PE-backed CFOs are favoring one form of pay over another

Sponsored by

The talent challenge. From longer hiring processes to difficulties finding qualified candidates, filling finance roles is getting harder. To better understand these challenges, we created the State of Finance Careers report. In it, we explore the obstacles finance professionals face, the impact of AI, and what’s going on in the job market. Take a look.

“Cash is king”—even sometimes in compensation. In a survey last December conducted by executive search firm Heidrick & Struggles, CFOs at PE-backed companies in the US reported average total cash compensation of $604,000, up 5% from 2024. While the average cash bonus declined 2%, the average base salary rose 7%.

The cash compensation boost, according to H&S, “reflects longer expected hold periods and time to exit, which heightens candidates’ focus on negotiating base cash compensation up front. As CFOs carefully consider both immediate and long-term value in these extended investment horizons, they’ve realized that a higher base mitigates the risk of delayed equity realization and shapes the overall package.”

The H&S survey collected compensation data from 353 senior financial officers, most of whom were CFOs, within the US and Europe. A plurality (40%) of the respondents said their financial investors had exit timelines three or four years from the time of the survey, 29% said one to two years, and 16% gave them five or more years.

President and founding partner of Cowen Partners Executive Search Shawn Cole told CFO Brew that the experienced PE-backed CFOs he’s seen in recent years are coming from “extended hold times”—when the PE firm took longer than what’s been traditional to exit an investment.

These CFOs are saying to their new PE-backers, “This story you’re telling me, and this exit you’re going to do, that’s awesome. Been there, done that, just pay me cash,” Cole said.

“Equity doesn’t really motivate [prospective PE-backed CFOs] because they don’t really believe in it. Sure, it’s sort of the golden handcuffs if it all works out—but they’ve already played that game a few times,” he added.

But these veteran CFOs are also retiring en masse, Cole said. “A lot of the experienced CFOs that we contact say, ‘Hey, I’m not interested, this is going to be my last job.’” That trend is causing increased competition as the candidate pool decreases.

Tips for newbies. For finance executives aspiring to lead finance at a PE-backed company, Cole suggested they do their homework about a job, but also think realistically.

“[Prospective PE CFOs] need to understand where the company has been and where the company’s going. If they’re in a position to receive an offer, they need to just assess the potential for success, and that needs to be applied to their assessment of equity.”

“And then the next question is historically, what has been your success in paying out on bonuses? I would just, as an incoming CFO, want to make sure that I was in a position to influence those things…and in that regard, not all opportunities or comp plans are equal.”

One reminder Cole gave: “Compensation is based on size and scale of the organization, so if you’re reviewing an offer from a $50 million company, that’s going to be very different than being offered a $300 million company…Usually that is predicated on the CFO’s resume, but if they get themselves in a position where they are seeing other opportunities, they just need to understand that the size and scope and scale of the opportunity dictates the compensation.”