I’ve read that most finance leaders in corporate (mostly FP and A, controller stuff) are can expect a 20% to 30% annual bonus. The idea is to align interests. In my particular scenario, my CEO has already granted me decent equity.
So far, the topic of a cash bonus hasn’t come up because the company was tight on cash. That’s about to change drastically in everyone’s favor. What advice would you give about setting metrics and boundaries for a cash bonus? On one hand, I want to earn more cash for a job well done. On the other hand, part of me thinks that a decent salary is the reward for a job well done.
I think the cash bonus performance metrics should be a hybrid of personal and corporate performance. but if you have equity, which is 100% corporate performance, than I would personally want the cash bonus to be more about personal performance
I think it depends on the industry, the company and the work you are doing. Corporate Finance is vast. I would not call FP&A as being corporate finance unless you deal with Strategic stuff such as capital allocation, strategic planning or M&A.
I work in Corporate Finance myself in a $4B company. I receive a 15% bonus (bonus is flexible based on performance and go up to 25%) and 10% equity - I have 7years of exp. I report to the head of Strategic Planning who then reports to the CFO and CEO. Therefore we can argue that the Head of Strategic Planning may be considered Head of Corporate Finance. If it can serve you as a benchmark, he gets 50% equity and 50% cash bonus. However, as we also work on M&A deals, we get additional one time bonuses when deal closes, these % can go as high as 40% of the annual comp.
Metrics related to cash bonus should be based profitabilitiy of the company (basically same metric as the equity), HOWEVER, the main advantage or disadvantage, depends on how you see it, with cash bonus is that it’s extremely subjective… If I were to set-up a competitive compensation structure for the department to hire the best candidates and retain talent, I would offer 0-100% cash bonus based on individual and company performance (more weight towards individual).
Alas, I know all too well what I am talking about.
People keep pulling all finance-related role into one universe, it is all business related they figure. True, you could do both finance and accounting. In theory. In practice different sets of skills are wanted in each of these paths. So finance is not accounting. THese are totally different career paths with no overlap at least in Europe and at least with the exception of some department heads of SMEs who might - for the lack of corporate development specialists - do some project work, possibly interacting with a sell side. Other than that, auditors is the default contact universe for CF specialists. Period.
^ You have no idea what you’re talking about. Period. There are plenty of SME roles that are way more finance focused than you think. Who exactly do you think the sell side’s clients are? Someone on the business side has to assess the garbage they peddle. The bigger the firm, the more goes on in house. The amount of accounting work I do? Signing off on my expenses after my admin does them for me.