Finance chiefs at US companies are enjoying fatter pay packets as stock-based incentives pushed up executive compensation last year. Chief financial officers’ median pay rose 8.45% in 2023 from the previous year.
High pay isn’t without potential pushback, particularly when it comes to chief executives’ compensation. However, it is unusual that companies don’t get the needed support for say-on-pay votes, with only 1% in the S&P 500 failing this year, according to preliminary results.
Shareholders may also use votes on pay to show frustration with topics such as a dividend policy or governance matters, or because executives are being paid more while company shares are underperforming.
Companies use total shareholder returns in explaining their compensation to investors and other stakeholders. But the comparison alone may not fully capture the picture, said Bill Reilly, a managing director at compensation and leadership consultancy Pearl Meyer. Companies in a challenged industry, for instance, may have performed well against others facing similar conditions while looking unfavorable compared with the broader S&P 500, he said.
“Having said that, if you’re in a down year, maybe your financial performance is down, maybe your stock price is down, you can certainly expect some scrutiny,” according to Reilly. “So, you want to make sure that you’re making prudent and defensible decisions about your executive pay determinations.”