Retail Executive Compensation Remains Mired as CEO and CFO Pay Increases Across Other Industries

We recently published our fourth annual BDO 600 CEO and CFO Pay Study, and the findings were rather notable for the retail sector. As has been a trend over the last several years, in roughly half of the industries analyzed, the percentage increase for middle market CEO compensation exceeded that of CFO compensation. However, the retail industry was a unique case this year: it was the only sector in which CEO and CFO pay decreased. While retail CEO pay declined 1 percent in FY 2012, it dropped again by 4 percent in FY 2013. To note, retail and healthcare were the only industries in which CEO pay experienced negative growth. At the same time, retail CFO pay, which increased by 6 percent in FY 2012, fell by a substantial 11 percent in FY 2013—the largest decline across all eight industries that were analyzed. Overall, retail CFOs made 31 percent of what retail CEOs did—the lowest percentage among all sectors. 

Looking across industries, energy CEOs and CFOs saw the highest pay increases (45 percent and 21 percent, respectively) and highest average total compensation ($5,129,629 and $1,788,635, respectively). This marks a notable shift from the past two years, which saw real estate CEOs holding the rank of highest total compensation—likely due, in large part, to the boom of domestic shale and improving conditions across the broader global energy market.

According to our own Randy Ramirez, a senior director in the Global Employer Services Practice, “The percentage increases for both CEO and CFO compensation this year support the theory that the Great Recession is behind us, and businesses are once again investing in top executive talent. As anticipated, however, in stronger markets, companies are favoring pay-at-risk compensation programs, which directly tie executive compensation to company performance.”

As retailers continue to slog through slow sales gains and a competitive, consolidating marketplace, performance-driven compensation is being held down by weaker margins, and will remain on the lower end of the spectrum until conditions improve more substantially.

The BDO 600 CEO and CFO Pay Study examines the CEO and CFO compensation trends in publicly traded companies with annual revenues of $25 million to $1 billion in the energy, health care, manufacturing, real estate, retail and technology industries; and publicly traded companies with assets between $50 million to $2 billion in the banking and financial services industries. For more findings, click here.

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