- In 2019, the CFOs for S&P 500 tech and media companies with the largest reported total compensation were from Comcast, Apple, T-Mobile, Facebook, and Microsoft. They earned $23 million each, on average.
- For most of the CFOs, equity awards made up the majority of their recorded compensation in 2019.
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Everyone knows CEOs make a ton of money, but the top finance executives at big companies can also pull down massive paydays.
In 2019, the highest-paid CFOs in the tech and media industry earned $23 million each on average. These CFOs were from Comcast, Apple, T-Mobile, Facebook, and Microsoft. (The CFO from Intel in 2019 would have been part of this list, but his compensation was irregular due to the fact that he became CFO in mid-2019. For this reason,we left him out of our analysis.)
For most public companies, the SEC requires compensation disclosure for five executives: the chief executive officer, chief financial officer, and the three other highest paid executives. We pulled the five highest paid CFOs from our compensation database for media and tech executives.
All data in the chart below comes from the "summary compensation table," which is available in firm proxy statements. The chart shows the compensation split out by element: salary, bonus, NEIP (non-equity incentive plan), stock awards, option awards, and other compensation. By holding your cursor over the labels at the top of the chart, you can see how specific parts of compensation compare across listed executives.
The following breaks down each of the components of compensation for the five CFOs.
In proxy statements, recorded salary reflects salary earned in the previous fiscal year. This means that sometimes, the salary listed in the proxy statement is different than the salary rate of pay, which is the amount an executive would receive in a normal year.
The biggest winner in our top five for salary was Michael Cavanaugh, the CFO of Comcast. He earned nearly $2.3 million in salary in 2019. The two next highest earners in salary were the CFOs from Apple and T-Mobile, who both earned around $1 million.
Bonus and short-term incentives
Bonuses and short-term incentives typically reflect cash awards given for performance in the short-term. In the chart above, "NEIP" stands for non-equity incentive plan, meaning that it's the firm's incentive plan that awards in cash (rather than equity).
While there is no legal definition distinguishing bonuses from NEIP awards, bonuses are typically backward-looking and discretionary. Performance is still connected to pay, but not in a clearly defined and measurable way.
Short-term incentives, or non-equity incentive plan awards (NEIP), are part of an incentive plan that is set up before the performance period, and sets out explicit goals and awards that employees will earn if they achieve. Because of the clarity often accompanying short-term incentive plans, they are more common in compensation packages than bonuses.
For our highest paid CFOs, two had bonus awards and four had short-term incentive (NEIP) awards. T-Mobile's J. Braxton Carter had the largest bonus, at $2.5 million, which was awarded as a part of his employment agreement (and called the "Carter Retention Bonus"), according to most recent proxy filings.
The largest non-equity incentive award went to Michael Cavanagh of Comcast, at nearly $7 million. According to the latest proxy statement, Cavanagh's award was based on achievement of firmwide goals based off earnings, cash flow, revenue, customer experience, product churn (the rate of customers who stop using the company's products), and a wireless phone rollout, along with qualitative goals based on Cavanagh's individual achievements.
Long-term incentives are almost always granted in equity. Equity awards are a form of compensation where employees are given shares of the company's stock.
The reason that the plans are called "long-term" is that they typically measure performance over a few years, rather than a single year like short-term incentive plans do. The reasoning here is that if an executive's compensation is housed in equity, they'll be more incentivised to push for firm success in the long run.
For many executives, the majority of compensation comes from equity. In the chart above, you'll see this is true for our top five highest paid CFOs. (Hold your cursor over the "Stock awards" or "Option awards" label to see the equity awards.)
There are two types of equity typically granted to executives in long-term incentive plans: stock awards and option awards. Stock awards are mostly straightforward — it's a number of shares that an executive is granted, valued at the price of the day they were granted on. Option awards can be thought of as an option to buy the granted number of shares at a specific price, but the valuation is more complicated due to the unknowns of when an executive will use the option.
For our top-earning CFOs, the largest equity award (both stock awards and option awards combined) went to Luca Maestri from Apple with an award of $21.6 million. The award was based in part on Apple's achievement of relative total shareholder return, meaning that the company's stock price performance was measured against peers' performance (for Apple, the measured peer group was the entire S&P 500), rather than an absolute goal.
Other compensation includes payments to executives that don't fit anywhere else. In most summary compensation tables, a column called "change in pension value and nonqualified deferred compensation earnings" is split out from "other compensation," but for the simplicity of the table above, we've combined them.
Change in pension value is essentially showing the growth (and sometimes decline) of the value of the executive's pension plan. Nonqualified deferred compensation is compensation put off until a future date. These plans are sometimes used as retirement plans.
Values classified in "other compensation" include a variety of things. This is where things like home security, amounts associated with use of corporate aircraft, insurance and benefits plans, and a lot of other things go.
For our CFOs listed above, examples of other compensation include amounts related to company-provided aircraft (Cavanagh), retirement plans (all five), severance payments (Carter), and personal security (Wehner and Maestri).
For example, Cavanagh's use of the company aircraft, which was valued at $170,818 in 2019, was encouraged for executives because it "affords [Comcast's executives] greater security, allows travel time to be used productively and enables them to be immediately available to respond to business priorities from any location." Maestri similarly spent $838 in 2019 for personal security, while Wehner spent $50,000 in security.
Get the latest Intel stock price here.
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