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VP Finance bonus plans...

I have been tasked with creating a bonus plan for a VP of Finance position. Does anyone have any tips/ideas/examples to share? Any ideas/suggestions will be appreciated.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Since titles and responsibilities are all over the map these days, hopefully this helps...

Some of the can be quantitative, others are qualitative.

Meeting cost containment goals (not necessarily cost reduction - you can only do that once or twice, but containment is ongoing).

Improvements in systems and processes that save money.

Creation and implementation of data sharing schemes with sales and marketing empowering them to obtain the data contained within the accounting systems to assist in their increasing top-line revenues.

James Scott
Title: Consulting CFO
Company: Early Growth Financial Services
LinkedIn Profile
(Consulting CFO, Early Growth Financial Services) |

Like everyone else in the company, the main component should be on EBITDA nd growth of that key metric. Add a component for cash growth YOY. Easily measured and ensures bonuses are not paid unless company is growing per plan.
Set the target for total compensation, for example bonus should be 20% of total compensation, and work back from there.

Thomas Aiken
Title: Managing Partner
Company: Cedarwood Partners LLC
LinkedIn Profile
(Managing Partner, Cedarwood Partners LLC) |

Key Performance Indicators of the position as opposed to financial performance measurements. This prevents the temptation to manage the numbers and adds the independence the rest of the management team probably won't have as they will be compensated on revenue, expenses, and/or profit. Revenue recognition, expense capitalization, inventory, prepayments, bad debt etc. etc. are all issues the VP of Finance faces that can conflict with bonus plans.

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