CFO Compensation - Samuel's CFO Website

October 23, 2014 By Samuel Dergel Leave a Comment

The One Perk Every Executive Needs

Any executive who has negotiated their own compensation appreciates that it can be stressful to make the case to be appropriately compensated. Whether they are being offered a new career opportunity or they are taking steps to ensure they continue to be paid fairly for the value they are delivering, knowing what to ask for (and accept) is a challenge.

Base salary, bonus, equity based compensation, vacation, medical benefits and the other standard executive compensation issues, while very important, are not what will be discussed here.

‎Your career is more than just about your ability to get the job done. You have grown throughout your career because you have continued to invest in improving yourself. Think about all the opportunities you had for growth throughout your career – conferences, training and others. All these things allowed you to not only improve yourself, but deliver significantly improved value to your employer.

Ask most executives, and they will admit that they have been beneficiaries of professional development expenses paid for by their current and previous employers. ‎However, in 4 out of 5 times when I ask executives to go to their employer and ask them to pay for executive coaching, they balk. Why?

The reasons I am given, at first, is about budget. They almost always say “I don’t know if I can get that approved.”‎ This response continues to concern me. Why would a strong, valuable executive be reluctant to ask for an investment in improving the value to their employer?

The real reasons I see are consistent across all types and sizes of companies. Asking for something can be stressful. Getting to yes, even with people you work for, can be a challenge, especially if it is not only about the company, but about you as well.

Fears of rejection, being looked at as being inadequate or not knowing what you should already know, as well as other fears, founded and unfounded, play into the difficulty of asking for approval of a professional development expense.

The answer to this challenge, which progressive companies are providing up front for their executives, is a Professional Development Spending Account (PDSA). The additional cost for such a program is usually negligible, since almost all companies, in theory, budget for training and development costs as a percentage of salaries.

A Professional Development Spending Account (PDSA) gives the choice to the executive. This allows them to choose the most appropriate professional development activities for their needs without having to ask for approval for each activity. Even better, companies can incorporate an assessment of the use of the PDSA in executive performance reviews. This process can assess how effective and relevant the executives were in spending these allocated dollars.

Retaining executives continues to be a challenge for a number of companies. Those organizations that invest smartly in the continued development of their executives will benefit greatly.

A PDSA (Professional Development Spending Account) is one perk that no executive should be without. If you don’t have one, ask for it. Let me know how it works out for you.

Samuel

This blog originally appeared in LinkedIn Pulse

August 14, 2013 By Samuel Dergel 1 Comment

CFOs: IPOs are coming back. Are you ready?

Initial Public Offerings were hot commodities in the early and mid oh-oh’s. Most finance leadership reading this blog remember those days well, and some of you did very well financially because of it.

The recession that occurred towards the end of the last decade put a stop to that IPO train. Companies needing capital for growth had to look elsewhere, and many companies were unable to succeed because this driver of growth dried up. IPO (Initial Public Offering)

For the past few months I have been hearing the rumble of the oncoming IPO train. A number of CFOs I have spoken with in the past months have shared with me that they are being given the strategic responsibility to be ready for when the IPO market comes back. There is a feeling of cautious optimism that this catalyst for economic growth will soon be back.

How can a CFO prepare for the talent challenges to come?

One of the biggest challenges that an uptick in the IPO market will face is that there is a small pool of talented mid-level professionals with relevant and recent IPO experience. The amount of work needed to be IPO ready is significant. When the IPO dam breaks, many companies will be rushing to get their IPO done. If the talent challenges are not planned properly, companies will have to be more reliant on expensive external resources (think audit and law firm rates). Companies who properly plan for their talent needs in advance will be able to go public earlier, which could be very beneficial as well.

Another significant challenge to companies that are currently private is that the cost of being public is expensive. A CFO needs to ensure that they have the leadership and professionals on staff that can deliver the quantity and quality of timely and correct information necessary to be considered a well-run public company. CFOs bear the burden when their finance team is not able to deliver accordingly.

CFOs who have been mandated to prepare for an upcoming IPO by their board need to have a talent plan to ensure they can meet their needs for going public and staying public. This plan for talent acquisition, development and retention is necessary to balance the costs of going public and staying public.

This talent planning business will not be easy. But those that start planning now will be at an advantage.

CFOs, get ready. You could be in for a very bumpy ride on the IPO Express.

March 14, 2013 By Samuel Dergel 2 Comments

Listen to: Samuel Dergel at Lunch with DriveThruHR, March 14, 2013

Listen in to my Interview with Bryan Wempen on DriveThruHR from earlier today.

Please feel free to share your comments, input and questions…

Thank you to Bryan and William Tincup for inviting me!
You can listen to the show in the player below or in iTunes.

Check Out Social Networking Podcasts at Blog Talk Radio with DriveThru HR on BlogTalkRadio

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December 20, 2012 By Samuel Dergel 2 Comments

Top 12 Samuel’s CFO Blogs of 2012

2012 sure has been an interesting year.

And I’m looking forward to 2013! I’m looking forward to:

Working with my clients at Stanton Chase and providing them with excellent service and value in retained executive search.

Staying close to CFOs in my network, and continuing to add value to their businesses and careers.

Continuing my blogging, both here and at CFO Moves. I find it humbling that I have people that are not only interested in what I have to say, but have signed up to ensure they don’t miss any of it.

Working on my book for CFOs. Stay tuned!

It is customary as the year turns to a close to look back at the previous year.

Blogging is great, but sometimes people can miss out on some very valuable insights or content. So, to make sure you didn’t miss what other people thought was worth reading, I would like to share 12 of my most popular CFO Blogs in 2012.

12) Negotiating your CFO Employment Contract

11) 5 Steps to Building your Finance Dream Team (and 3 tips on how to get it done)

10) The Value of “Thank You”

9) 5 Reasons why Talent Development is a Challenge for CFOs

8) Road Map to Successful CFO Relationships

6) The First 90 Days of a New CFO

5) 1 key difference between your LinkedIn Profile and Resume

4) Dear CEO & Board: You can’t afford to hire the wrong CFO.

3) Investor Relations for the New CFO – 6 Steps for IR Success

2) 4 Reasons you should use an Executive Search Firm when hiring your CFO

And the most popular of Samuel’s CFO Blogs for 2012 is:

1) How a Recruiter sees a Candidate (You may not like the analogy)

If you like these blogs and want to ensure you don’t miss any of them, please click on the SIGN ME UP! button on the right.

Happy Holidays and all the best for an amazing 2013!

Samuel

December 1, 2011 By Samuel Dergel 6 Comments

4 Reasons you should use an Executive Search Firm when hiring your CFO

As CEO, Board Member, or VP of Human Resources of your organization, you may find yourself in a situation where you need to hire a CFO. Some companies take the decision to perform a search for their next CFO by themselves. This is a mistake. In past blog postings, I have detailed the reasons you cannot afford to hire the wrong CFO, asked if it’s time to replace your CFO and how do you replace your CFO?

When you do a search for a Chief Financial Officer on your own, it is a misnomer to call it ‘search’. What you are really performing is a ‘look’. To find a needle in a haystack, ‘looking’ will not suffice – you need to do a proper, methodical search. And just because you find a needle, it doesn’t mean that it will be the right needle you need to get the difficult job done.

Searching for your CFO requires that you have the resources, network and capabilities to succeed. An Executive Search Firm that specializes in the Chief Financial Officer,

• Understands what you need,

• Knows how to find the CFO you need,

• Actively engages in a methodical and detailed search,

• Has the experience necessary to get your next CFO interested in your opportunity,

• Is intimately aware of the market and ensures that negotiations are fair to both parties, and

• Works after your CFO is hired to ensure that they have the right support in place to succeed.

When you look to hire a CFO on your own,

• You have not done a proper Needs Assessment. Do you really know what knowledge, skills and abilities your next CFO needs? Are you making an assumption, or has an expert made you think more about what you really need?

• You are missing the best CFOs. CFOs that are happy in their job are too busy to be looking at job postings. Without an active search, done by people experienced in gaining the attention of a busy CFO, you are missing what could be the best candidates.

• You are tapping in to your network. This is a good thing. Except does your network really have access to the best CFO that you need? Can they attract the right CFO for your needs that is currently working and happy at another company?

• The CFO you hire will not be a match. You’ve hired a square peg CFO to fit your round hole.

If you have the important responsibility of being involved with hiring your organization’s next CFO, it is important to be honest with yourself. If you are not using a Search Firm for hiring your CFO, you are probably resigned to the fact that any CFO will do.

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November 22, 2011 By Samuel Dergel Leave a Comment

Ask Samuel: I’ve been approached for another opportunity

Dear Samuel,

I am a CFO that is very committed to my employer. Recently, I was approached by someone I know to consider a CFO role with another company.

The new opportunity sounds challenging, and right up my alley. I have been with my current employer for 4 years, and I think I’m ready for a change.

On the downside, the new CFO opportunity pays less than I am currently earning. Also, my current employer is beginning to face some tough times and I don’t want to leave them in a bind.

What should I do?

Torn in Toronto

Dear Torn,

You are in the ideal situation for a considering a job change. As opposed to being unemployed and looking for a job, here is an opportunity that has found you (you didn’t go looking for it) while you are working and busy. There are people I speak with that would envy your current situation.

That being said, your choice is tough. Giving up the known for the unknown can be a very stressful and difficult choice.

While money is important, you need to look at the situation without the compensation aspect. Once you have all the information you need, then you can add the compensation piece back into the equation to see if it will make a difference.

You need to put your CFO hat on and get as much information you can on the company that is pursuing you. Do your due diligence, as you would for any company you would be considering acquiring for your current employer. Really learn what you could be getting yourself into. True, you will not know everything, but you didn’t get to become CFO by not asking the tough questions and getting the right information you need to make important decisions.

Now that you have all the information, ask yourself the following question:

If I was unemployed, and I had these two opportunities to choose from, which would I choose?

Now that you have this answer, add the compensation piece back into the equation and ask the same question.

If you’ve decided to leave your current employer, you need to prepare yourself for what could be a difficult conversation. As part of your conversation, you should recommend to the CEO that they use a search firm to hire their next CFO, and that you would be happy to speak with the executive recruiter to help them help the company hire a very good replacement CFO.

Good luck with the decision process. If I can help any further, email me and we can talk.

Samuel

If you’d like to ask Samuel a question, click here.

October 27, 2011 By Samuel Dergel Leave a Comment

“Get a CFO on board when you are ready to take on the world”

The title is a quote from Fred Wilson, a VC and Principal at Union Square Ventures, who recently wrote a blog titled “VP Finance vs CFO”.

It’s an interesting blog – you should read it. It certainly got a lot of attention in the social media space (CFO, Tech and VC subsector) in the time since it was published 72 hours ago.

I chose this quote to write my blog post on because it was the meatiest and juiciest for me to work with. In addition to my own direct take on the blog which I recently wrote – Does a Small yet Growing Business need a CFO? – I have written blogs that have touched this topic from different perspectives.

Let us count the ways.

1) CFO Readiness. When is a company really ready to take on the world? Are they really ready for a CFO?

2) Promoting the VP Finance to CFO. Fred says that a VP Finance is about “what happened” and a CFO is more about “What is happening right now”. I do agree with him. But that doesn’t mean the VP Finance cannot become a CFO. Here is how. And here is how as well.

3) The Successful CFO. How does a CFO become a successful? They prepare a plan, map out their relationships, get coaching, and build a strong team to support them.

4) Hiring your CFO. How do you hire them? Read this. How do you NOT hire a CFO? Read this.

Come to think of it, there are more than just these 4 ways.

Just read all my blogs.

And, to not miss any in the future, Click on the “Sign me up!” button on the right side of the blog.

September 20, 2011 By Samuel Dergel Leave a Comment

Ask Samuel: Leaving my Bonus on the Table

Dear Samuel,

I’m going through an interview process for a CFO role that I would like. The position is an upward move with more responsibility. The company is reputable and I’m excited about this role. I’m one of two candidates being considered for the role.

My concern is that the process is taking a while. The longer the process drags out, the closer we get to year end, and the closer I am to leaving my bonus from my current employer on the table. Any recommendations on how to handle this?

Dragging in Detroit

Dear Dragging,

There are many things to consider when negotiating your CFO Employment Contract (See our recent blog on the subject).

In any job change situation it is important to ask yourself the following: “Taking money out of the equation for a moment, is this the right role, company and team to join for me to continue my career?”

If you’ve answered yes, it is at that point in time that you should consider what impact compensation will have on changing your answer.

If they want to bring you on board, the company will make you an offer. Once you get that offer, you will be in a position to see whether your answer will still be the same.

Then the negotiations begin.

Good luck,

Samuel

If you would have a question to Ask Samuel, click here to send him your question.

September 14, 2011 By Samuel Dergel 12 Comments

Negotiating your CFO Employment Contract

Congratulations! You have been offered the role of CFO at a company you are excited about. You’re buzzed, and pleased with yourself, and so you should be. However…

… keep the following in mind:

From my experience, most CFO roles last an average of 3 years. The time to prepare for your next job is today.
The best time to negotiate the terms of your employment is when you begin your employment.

Some Warnings:

Be sure to have an employment contract. An offer letter may not be sufficient to protect you.
Have the employment contract reviewed by competent counsel before signing.
Do not resign from your previous role without ALL the details being worked out.
A proper employment agreement not only protects you, it protects your new employer as well.

Now, let’s take a look at some things you should be looking for in an employment contract.

(Please note: I am not offering legal advice. I am reviewing points worth considering when negotiating your CFO employment agreement. For specific advice with regards to your employment situation, I recommend discussing it with competent counsel.)

Issues to consider for your employment agreement.

Base compensation – you know how this works. You want more and they want to give you less. This is where all those years of sharpening your negotiation skills come into play.
Upside – regular bonuses, special bonuses, stock based compensation etc. – many conflicts arise because of lack of clarity on how this works. Be sure it’s clear.
Severance – you may be asked to leave. It happens. Having clarity on what happens if you are asked to leave is important not only for your cash flow after you leave, but for your reputation as well.
Notice – you love your new job, but a better one might come along. What will your responsibilities be upon leaving?
Restrictive covenants – usually includes non-disclosure and non-competition clauses, but may include others. It may be detrimental to your new employer for you to take your next job at a direct competitor. Ensure that the time limits on these restrictive covenants are reasonable, and get competent legal advice as to their reasonability.
Relocation – there should be no guessing games when it comes to relocation for your new role. Will they cover moving expenses? Transition costs? Cover your ‘out-of-the-money’ mortgage? Clarity here is key.
Other benefits – What will be offered in insurance (health, life, disability)? Will there be a car? Access to the corporate jet?

Issues outside your employment agreement that you will want to have a clear understanding of prior to accepting:

Office – I have seen CFOs get off on the wrong foot when they get an office that was not what they were expecting. It can really sour the relationship.
Resource support – Will you get an Executive assistant? Will you share one? Will you get to choose your own? (See Does a CFO need a PA?)
Allowable expenses – What expenses will you be allowed to charge to the company? Is there a policy for executives?
Professional Development – You should have a budget for allowing you to attend conferences you deem necessary to ensure you are on top of your game. You don’t need to be going hat in hand to the CEO each time.
Coaching – Does your CEO have a Coach? If he or she does, then you should have the budget for one too. If your CEO doesn’t have one, you should recommend that he or she gets one. (See 5 Reasons why you need an Executive Coach)
Team Headcount or Staff Budget – Before accepting the role as CFO, you need to know what the cost of your team is, and get clarity on the leeway you will have to make changes you feel are necessary to deliver to the rest of the company. (See A Strong CFO needs a Strong Finance Team)
Onboarding – Ask what the plan for “Onboarding” is. You might get blank looks. Make sure that you have an onboarding plan that allows you to develop the internal relationships necessary for success. (If you want to know more about Onboarding, we will be posting a Blog on the topic soon. Click on the “Sign me Up” Button on the right to get blog updates directly in your email inbox).

Special situations.

In special situations, keep this in mind: When the company’s risk increases, so does yours.

Restructuring – if you start off in a restructuring situation, or you are called upon during your mandate to turn the company around – you need to address the following situations.

Bonuses. If you accomplish the goals set out, you should have potential for an upside. Be clear on what the upside is.
Getting paid. You’re working hard for the company. If the company has no cash, and you’re busting your chops, what is the guarantee you will get paid.
What happens on bankruptcy, buy-out, new investment etc. How do you protect yourself and your career? Work these things out in advance.

CEO leaves permanently or temporarily – It is time to renegotiate. (See Are you a CEO in Training?)
Poison pills and takeovers – time to renegotiate.
Where the CEO or other executives are getting special compensation privileges, it may be time for you to ask for more as well.

Remember, a key reason your new company is hiring you because you are supposed to be a great negotiator! Show them how you negotiate a win for all sides.

September 8, 2011 By Samuel Dergel 1 Comment

CFOs: Are you a CEO in training?

The news of the replacement of Carol Bartz as CEO of Yahoo by Tim Morse, the CFO (as an interim position) brings up interesting points to ponder for the CFO about their career path and career plan.

As I was at my desk thinking about what CFOs could learn from the Yahoo news, the phone rang and it was the Wall Street Journal wanting my take on this news. You can read the article and my quotes in the article by Emily Chasan, When CFOs Become Interim CEOs.

This Yahoo succession story should make every CFO look in the mirror and ask themselves:

If I get the call to be CEO,

Can I take it?
Should I take it?
Am I ready to take it?
Do I have what it takes to take it?

Most CFOs will admit to second guessing the CEO on some of their decisions. It’s easy to think “I could do a better job”.

When a finance executive moves up the ladder to become CFO, they need to move out of their comfort zone of being technical to become a strategic finance leader. A CFO can only move to the CEO role if they have taken steps to move beyond finance.

What are you doing as CFO to learn, grow and challenge yourself? (Hint: Get a Coach or a Mentor)

Are you a CEO in training?

If you get the call, would you be ready to become CEO?

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