Good morning. CFO pay is rising but not in the way you might expect.
New data from Compensation Advisory Partners (CAP), exclusively shared with CFO Daily, examines 140 large companies with at least $5 billion in revenue and a median revenue of $15.6 billion. While CFOs continue to gain influence, their compensation remains closely tied to CEO pay. Notably, pay growth for the two roles is increasingly converging.
In 2025, total direct compensation (TDC) rose roughly 8% for CFOs and 9% for CEOs, the first time in several years that increases have nearly matched. The shift reflects strong corporate performance—median revenue and operating income rose 6% and 8%, respectively—and a heightened focus on executive retention.
“CEO and CFO pay does tend to move with performance,” Kelly Malafis, founding partner at CAP and co-author of the report, told me. “But our hypothesis is that we’re operating in an increasingly competitive environment where companies really want stability in leadership and that starts with the CEO.”
Long-term equity becomes the real retention tool
That focus is showing up most clearly in long-term incentives. LTI awards jumped 12% for CFOs and 9% for CEOs in 2025, nearly double last year’s increases, and now account for 63% and 73% of pay, respectively. Tied to future performance and vesting, they have become a central tool for alignment and retention.
While CAP’s dataset focuses on executives in role for at least two years, Malafis noted that long-term incentives also serve as a “lock-in” mechanism. That’s notable because CFO turnover continues.
“You have to be there, and you have to perform to realize that value,” she said. “It’s a tool companies can use to reinforce retention while maintaining alignment with shareholders.”
Base salaries remain a relatively small component of compensation. CFOs received a median increase of 3.7% in 2025 versus 2.1% for CEOs; notably, this was the first year in three that more than half of CEOs received raises.
Even so, CFO compensation remains about one-third of CEO pay, a ratio that has held steady for a decade despite the role’s expansion into enterprise transformation, data strategy, and AI.
There are exceptions. Looking at proxy statements, Tesla CFO Vaibhav Taneja, for example, logged roughly $139 million in total compensation for 2024—almost entirely in stock-based awards—making him one of the highest-paid finance chiefs on record. Alphabet and Google CFO Anat Ashkenazi and AMD’s Jean Hu have also landed packages in the tens of millions, driven by sign-on grants and performance-based equity tied to AI and chip-led growth plans.
But those cases remain outliers. For most companies, expanded CFO responsibilities have yet to meaningfully reshape compensation frameworks.
‘AI is still evolving in compensation plans’
While some companies are beginning to incorporate AI and digital transformation into incentive plans, it remains relatively rare, Malafis said, typically through strategic components of short-term bonus plans.
“It makes sense that AI is still evolving in compensation plans,” she said. “Companies first need to understand how it ties to their strategy and performance before embedding it in incentives.”
For now, the broader structure of executive pay remains intact: heavily performance-based, increasingly weighted toward long-term equity, and closely aligned between CEOs and CFOs when results are strong.
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In response, McKinsey outlines five priority shifts for leaders: move from headcount planning to strategic capability planning, modernize talent acquisition, integrate learning and performance, take a more tailored and data-driven approach to employee experience, and redesign HR operating models using generative AI and shared services to boost both efficiency and strategic influence.
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Oreskovic writes: "In the automobile industry, where the average time to introduce a new vehicle from design to production can take years, Ford is using AI to speed up certain parts of the process and to 'fail fast,' said Sammy Omari, Executive Director, Advanced Driver Assist Systems and In-Vehicle Infotainment at Ford Motor Company." Read more here.
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