CFO pay jumps 66% at major industrial spinoffs

Good morning. CFOs at newly independent companies can see substantial increases in compensation.

A Compensation Advisory Partners (CAP) study of industrial and manufacturing spinoffs, shared with CFO Daily, found that median target total compensation rose roughly 66% for “SpinCo” CFOs with comparable pre- and post-transaction pay disclosures, compared with 57% for CEOs. CFO salaries rose 11%, while annual long-term incentive opportunities increased 102%. The study covered 19 major separations involving 29 resulting companies. Median revenue was $11.8 billion for parent companies before the transaction and $5.2 billion for the resulting companies.

The larger equity packages reflect the shift from divisional leadership to the top ranks of a new standalone public company, Ryan Colucci, a CAP partner and author of the report, told me. “The buck stops with you now,” he said.

That expanded responsibility also helps explain a striking difference in hiring patterns. While 79% of SpinCo CEOs came from within their organizations, 58% of CFOs—11 of 19—were recruited externally. Many of those external hires had experience as public company CFOs, Colucci said.

“Honeywell Aerospace, for example, hired the former CFO of Deere & Company,” he said. Honeywell Aerospace, a spinoff of Honeywell, became an independent, publicly traded company in June, trading on the Nasdaq under the ticker symbol HONA. Josh Jepsen joined Honeywell Aerospace as CFO on Feb. 23. According to his offer letter from Honeywell, his annual base salary is $1 million, and he was also offered a cash sign-on bonus of $1.525 million, payable within 30 days of his start date.

Colucci said boards may turn to external candidates because an internal divisional finance leader may have........

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