CEO vs CFO Pay in Private Equity and the Mid-Market: Does the One-Third Rule Hold?

CFOs at the largest public companies earn about a third of CEO pay, while mid-market CFOs earn a larger share and PE-backed CFOs, like other C-suite members, get about a fifth of the CEO’s equity grant. 

The one-third figure is the pay ratio between CFOs and CEOs at the largest US public companies. Compensation Advisory Partners has tracked that ratio for ten years. Its latest sample has a median revenue of $15.6 billion. 

Our earlier article on AI and CEO-CFO pay found the distance between CEO and CFO pay widening at those companies where AI had lifted valuations most. This article turns to the rest of the market. Most CFOs work in the mid-market or for PE-backed businesses. Mid-market firms compare pay with peers their own size. Private equity puts more of the CEO’s compensation into equity that pays out when the company is sold. For both, the one-third figure is the wrong benchmark. 

How Much Do CFOs Earn Compared to CEOs in Mid-Market and Private Companies?

In an analysis of C-suite pay ratios, Paul Hodgson at The Conference Board compared CFO and CEO pay in the S&P 500 and the broader Russell 3000, which reaches into mid-sized listed companies. Across the Russell 3000, CFOs earned 37% to 39% of CEO pay between 2020 and 2024, while in the S&P 500 the share rose from 33% to 35%. That difference can look like rounding. On a $10 million CEO package, each percentage point is $100,000 of CFO pay. 

In private companies, the CEO-CFO pay gap narrows further. BDO’s 2024 survey of 563 private companies compared salary and bonus only and found that CFOs received 46% to 59% of what CEOs did, with the share peaking at companies with $50 million to $100 million in revenue. 

Recent pay increases have also favored CFOs. In BDO’s 2025 study of 600 mid-market public companies, CFO pay rose 5.8%. CEOs saw 2.3%. Compensation Advisory Partners’ 2025 update found median rises of 6% for CFOs and 4% for CEOs at companies above $5 billion in revenue. 

Why Is the CEO-CFO Pay Gap Smaller in the Mid-Market?

Hodgson puts the smaller pay gap down to a likely ratchet effect. A ratchet turns one way only. Large companies set CEO pay by looking at peers. Each comparison pushes it higher. The S&P 500 feels it most, he says. Smaller companies face less of that pressure. Their CFOs’ pay stays closer to the CEO’s. 

Pay mix may also play a part. Long-term incentives are mostly paid in shares. The bigger their part of a pay package, the more it follows the share price. In Canada, Compensation Governance Partners found the average CEO at TSX companies ranked roughly 100th to 300th received 46% of total compensation as long-term incentives, while other named executives, including the CFO, received 39%. Southlea Group’s review of early 2026 filers, including 18 S&P/TSX 60 companies, put the median at about 72% of CEO pay and 60% of CFO pay. The two studies measure pay mix differently. Even so, at the largest companies the CEO’s package leans more on shares than the CFO’s. In the mid-market, the two packages are more alike. The share price moves them by similar amounts. 

How Much Are CFOs Paid Compared to CEOs in Private Equity?

In private equity, CFOs and other C-suite members typically get about a fifth of the CEO’s equity grant. Carta’s 2026 analysis of executive equity at PE-backed companies found the median non-founder CEO at a PE-backed corporation receives an initial grant of 2.29% of total equity. Other C-suite members get a median of 0.45%. Carta does not report CFOs on their own. 

That distance has narrowed a little. A year earlier, Carta’s 2025 report put new CEO hires at about 2.6% and other C-suite hires at about 0.4%, though it defined the CEO group differently. 

On salary and bonus, the CEO-CFO pay gap is smaller. Published figures for PE-backed CFOs are thin. Across all private companies, BDO found CFOs receive 46% to 59% of the CEO’s salary and bonus. Bonuses also fall short for many PE-backed executives. PwC Australia surveyed executives in PE-backed companies’ equity plans. Only 50% found their cash bonus target attractive. 

Cash also counts for less in private equity. The same BDO survey found that among businesses with $100 million to $500 million in revenue, PE-backed companies weight CEO pay toward long-term incentives more heavily than any other type of owner. A PE-backed CFO on about half the CEO’s salary and bonus could still receive only a fifth of the CEO’s equity. That makes the equity ratio the better guide to how the two roles are paid. 

Is the Management Incentive Plan Still Working for PE-Backed CFOs?

A PE-backed CFO usually receives an equity grant through a management incentive plan. Linklaters, writing for The Legal 500, says US plans grant the award upfront. The CFO then owns it in stages, a process called vesting. For senior managers, one third typically vests over four to five years as long as they stay, while the other two thirds vests only if the sponsor hits a return target, most often tested when the company is sold. Common targets are a 10% to 25% annual return or 2.0 to 4.5 times the sponsor’s money. 

So, the incentive plan pays out mostly at a sale. Sales now take longer. Bain’s 2026 report puts the average holding period at exit at around seven years. From 2010 to 2021, it was five to six years. 

A longer wait makes the equity award worth less. Money paid in seven years is worth less today than money paid in five, because it cannot be spent or invested in the meantime, and more can go wrong before the sale. The return target also gets harder to reach. If the performance portion vests only after the sponsor has earned 20% a year, the sponsor needs about 2.5 times its money after five years but about 3.6 times after seven. An equity award unlikely to pay out gives a CFO little reason to stay. 

Longer holds turn the incentive plan into a retention problem. Without a reset, sponsors must lean on cash. Raises and retention bonuses make up the difference. 

What Does Exit Readiness Mean for How a PE-Backed CFO Is Paid?

Sponsors also want a sale-ready company. Fortune reported a survey by consulting firm Accordion of 200 sponsor executives and 200 CFOs at PE-backed companies with revenue above $50 million. Ninety-seven percent of sponsors expect CFOs to stay exit-ready at all times. Only 20% of CFOs say they do. Most sponsors want preparation to start 12 to 24 months ahead. Half of CFOs start three to six months out. 

Sponsors say that difference costs money. In Accordion’s own release, they put the cost of a rushed sale at one to three turns. A turn is one times EBITDA in the sale price, so on a business sold at nine times EBITDA, losing one turn cuts its enterprise value by more than a tenth. 

A CFO whose preparation protects the sale price should be paid for it, and sponsors could tie part of the annual bonus to milestones checked before a buyer arrives, such as a clean data room ready for diligence. 

AI now counts toward readiness too. Fortune also reported that 85% of buyers consider AI-enabled finance when valuing companies. At the largest public companies, AI hopes lifted share prices. CEOs held more of the equity that benefited. A portfolio company CFO has to build that capability and prove it to buyers. 

What Should Mid-Market Boards and Private Equity Sponsors Do?

1. Benchmark CFO pay against companies of a similar size. The one-third ratio comes from US public companies far bigger than most mid-market firms. 

2. Value each equity award by when it is likely to pay out. An award tied to a distant sale is worth less than the same award paid sooner. Model each package as if the sale comes two years late. 

3. Update incentive plans written for five- to six-year holds. New return targets or extra equity can restore some lost value. A cash bonus can help keep the CFO until the sale. 

4. Tie part of the CFO’s bonus to exit readiness milestones. Sponsors say a rushed sale can cost one to three turns of EBITDA. 

5. Consider what the pay gap signals about succession. If the board sees the CFO as a future CEO, a widening CEO-CFO pay gap sends the opposite message, intended or not. A sponsor preparing its CFO for the CEO role should consider an equity grant above the C-suite median. 

Stanton Chase’s CFO and Financial Executives Practice advises boards and sponsors on finance leadership appointments, including whether a candidate can lead value creation as well as reporting. The practice works alongside Stanton Chase’s advisory services in board effectiveness, executive assessment, leadership development, and succession planning. 

Read next CEO vs CFO Pay: Is AI Widening the Gap? At the largest US public companies, the distance between chief executive and finance chief pay is widest where AI has lifted valuations most. Read the article

About the Authors

Cathy Logue, FCPA, FCA, is Managing Director at Stanton Chase Toronto and also the firm’s Global Functional Leader for CFO and Financial Executives. With over 30 years of experience in executive search and financial leadership, her appointments span CFO, CEO, COO, and board roles, focusing on the technology, financial services and private equity sectors. She is also certified in Hogan Assessment. Cathy qualified as a Chartered Accountant with Ernst & Young and has also been awarded the FCPA designation. She currently sits on the board of the global Association for Corporate Growth (ACG) and previously the global Association of Executive Search and Leadership Consultants (AESC). 

John Moffatt is a Director at Stanton Chase Toronto. He manages search engagements end to end, from industry research and candidate development through to advice on what each organization needs from its next leader. His appointments at C-level and in senior leadership span consumer products, technology, professional services, and industrial companies. He also supports business development for the CFO and Financial Executives practice.