FEI: No Raises for 31% of Finance Execs

The survey also shows a dramatic shift from individual goals to EBITDA as the basis for measuring the performance of CFOs.

Thirty-one percent of 990 financial executives have received no salary increase, according to a survey conducted in December 2008 and January 2009 and issued today by the research arm of Financial Executives International. That’s just about double the number (16%) of those who received no raises as of early 2008.

As a whole, however, the survey respondents averaged a 3.7% increase in base salary. But that was less than the average 4.96% recorded in 2008.

Bonuses, nevertheless, are as ubiquitous as ever. Ninety-four percent of the respondents-half of whom were CFOs—reported receiving a 2008 bonus.  Eighteen percent of financial executives reported bonuses of between 21% and 30% of their base salaries, and 17 percent got bonuses of between 31% and 40% of their base salaries.

“This year’s results demonstrate that the combination of the economic downturn and increasing pressure on executive compensation has left a clear impact on U.S financial professionals,” said Marie Hollein, the organization’s chief executive officer and president.  “While salaries for this group still saw a boost, the percentage of their increase declined from 2008. This, coupled with the fact that a sizeable number of professionals did not receive increases at all this year, reveals that the current crisis is undoubtedly reflected in the compensation of the C-suite.”

The finance chiefs of public companies appear to be doing better than their counterparts in the privately held sector, getting an average 4% salary increase in comparison to the private-sector’s 3.4% . The 122 public company CFOs responded to this year’s survey reported average yearly total compensation  of $410,100, a neat rise from the $373,100 recorded in the 2008 survey.

The public-company finance chiefs an average of $296,800 in base salary in 2009. Bonuses were based on a percentage of annual salary and ranged from 21% to 70%.

In contrast, the 344 private-company CFOs reported average total yearly compensation of $257,800, including an average $199,600 in base salary. Total annual comp was off a bit from 2008 at $262,800. Bonus percentages for those finance chiefs ranged from 11% to 50%. 

The survey also shows a dratmatic shift in the basis for measuring the performance of finance executives for the purpose of calculating their pay. This year, for example, the use of  individual goals and objectives as compensation-linked performance metrics fell off a cliff at public companies—to 40 % from 74% in 2008.

Over the same period, however, the use of earnings before interest, taxes, deprecation, and amortization (EBITDA) jumped from 48% compared with 16% in 2008.

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