WTW report: slow increase in CFOs’ total pay in 2020 and earned bonuses fall short of target

Melissa Teo, DigitalCFO Asia | 24 March 2022

A report by advisory company Willis Towers Watson, “CFO Pay at S&P 1500 companies: 2021”, presents key figures from CFOs’ compensation packages in 2020. Average total pay is down, above-target bonuses has dropped for most sectors, while long-term incentives (LTI) continue to amount for the majority of CFOs’ compensation. The research data comes from 982 S&P 1500 companies, including companies from Asia and beyond. Read on for details on the report’s key findings. 


#1 Total Pay 

The slow economy outlook of 2020 is reflected in the slow growth of CFOs’ total direct pay compared to 2019.  Lower earned LTI values and bonus payouts resulted in earned pay dipping slightly. 2020 median pay for CFOs at large-cap companies were over $3.7 million, $2.1 million for mid-cap companies and $1.4 million for small-cap companies. 

CFOs’ total pay comprises of salary, annual bonus and long-term incentives (LTI). Across S&P 1500 companies, LTI constitutes the majority of the pay. The information technology sector reports the highest proportion at 62%, while the financial sector reports the lowest proportion at 41%. The healthcare sector is a close second at 60%. These industry breakdowns are based on the 11 Global Industry Classification Standard (GICS) sectors.

Breakdown of CFOs direct compensation by sector


The proportion of LTI in CFOs’ total pay appears to have a positive correlation with company size. The larger the company size, the higher the proportion of LTI. 62% for S&P 500 companies, 51% for S&P 400 companies and 45% for S&P 600 companies.

Percentage of LTI in compensation by company size

#2 Short-Term Incentives (STI) 

STI mainly comprises of bonus payouts. In 2020, average payout continued the previous year’s downward trend. 98% of target average bonus was observed for 2020, down from 2019’s 104%.

8 out of the 11 industry sectors saw a decrease in above-target bonuses, with the largest drop coming from the energy sector.Closure of offices and indoor public spaces are plausible causes.

3 industry sectors — consumer staples, materials and consumer discretionary, observed an increase in above-target bonuses. The biggest increase comes from materials sector at 14%, likely owning to the sky-rocketing demands of raw materials for face masks, test kits and vaccine needles. 

Percentage of annual bonuses earned at or above target by sector

#3 Long-Term Incentives (LTI) 

S&P 1500 CFOs receive LTI as part of their rewards package in a combination of 3 variables — time-vested restricted stock (TVRS), stock options (options) and performance awards (LTPP). 

A combination of TVRS and LTPP is the most popular combination of rewards across S&P 500, 400 and 600 companies. This combination ranks highest for S&P 600 companies (51%) and lowest for S&P 500 companies (37%). Company size appears to have a negative correlation with the usage of TVRS and LTPP. An opposite trend is observed for the combination of TVRS, options and LTPP. Company size appears to have a positive correlation with usage of this combination. 

Types of LTI combinations and percentage used by company size

In terms of LTI combinations by sector, LTPP represents the predominant form of LTI granted in most sectors. Utilities sector is the highest (71%) while healthcare sector is the lowest (36%).

Breakdown of LTI by sector

In unpredictable pandemic times, companies are conservative in adjusting top executives’ pay structure. The report also suggests the trend of companies moving towards performance-based rewards. Receiving cash and stock incentives based on one’s capabilities is perhaps the way towards earning a higher total pay.