How do private companies structure CEO and CFO pay?

Economic uncertainty is putting pressure on companies to optimize spend, and in a competitive talent market, the significance of making well-informed pay decisions becomes even more pronounced. Over 80% of U.S. companies are privately held, yet there is limited market pay data available. Private companies are often compelled to rely on public company information or make decisions not backed by sufficient data.

To help bridge this gap, BDO conducted an inaugural survey to assess compensation of CEOs and CFOs in private companies. We analyzed executive pay, including salaries, bonuses, long-term incentives/equity, and other compensation arrangements, from over 750 participating private companies. This Insights Report highlights some of the key findings from analysis of the survey data. Download now to learn:

  • Key drivers of CEO pay levels
  • How CEO pay is delivered
  • Annual and long-term incentive plan types and targets
  • CFO pay relative to that of the CEO
  • How CEO pay varies by ownership, including employee owned (ESOP), family owned, private equity/venture capital — as well as comparisons to public companies
  • How to calibrate pay based on benchmarking data
  • Strategies to maximize spend on compensation and benefits

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How Do Organizational Factors Impact Private Company Pay?

Ownership Type

Private companies deliver 23% of pay through long-term incentives compared to 51% for private equity owned and 60% for comparably sized public companies.

Industry

Life sciences/pharma CEOs are paid the highest salaries, while real estate CEOs have the highest total direct compensation (TDC), which includes salary and incentives.

Company Size

CEOs of larger companies are paid as much as 78% more in TDC than CEOs of smaller companies. Larger companies also pay bigger bonuses/annual incentives (53% of salary vs. 28%).

Geographic Location

CEOs of similar-size companies located in large U.S. metro areas are paid as much as 37% more than CEOs in other locations.

Job Title

CFOs of private companies are generally paid less than 75% of the CEO’s pay.

Methodology

The survey reports chief executive officer (CEO) and chief financial officer (CFO) compensation plans, including salaries, bonuses, long-term incentives/equity, and other compensation arrangements of 751 private companies. All data was collected between April and June 2023 using an online submission tool. Unusual or outlier responses were flagged and clarifying questions were sent to the participants. Survey participants are eligible to receive the full survey participant report.

Looking for public company benchmarking data?
Check out the BDO 600 Studies for analysis of executive and board compensation practices of mid-market public companies.