity and representation within the company and the beauty industry.
Jack Hartung, CFO at Chipotle Mexican Grill (NYSE: CMG), has decided to retire. Hartung has served as CFO since 2002. Adam Rymer, a 15-year Chipotle veteran, will assume the role of CFO beginning Jan. 1, 2025. Rymer joined Chipotle in 2009 and currently serves as VP of finance. Hartung will continue in his current position through the end of the year and will remain with Chipotle until March 31 for a transition period.
Brian Dykes was named EVP and CFO at UPS (NYSE: UPS) effective immediately. Dykes succeeds Brian Newman, CFO since 2019, who left the company on June 1 for medical reasons. Dykes has spent more than 25 years with UPS, most recently serving as SVP of global finance and planning, since April 2023. Before that, he held positions of increasing responsibility within the company’s finance and accounting, corporate treasury, mergers and acquisitions, business intelligence, and business development functions, both in the U.S. and internationally.
Monish Patolawala was named EVP and CFO at ADM (NYSE: ADM) effective Aug. 1, succeeding Ismael Roig, who has been serving as ADM’s interim CFO since January. ADM CFO Vikram Luthar resigned amid an investigation of accounting issues. Patolawala brings to ADM more than 25 years of experience. He most recently served as president and CFO of 3M Company. Before 3M, Patolawala spent more than two decades at GE in various finance roles, including as CFO of GE Healthcare and also as head of operational transformation for all of GE.
Gordon Brooks was named interim CFO at Eli Lilly (NYSE: LLY), effective July 15, according to an SEC filing. Brooks is currently Lilly's group vice president, controller and corporate strategy. Anat Ashkenazi resigned as CFO and EVP at Lilly in June and will join Alphabet Inc. as CFO. Brooks has worked at Lilly for almost 30 years serving in several divisional CFO roles.
Cesar Perez was named CFO at Serta Simmons Bedding (SSB), effective July 8, reporting to newly appointed CEO Jim Loree. Perez joins SSB with 19 years of finance leadership experience, including at Electrolux, where he served as CFO for North America and as a member of the global CFO team. Cesar began his career at GE Appliances and spent over a decade in financial management positions.
Big Deal
WTW’s Quarterly Deal Performance Monitor finds that worldwide M&A activity continued to rebound in the second quarter of 2024. An analysis, conducted in partnership with the M&A Research Centre at Bayes Business School, finds that 166 deals valued over $100 million were completed globally during the second quarter, which matches the number of deals closed in the first three months of 2024. This marks a 25% increase in deal volume compared with the second quarter of 2023, according to WTW.
“The combination of rising market confidence, anticipated interest rate cuts, improved financing conditions, low volatility and narrowing valuation gaps will help shake off the dealmaking doldrums we’ve seen since late 2022,” David Dean, managing director of mergers and acquisitions at WTW, said in a statement.
Going deeper
Here are a few Fortune weekend reads:
“Bank stocks like Goldman Sachs are suddenly soaring—and helping power an 18% stock market rally this year” by Jeff John Roberts
“Goldman Sachs’ CEO was seen as a dead man walking. A year later, the 'David Solomon' era is being hailed as a success” by Luisa Beltran
“The rise and fall of a crypto whiz kid: How 25-year-old Kanav Kariya went from president of Jump Crypto to pleading the Fifth” by Leo Schwartz
“Can’t get a good night’s rest? Watch out for these 8 ways you may be sabotaging your sleep” by Lindsey Leake
Overheard
“Our company, Alkira, was fortunate to close a $100 million Series C funding round. While we’re incredibly grateful for the support we’ve received, the journey wasn’t easy.”
—Amir Khan, CEO and cofounder of the software startup Alkira, offers in a new Fortune opinion piece lessons and advice on the fundraising process.