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Article | Executive Pay Memo North America

2021 S&P 1500 CFO pay study

By Jang Han | December 8, 2021

Pay growth slows amid a volatile 2020
Executive Compensation

As noted in our review of CEO pay earlier this year (see 2021 S&P 1500 CEO pay study), pay growth for the top executive role at S&P 1500 companies slowed as companies faced immense challenges presented by the COVID-19 pandemic. This reality also held true for those in the CFO role. This year’s study of CFO pay revealed smaller increases in both target and earned total pay, representing a slower rate of increase than observed in the prior year. The struggle to achieve or surpass bonus plan performance metrics amid global market disruptions led to a drop in overall annual bonus payouts, with the average bonus falling to below target, down from the prior year’s performance. The increase in earned long-term incentives (LTI) was also smaller in the current year, down nearly half year-over-year.

These findings were identified by Willis Towers Watson’s Global Executive Compensation Analysis Team (GECAT) in its annual review of 2020 S&P 1500 CFO pay, as disclosed in proxies filed in 2021. Key drivers of CFO pay include:

  • Target pay: Target pay for S&P 1500 CFOs grew 5.3% at the median, a slower growth rate than the 6.9% increase that we observed last year. The median increase remained the same at 6.8% for large-cap CFOs, 4.5% for mid-cap CFOs and 4.9% for small-cap CFOs. The majority of the S&P 1500 CFOs’ target pay continues to be delivered in the form of LTI, comprising 52% of the pay mix. Annual bonus and salary made up the remainder of the pay mix at 27% and 21%, respectively. These findings vary according to company size, with LTI taking up a larger proportion of the pay mix at larger companies.
  • Base salary: Base salary increases for S&P 1500 CFOs held relatively steady at 3% at the median in the current year, just a slight dip from the 3.1% increase noticed in the previous year. The increases across all the indices were in line with that of the overall group at 3%. The salary increases at the median ranged from 2% to 4% for all the sectors, apart from the energy and communication services sectors, which showed no change at the median.
  • Annual bonus: Bonus target increases declined slightly to 3.1% at the median, a drop from the 4% growth we observed in the prior year. Annual target bonuses remained unchanged at 80% of base salary, with no increase at the median for the S&P 1500 CFOs. This was also the case for large- and mid-cap CFOs with only small-cap CFOs seeing a five-percentage-point increase at the median to 75% of base salary. The average bonus payout as a percentage of target for S&P 1500 CFOs declined to 98% of target from the prior year’s average of 104%, with 51% of CFOs receiving payouts below target.
  • Long-term incentives: LTI compensation remains the principal element of pay programs for S&P 1500 CFOs, comprising over half (52%) of their total pay mix. Target LTI values increased 5.9% in 2020 compared with an 8.2% increase in the prior year. The LTI value mix did not display any substantial shifts year-over-year. Performance-based LTI awards comprised nearly half (49%) of the LTI value mix, with the remainder delivered through time-vested restricted stock (37%) and stock options (14%). Performance-based LTI awards, the most prevalent type of award, was granted to 79% of S&P 1500 CFOs, slightly more than the 77% who received time-vested restricted stock grants. While the prevalence for the performance-based LTI and time-vested restricted stock awards remained the same as in the prior year, stock options saw a decrease from 38% to 35% in the current year.
  • Earned pay: Total earned pay for S&P 1500 CFOs grew 8.1% at the median, down from last year’s growth of 11.3%. This downward movement in earned pay was observed for CFOs at companies of all sizes. The sluggish growth in earned LTI, a large driver of earned pay, and muted annual bonus payouts contributed to the slowed growth in earned pay.

For more details, please download a copy of the complete report (below).

Download the complete report
Title File Type File Size
CFO Pay at S&P 1500 Companies: 2021 PDF 1.4 MB

As the pandemic caused companies to operate in an economic climate laden with uncertainty, companies tended to take a conversative approach in determining pay adjustments, balancing the need to be able to navigate successfully through the uncertain times while trying to retain those executives at the helm. While uncertainty is still looming, it remains to be seen how companies will address their approaches to determining pay and to what extent earned pay will be affected as the economic and global pandemic concerns continue to adjust.


Associate, Global Executive Compensation Analysis Team (Arlington)
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