Market Snapshot: Big Firms, Strong Performance
In a fresh look at executive pay, Compensation Advisory Partners (CAP) analyzes 140 large U.S. companies with at least $5 billion in revenue. The period studied reflects a year when corporate results were resilient, helping set the backdrop for a shift in how top finance leaders are compensated.
Across the board, firms reported stronger fundamentals in 2025, with median revenue rising about 6% and operating income up roughly 8%. Those gains helped sustain a push to retain senior leadership during a time of intense competition for talent at the C-suite level.
“CEO and CFO pay tends to track performance, but we’re operating in a more competitive environment where stability at the top has become a priority,” said Kelly Malafis, founding partner at CAP. “That stability is reflected in how pay is structured, especially the emphasis on long-term incentives.”
Two Numbers That Tell the Story
CAP’s latest dataset, drawn from companies with a median revenue around $15.6 billion, shows a clear rebalancing of pay between annual cash compensation and longer-term rewards. The results underscore a broader trend in U.S. corporate governance: retention through equity-linked incentives is rising in importance for senior financial leadership.
- Total direct compensation (TDC) for CFOs rose about 8% in 2025, while CEOs climbed about 9%.
- Long-term incentives (LTIs) surged 12% for CFOs and 9% for CEOs in 2025, nearly doubling the pace of the prior year’s increases.
- LTIs now account for 63% of the average CFO pay package and 73% of CEO pay, cited as the core retention and alignment tool.
- Base salaries for CFOs rose a median 3.7% in 2025, versus 2.1% for CEOs.
- The CAP dataset specifically tracks executives in role for at least two years, acknowledging that long-term incentives also function as a broad retention mechanism.
In CHRO and governance circles, these shifts are viewed through the lens of shareholder alignment and leadership continuity. The report makes clear that LTIs are not just about reward for past results; they’re designed to lock in leadership to deliver for the long arc of business plans and capital allocation.
Long-Term Incentives: A Retention Lock-in
One striking line from CAP’s analysis is the growing emphasis on LTIs as a primary driver of retention. The latest figures show LTIs have become a central feature of CFO pay, echoing the pattern seen among CEOs and other C-suite peers. CAP notes that LTIs serve as a practical “lock-in” mechanism, encouraging executives to stay the course through periods of transition or market volatility.
“We are seeing a competitive market where leadership stability matters just as much as performance,” Malafis said. “Compensation surges last year—and long-term incentives now anchor the pay-for-performance model.”
The Pay Mix: What Moves the Needle
Despite the emphasis on LTIs, the base salary component remains a smaller slice of the total package. For CFOs, base pay rose 3.7% in 2025, modestly outpacing the 2.1% rise seen by CEOs. This pattern underscores a deliberate shift away from front-loaded cash compensation toward performance-linked equity.
Here are the practical implications for CFOs, boards, and investors:
- Higher LTIs reflect confidence in the long-term execution of strategic plans.
- Retention risk appears most acute at the CFO level, where turnover can disrupt financial reporting and capital strategy.
- Shareholders may scrutinize LTIs for performance metrics, vesting schedules, and defensibility during downturns.
Implications for Investors and Workers
From an investor perspective, the move toward LTIs signals a willingness to bind leadership to sustained outcomes. The alignment with shareholder interests is stronger when pay is tied to multi-year goals and vesting hurdles that reflect long-term value creation.
For employees and potential hires in the finance function, the trend translates to a compensation philosophy that rewards steady leadership and the ability to navigate complex capital structures. The 2025 CAP data suggests that the market values a steady hand at the wheel and credible plans to grow earnings and cash flow over several years.
What This Means Going Forward
As markets enter 2026, CFO compensation remains a focal point for governance discussions and shareholder engagement. Expect boards to sharpen LTIs, adjust performance metrics, and revisit vesting horizons to ensure retention without sacrificing accountability.
The CAP analysis also serves as a benchmark for mid- and large-cap firms evaluating pay strategies. With LTIs already comprising the bulk of pay for CFOs, any shift in equity markets or regulatory guidance could ripple through compensation committees and executive compensation disclosures.
Bottom Line
The latest CAP data confirms a pivotal shift in how top finance leaders are rewarded. CFO pay rose roughly 8% in 2025, within a hair of CEO gains, and long-term incentives surged last year—and long-term incentives now dominate the CFO pay mix. The emphasis on LTIs reflects a broader belief that long-run performance and leadership stability are inseparable from sustained corporate value creation.
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