Software CFO Compensation 2016

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(Please check our recent RPE and R&D metrics for a listing of the firms listed in the Software CEO Compensation Benchmark 53 report.)

For these Benchmark 53 reports, we do not break out compensation by base, bonuses, and various stock and options packages, simply base and combined (stock, options, special expenses, etc.).  For more detailed breakdowns, our Top 50 Software CxO series due later this year, as well as our CxO compensation surveys, will provide that level of detail. Wide swings in variable compensation can lead to disparities in pay, but from year to year, compensation medians tend to be surprisingly stable. The most stable software CXO compensation group is On Premise; these markets are dominated by long-time winners whose business models are fairly stable with compensation numbers following suit.

In some cases, you will note that despite government reporting requirements, CFO compensation is not always available in public filings, despite the fact that CFOs 99%+ of the time have fiduciary duties at a company and if they are neglected or bypassed, can go to jail. It’s a serious indicator of conflict or internal financial difficulties/disagreements when a company declines to list its CFO in its 10-K or can’t list out their compensation.

CFOs several crucial roles at public software firms. One is to manage the company’s finances and ensure the firm stays in compliance with the numerous regulation and reporting requirements expected of a public company.

Another is to help manage a company’s cash via financial planning. This can include investing a company’s cash, calculating dividend payouts, helping manage stock splits and related activities. As SaaS and mobile firms increasingly integrate analytics into their operations, CFOs are increasingly data mining their own customer bases and network effects data to also enhance company financial performance.

CFO’s report directly the CEO and are always treated with deference by other members of upper management since all budgets remain under the scrutiny and purview of the Supreme Financial Deity. In the past, CFOs were often regarded as simply score keepers, but those days are long past. The modern CFO is regarded as a strategic planner in a software company and is expected to closely work with and partner with the CEO.

Software CFO Compensation 2016 Analysis

Companies where the lack of a CFO raises concerns include Cvent, Renren, and NQ Mobile. We can understand the tumult at overseas mobile firms, but Cvent is another matter. Cvent is an online event management and registration system and competition in this sector is fierce. We suspect the company’s model of asking subscribers to pay for event usage is becoming an increasingly tough sell in contrast to its competitor’s model of “pay per registration” alternative.

One CTO whose total compensation numbers raised our eyebrows was Anthony Noto’s $72M overall compensation package. A drill down into the numbers reveals most of the value of his package gave from stock and option grants. If you didn’t understand before, now you understand the allure of public markets. Patrick Pichette’s $43M bonanza courtesy of Google isn’t too shabby either.

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