A Chief Financial Officer is a high-ranking executive responsible for the entire financial organization of a business. A CFO salary falls between $150,000 and $300,000 a year. It’s a wide range that depends on a number of factors; education, location, experience, the size of a company, private vs. public companies, the number of reports, and more can contribute to the expected CFO salary at any particular company.
Today we are sharing everything you need to know about CFO job descriptions, CFO salary, CFO requirements and more.
What does a CFO do?
Businesses have always had a need for a keen budgeting and reporting eye, but as finances have grown more global and complicated there has grown a need for a position that can provide more leadership. According to Investopedia, the role of CFO wasn’t always necessary (and may still not be necessary for many small-to-medium businesses) but was borne out of this need for complex analysis, goal-setting, and reporting.
A CFO is responsible for synergizing many parts of business finance, including accounting, taxes, investment, purchasing/pricing, and shareholder accountability. This position requires both financial and management experience, as well as public speaking and presentation skills as a member of the executive team. A CFO will need to be an extremely smart and hardworking individual to accomplish the variety of daily tasks which may be asked of them.
CFO responsibilities may include:
- Oversee multiple departments such as accounting, purchasing, client relations, tax & legal, and growth
- Maintain and prepare financial reports, statements
- Budget decisions
- Acquiring and utilizing new technology
- Finding ways to increase revenue and save money
- Cash & credit management
- Research & recommendations for future growth and investments
- Executive team leadership
- Presenting to board, shareholders, media, etc.
How much does a CFO make?
As stated above, a CFO can expect a salary between $130,000 and $300,000, usually making them one of the highest paid individuals at a company. This lucrative salary makes sense, because a CFO has such an impact on the financial success of the company, and requires a lot of education, experience, and dedication. Still, that range is very wide… so what determines a specific CFO’s salary?
Education: Around half of CFOs have an MBA (Master’s of Business Administration), and most have an undergraduate degree in accounting or finance. CFOs with CPA certification are often preferred, and can make more money.
Experience: Typically a CFO will have 10-15 years of financial experience (more experience = more money), and may have some financial management in their background. For example, a controller may be an excellent choice for a promotion to CFO, and will earn more than a CFO with no financial management experience.
Company details: Publicly traded companies usually pay their CFOs more money (up to $50,000 more per year), because the job requires more reporting and shareholder relations. Larger companies tend to pay more, as do those in financial and global markets.
Benefits & perks: Some companies consider salary to be just one of the components of a compensation package. Bonuses, revenue sharing, stock options, increased health benefits, and even perks like a company car, private bathroom, and parking spaces (or the lack of these benefits & perks) may be a significant part of the negotiating process for a CFO salary. CFO Search reports that bonuses can be between 30-60% of a CFOs base salary!
TRY THIS: Use the Salary Calculator to adjust factors that can contribute to CFO salary.
Calculating CFO salary
You might be wondering if you’re being paid enough in your current role as CFO. Or perhaps you’re a CEO ready to create a CFO job and want to nail down the compensation. Maybe you’re a financial professional trying to determine if the route to CFO would be worth it for you. We’ve got a few ideas to help you estimate the appropriate CFO salary for any particular job.
- Start with CEO Salary. The CFO will report directly to the CEO and board, so their position and therefore salary will fall below the CEO range. The ceiling of CFO salary should give enough room for raises and bonuses, while remaining in the appropriate tier.
- Look at reports’ salaries. How many direct reports will fall under the CFO? Again, a gap should exist between tiers that will allow flexibility for raises and bonuses. Your CFO should make more than their direct reports with a generous cushion.
- Compete. Is this range competitive? Try looking at Glassdoor and doing your own research to determine if comparable companies are paying their CFOs more – or less. This could dramatically impact the quality, number, and happiness of your CFO candidates.
- Consider education, experience, and benefits. Likely the range between direct reports and the CEO is wide, so landing within that range can be determined by the aforementioned factors. Better education might move the needle upwards, but lack of experience might keep it on the lower end.
Example
If your financial controller is making $130,000 (a good median estimate according to the Bureau of Labor Statistics) and will report directly to the CFO, your CFO should be making at least $150,000. If the CEO is making $200,000, then your CFO is unlikely to make more than about $185,000-190,000. If your CFO has years of experience and an MBA, you’re probably going to land right around $165,000-$180,000. Then within that range you can negotiate with bonuses and other perks.
Other financial career salaries and resources
- How much does an accountant make?
- How much does a CMA make?
- How much does a controller make?
- How much does a CPA make?
- How much does a financial analyst make?
- How much does a treasury analyst make?
- How much does a Vice President of Finance make?
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