Importance Of Company Profitability To CFO Compensation

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 2nd Quarter of 2013.   There are various notable items seen in the report; two items seem especially notable from a company profitability perspective.

First, as seen on page 5, regarding the importance of profitability to CFO compensation:

Growth is important, but profitability is still king when it comes to driving CFO compensation. More than 95% of CFOs report at least moderate influence and 75% report strong influence. But it is interesting to note that economic performance (through metrics like ROIC that incorporate both income statement and balance sheet measures) are the next strongest driver of CFO pay, with more than 70% of CFOs reporting moderate or strong influence. Also interesting is that measures more limited to the functional scope of finance (factors like liquidity, cost of capital, treasury returns, and tax efficiency) are considerably less influential – but there are important industry differences.

Also of note is an item seen on page 14 regarding (company) “Board Worries” of an external nature.  Under the “Industry” Category, “Intensifying Competition” (prices, tactics, etc.) is seen as having a high (relative to other worries) percent of CFOs naming the risk as a top-three concern.


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StratX, LLC ( is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to increase revenue and profitability.