The average yearly salary of a chief financial officer (CFO) can vary based on a number of factors, but the median compensation for a CFO in the U.S. as of April 2019 was $371,548 per year, according to Salary.com. CFOs within the bottom 25th percentile should expect to earn $291,721 per year, while those in the 75th percentile should expect to earn $462,923 per year.
By way of comparison, according to the Bureau of Labor Statistics, the median weekly earnings of full-time workers in the U.S. was $886 as of Jan. 2019, which is $46,072 per year. Thus, the average CFO makes over eight times more than the average worker, making the CFO a very lucrative career by comparison. See also, A Day in the Life of a CFO.
Salary, Benefits, and Perks of a CFO
The primary factors that impact the median salary of a CFO include geographic location, and the experience and personal qualifications of the person. Base salary makes up roughly 70% of the total compensation a CFO should receive within a given year. The other areas of compensation are bonuses and benefits, as well as perks.
When bonuses and benefits are included in salaries, the median total compensation for a CFO is $519,692 per year. Those within the bottom 25th percentile should expect to earn $363,567 per year, and those within the 75th percentile should expect to earn $743,025 per year. CFO benefits include Social Security, 401(k), disability, healthcare, pension and time off. The value of these benefits and perks for the average CFO is about 30% of his or her total compensation.
Perks of the job can vary but can include the likes of a company car or driver, a hefty severance package—also known as a golden parachute, relocation expenses, use of a private jet or helicopter, and first-class flights. While healthcare is a typical perk, high-level executives such as CFOs have access to disability and life insurance. Workplace related perks can include a dedicated parking space, large offices, and private bathrooms, among others.
When it comes to total pay, it not only varies by experience but also job location. In major metropolitan areas and “financial capitals of the world,” such as New York City, the pay will be higher. The table below lays out the base compensation and total compensation including annual bonuses for the top 10 metropolitan areas:
|CFO Salary and Bonuses for Top 10 Metro Areas|
|Top 10 Metro Areas||Base Compensation||Salary and Bonuses|
What It Takes to Become a CFO
Most CEO have an average of 15 years of relevant work experience and usually have a Master in Business Administration (MBA). In many cases, a CFO will also be a Certified Public Accountant (CPA). Generally, CFOs have help previous positions such as controller or director of finance. Some may have worked in accounting departments.
Per Salary.com, roughly half of CFOs have a Masters degree, while 45% have a Bachelors degree. Meanwhile, just 2% have a Doctorates or Associates degree, and only 1% of CFOs have only a high school diploma. In terms of salary, there is not much differentiation between a CFO with a Bachelors and a Masters degree, however.
At the top of the proverbial food chain, in the corporate world, is the chief executive officer (CEO). The CFO generally reports directly to the CEO and the board of directors. The average CEO makes $794,136 per year on average.
The CFO is generally responsible for all budgeting, financial goal setting, and related financial reporting—including financial statement construction and review. Arguably, there has always been a need for CFOs, however, the position really only came about in the 1960s. This comes as companies’ finances, accounting, and bookkeeping have become more complicated.
The Bureau of Labor Statistics estimates financial manager jobs will grow by 7% from 2014 to 2024. The business of being a CFO will likely change a lot over the next decade, including navigating the rise of cybersecurity and advancement of technology. As well, the CFO position will see increased demand when it comes to regulatory compliance. This includes managing risks, whether it be taking risks or protecting against disruption.
Overall, CFOs will not only be managing finances and overseeing banking relationships, but they’ll also need to be able to manage big data—embracing artificial intelligence and data analytics.