Taking Stock of Those E-CFOs

Internet CFOs make less than CTOs, but stock options make up.


Often the number-two person at many firms, the CFO is decidedly in third place at many Internet start-ups, if total potential company- generated wealth is any indication (and we know it is). The average chief technology officer at an Internet firm is a healthy notch ahead of the CFO in the total holdings department, according to a recent survey of 155 public companies conducted by recruiting firm Spencer Stuart. While the average CTO receives a slightly lower salary, he or she holds a much bigger chunk of the firm than a CFO–in fact, about twice as much.

One reason for the discrepancy: CTOs more often are founders of Internet firms, while CFOs are often brought on to ready a company for an IPO.

But do not weep for the Internet CFO. The average CFO received a base salary of about $137,000 in 1998, but more than $3.6 million in total compensation when stock option grants are considered. Spencer Stuart assumed the stock options would vest at an approximate average of their current market value, which gives some of the total compensation numbers for individual CFOs a case of vertigo. But Internet and non-Internet clients were looking for a reasonable benchmark, explains Jason Baumgarten, an associate, Global Internet Practice, at Spencer Stuart. “Our goal was to answer some of the questions, from both the pure Internet start-up and the traditional company clients that are increasingly starting Internet divisions and competing for some of the same talent,” says Baumgarten.

Topping the Internet CFO list is William J. Ruehle of Broadcom Corp., the Irvine, Calif., maker of circuits that enable broadband access. While earning a salary of $156,211 in 1998, Ruehle received option grants for 500,000 shares that Spencer Stuart valued at more than $36.8 million. Etoy’s CFO, Steven J. Schoch, took a salary of just over $20,000 last year, but received stock option grants valued at more than $27 million.

———————————————– ——————————— Stratospheric E-Pay
When counting unvested option grants, a number of finance chiefs in the Internet sector enjoyed a wealth-generating 1998.

(Chart Omitted)

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