Chief audit executive pay is discussed less openly than almost any other executive package, for a reason that is structural rather than cultural: the CAE is the one senior officer whose compensation the board is supposed to control directly, whose incentives must not reward the outcomes of the business being audited, and who is often an officer for securities-law purposes without ever appearing in the proxy’s compensation tables. The result is a package that looks like other executives’ from a distance and behaves differently up close. This guide explains the components, who sets them and why, what officer designation changes, how incentive design protects or damages objectivity, how the package differs by sector and size, and how to read and negotiate an offer. It is deliberately a framework rather than a salary survey: the figures that appear are illustrative, chosen to make the arithmetic visible, and the published surveys that quote medians by sector and size are the place to go for market numbers once the structure is understood.
In this guide
- What a CAE package is made of
- Who sets CAE pay, and why that matters
- Officer designation: Section 16, the proxy and the clawback policy
- Incentive design that protects objectivity
- What drives the size of the package
- Sector and size spreads: the shape, not the numbers
- Reading an offer: target, realizable and downside
- Negotiation levers
- Worked example: two offers compared
- Frequently asked questions
- Related guides
What a CAE package is made of
A CAE package at a listed company or a large private one has the same five layers as any senior executive’s. What differs is who approves each layer and what each is allowed to reward. The what is a CAE guide describes the role; this table describes the money attached to it.
| Component | What it is | Typical share of target total (indicative shape) | Who approves it in a well-governed company | The CAE-specific consideration |
|---|---|---|---|---|
| Base salary | Fixed annual cash; the anchor for bonus and LTI percentages | Largest single component below the biggest companies; shrinks as a share as the package grows | Audit committee, with CEO and CHRO input, benchmarked by the compensation consultant | Should sit in the band of the CEO’s or CFO’s senior direct reports so that the role has peer standing |
| Annual incentive (bonus) | Variable cash paid after year end against a target percentage of base, with threshold and maximum | Target commonly set as a percentage of base that rises with seniority and company size | Audit committee sets target, metrics and the actual payout | Metrics must not reward the audited business’s results; the committee, not the CEO, should assess performance |
| Long-term incentive (LTI) | Equity or cash awards vesting over three to five years: restricted stock units, performance shares, options, or cash-settled units at private companies | Grows with company size; at the largest companies it exceeds base and bonus combined | Audit committee approves grant size and vehicle, often within the compensation committee’s plan | Equity in the company whose controls one audits creates an objectivity question that the design has to answer |
| Benefits and perquisites | Retirement plans, deferred compensation, insurance, car or allowance, financial planning, executive physical | Small share, but deferred compensation and supplemental retirement can be material over a career | Generally follows the executive tier the role is placed in | Eligibility for executive-tier plans usually follows officer designation |
| Severance and change-in-control protection | Cash continuation, bonus treatment and equity acceleration on termination without cause or for good reason | Not part of annual pay; defines the downside | Audit committee and compensation committee; often a standard executive agreement | A good-reason definition that covers loss of the committee reporting line is the CAE-specific clause worth asking for |
Two things about the shape matter before any number is discussed. First, the fixed share falls as the company grows: a CAE at a mid-sized industrial may receive most of the target total as salary, while a bank CAE’s salary may be a third of the package, with the rest at risk and deferred. Second, the at-risk share is where every independence question lives, which is why the next three sections concern governance rather than money.
Who sets CAE pay, and why that matters
The Global Internal Audit Standards make the board’s involvement a condition of independence rather than a courtesy. Standard 7.1, Organizational Independence, places the appointment and removal of the chief audit executive and the approval of the CAE’s remuneration with the board, which in practice means the audit committee. US bank supervisory guidance has, since the interagency policy statement of 2003, assigned the audit committee responsibility for the appointment, evaluation and compensation of the head of internal audit. UK and EU bank remuneration rules go further and require that control-function staff, the head of internal audit included, be remunerated independently of the business areas they oversee, with oversight by the remuneration committee. The GIAS 2024 guide covers what changed in the Standards; the audit committee charter template shows where the remuneration clause sits.
| Step | Who does it | What good practice looks like | What the weaker version looks like |
|---|---|---|---|
| Set the CAE’s annual objectives | Audit committee chair, with CEO input | Objectives agreed with the committee at the start of the year, covering plan delivery, function quality, insight, team and stakeholder standing; documented | Objectives set by the CFO or CEO alone, including business-performance items |
| Evaluate performance | Audit committee chair, drawing on committee members, the CEO and the external auditor | A structured evaluation discussed in executive session; the CAE receives written feedback | The CEO’s rating passed to HR with no committee involvement |
| Benchmark the package | Compensation consultant engaged by the compensation or audit committee | A peer group of comparable companies and comparable control-function roles; the data shared with the committee | HR’s internal grade table applied without external reference |
| Approve salary, bonus and LTI | Audit committee (sometimes jointly with the compensation committee) | Approval recorded in minutes; the CEO’s recommendation received as input, not as the decision | The CEO or CFO decides and the committee is informed |
| Approve the incentive metrics | Audit committee | Metrics reviewed for objectivity risk before the year starts | The CAE placed on the general executive scorecard, including earnings or revenue |
| Approve appointment, removal and severance terms | Audit committee | The committee leads the hire and approves the contract; removal requires committee approval | HR runs the hire; the committee meets the candidate after the offer |
For a CAE candidate, the process is a diagnostic. If the recruiter cannot say who approves the package, or says the CEO sets it and the committee is informed, the independence that the audit committee playbook describes exists on paper only, and the compensation conversation has revealed it before the first day. A committee chair who meets the candidate, discusses objectives, and signs off on the offer is the single best indicator of how the role will be governed afterwards. The first audit committee meeting as CAE guide picks up the relationship from there.
Officer designation: Section 16, the proxy and the clawback policy
At a US-listed company the CAE may or may not be designated an executive officer, and the designation changes the package’s legal context more than its size. The Exchange Act’s definition of an officer for Section 16 purposes includes any officer who performs a policy-making function, and companies decide for themselves whether the head of internal audit meets it. Large banks and some other heavily regulated companies commonly designate the CAE; many mid-cap companies do not. The table sets out what follows from each designation. It is a description of the mechanics, not legal advice, and the company’s securities counsel will confirm the position for any given role.
| Designation or rule | What it is | What it means for the CAE if designated | What to check in an offer |
|---|---|---|---|
| Executive officer (Rule 3b-7) | An officer who performs policy-making functions; companies list their executive officers in the annual report | Name, age and biography appear in the Form 10-K or proxy; the person is within the scope of executive-tier plans and policies | Whether the role is designated, and whether designation can change after joining |
| Section 16 officer | Directors and officers under Rule 16a-1(f); substantially the same population as executive officers | Form 3 on becoming an insider, Form 4 within two business days of each transaction in company stock, Form 5 annually for anything missed; the company usually files on the officer’s behalf but the obligation is personal | Who prepares the filings; the pre-clearance and trading-window policy |
| Section 16(b) short-swing profit rule | Profit from any purchase and sale, or sale and purchase, of company equity within less than six months is recoverable by the issuer, regardless of intent or possession of inside information | Vesting and tax-withholding share dispositions are generally exempt by rule, but open-market transactions need planning; a sale within six months of an open-market purchase triggers disgorgement | That the stock plan administrator and counsel manage the exempt transactions; whether a 10b5-1 plan is available |
| Named executive officer (Item 402 of Regulation S-K) | The CEO, the CFO and the three other most highly compensated executive officers (fewer at smaller reporting companies) | Full compensation disclosure in the proxy, including the summary compensation table and narrative; the CAE rarely qualifies, except at some large banks where control-function pay is high | Whether prior-year proxies show a CAE among the NEOs, which indicates both pay level and visibility |
| Compensation recovery (clawback) policy under Rule 10D-1 and the listing standards | Listed companies must have a policy to recover erroneously awarded incentive-based compensation from current and former executive officers after an accounting restatement, covering the three fiscal years before the restatement date | If designated an executive officer, incentive pay tied to financial reporting measures or stock price is subject to recovery after a restatement, whether or not the CAE was at fault | How much of the incentive package is ‘incentive-based compensation’ under the policy; whether any component is tied to a financial reporting measure |
| Affiliate status (Rule 144) | Executive officers are generally treated as affiliates for resale purposes | Resales of company stock are subject to volume and manner-of-sale conditions | Whether counsel treats the CAE as an affiliate |
| Officer indemnification and D&O coverage | Protection against claims arising from service as an officer | Designation usually brings the CAE within the indemnification agreement and the D&O policy | That the indemnification agreement is offered and the D&O coverage is confirmed in writing |
The clawback policy deserves a moment’s attention because it reverses an old assumption. Under the listing standards adopted in 2023, recovery after a restatement is mandatory and no-fault: the policy applies to every executive officer who received incentive compensation calculated on a measure the restatement changed. A CAE designated an executive officer whose bonus includes any financial-reporting metric, or whose performance shares vest on earnings or total shareholder return, is within that scope. This is a practical argument, independent of the objectivity argument in the next section, for keeping the CAE’s incentive metrics away from financial results. It is also a reason to understand the designation before accepting the role rather than after the first restatement.
Outside the United States the designation question takes other forms. In the UK the head of internal audit is a senior management function (SMF5) under the Senior Managers Regime, with personal regulatory approval, a statement of responsibilities and conduct rules, and at larger firms the role is a material risk taker whose variable pay is subject to deferral, malus and clawback under the remuneration rules. EU banks apply similar deferral and independence requirements to control-function heads. In each case the designation brings regulatory accountability and a package with a deferred component that the holder does not control, and the banking guide describes the supervisory expectations that come with it.
Incentive design that protects objectivity
An incentive plan that pays the CAE more when the company reports higher earnings is a conflict of interest with a payment schedule. The Standards treat the structure of the CAE’s remuneration as a matter for the board precisely because of this, and bank regulators’ incentive compensation guidance has for years required that control-function pay not be based on the financial performance of the business areas overseen. The design problem is real, because an executive who receives no equity and no bonus is also out of step with every peer and will be treated as such; the solution is to choose the metrics with care rather than to abolish the variable pay.
| Metric type | Examples | Objectivity risk | Verdict | Note |
|---|---|---|---|---|
| Function performance | Plan completion, timeliness, budget variance, QA results, external assessment outcome, issue validation timeliness | Low | Core of the scorecard | Measures the CAE’s own function; see the KPIs guide |
| Stakeholder assessment | Audit committee evaluation; structured feedback from executives and the external auditor; regulator feedback | Low to moderate | Include, with the committee’s view weighted most | Executive satisfaction alone rewards being liked; the committee’s assessment counters it |
| Insight and impact | Thematic reports delivered; adoption of recommendations; control-environment trend | Moderate | Include with judgment | Adoption rates can reward soft recommendations; pair with issue severity trends |
| Team and talent | Retention, development, certifications, succession readiness | Low | Include | Standard executive people metrics apply without conflict |
| Company-wide non-financial | Safety, conduct, culture survey results | Moderate | Use sparingly | The CAE assesses some of these; avoid metrics the function audits directly |
| Company financial results | Earnings, revenue, EBITDA, return on equity, share price, total shareholder return | High | Exclude from the annual incentive; minimise in LTI vesting conditions | The direct conflict; also the clawback trigger for designated officers |
| Equity ownership itself | Time-vested RSUs; stock ownership guidelines | Moderate, manageable | Acceptable with time vesting rather than performance vesting | Aligns with shareholders rather than with management’s targets; the committee should still consider the share of total pay |
The common compromise at listed companies is a scorecard bonus built on function performance and committee assessment, with LTI delivered as time-vested restricted stock rather than performance shares tied to earnings. A CAE offered the standard executive scorecard, with a heavy weighting on company earnings, should raise it with the committee chair before accepting, both because the Standards expect the board to have addressed it and because the committee chair will usually be glad to be asked. The audit committee effectiveness review guide includes the CAE’s remuneration governance among the things a committee should assess about itself.
What drives the size of the package
| Driver | Direction of effect | Why | How to test it for a specific role |
|---|---|---|---|
| Company size (revenue, assets, market capitalisation) | The strongest driver; the package scales with the executive tier the role sits in | Executive pay structures are set by size; the CAE is placed within them | Where the role sits relative to the controller, treasurer, CRO and CCO |
| Regulatory intensity | Raises pay and the deferred share | Supervisors expect stature and competence; regulated firms pay control functions closer to the business | Whether the role is a regulatory-approved function; whether the lead regulator meets the CAE |
| Function size and complexity | Raises pay | Leading 300 people across ten countries is a different executive job from leading eight | Headcount, budget, geographies, co-source spend |
| Reporting line and officer status | Raises pay when the role reports to the CEO and is a designated officer | Grade follows reporting line; officer status brings executive-tier plans | Who the administrative reporting line is to; whether executive-tier benefits apply |
| Ownership and listing status | Listed companies pay more in equity; private equity portfolio companies pay lower cash with a participation; government pays salary and pension | The vehicle available dictates the mix | Which LTI vehicle the offer uses |
| Geography | Large spreads between financial centres and elsewhere; national pay structures differ | Local executive markets | Whether the benchmark peer group is local or national |
| Candidate background | A sitting CAE or an audit partner commands more than an internal promotion | The hiring premium for proven incumbents; partner compensation sets a floor for laterals | The make-whole discussion for forfeited awards or partner capital |
| Scope beyond audit | Raises pay when the role also owns SOX, risk, compliance or investigations | Combined roles carry combined executive weight (and their own independence questions) | The charter and the job description, read together |
The practical use of the table is positioning. Before negotiating, a candidate should be able to say which executive band the role sits in, who the comparable control-function heads are, and whether the role is designated. A recruiter who places the CAE in the band of the CFO’s senior direct reports is describing a role with standing; one who places it with senior directors in finance is describing a different job with the same title, and the becoming a CAE guide explains why that distinction matters for everything that follows.
Sector and size spreads: the shape, not the numbers
Market figures date quickly and differ by country, so this section describes the shape of the package by sector rather than quoting levels. For current medians, the recurring compensation studies published by the Institute of Internal Auditors and by the large executive search and staffing firms are the sources to consult, and proxy statements are the primary source where a CAE is a named executive officer.
| Sector or setting | Package shape | Deferred and at-risk share | Distinctive features | Where the role usually sits |
|---|---|---|---|---|
| Large and mid-sized banks | Highest cash and highest total; significant deferred equity or cash | High; much of variable pay deferred three to five years with malus and clawback in the UK and EU | Regulatory approval of the holder; remuneration committee oversight; MRT status in Europe | Executive committee or one level below; often designated officer |
| Insurance and asset management | Similar structure to banking at somewhat lower levels; LTI meaningful | Moderate to high | Regulatory expectations on control functions; actuarial and investment specialists in the team raise the bar | One level below executive committee |
| Large listed corporates (industrial, consumer, healthcare) | Base plus target bonus plus equity LTI, usually RSUs | Moderate; LTI often the largest single component at the biggest companies | Officer designation varies; SOX and ERM scope sometimes bundled | CFO’s senior direct reports band; reports functionally to the audit committee |
| Technology companies | Equity-heavy; cash can be below industrial peers with more upside in stock | High, in equity | Volatile realizable value; refresh grants matter; see internal audit at tech and SaaS companies | Often a VP title below the CFO |
| Private equity portfolio companies | Lower cash; management incentive plan participation vesting on exit | High and binary | Short tenures aligned to the hold period; the CAE often also owns SOX readiness for a future listing | Below the CFO; the audit committee is the sponsor’s deal team |
| Government and public sector | Salary scale with pension; little or no variable pay | Low | Statutory independence often strong even where pay is modest; see internal audit in government | Senior civil service grade or equivalent |
| Higher education and non-profits | Salary with institutional benefits; small or no bonus | Low | Board audit committee oversight of a small function; see higher education and nonprofits | Senior staff grade reporting to the board committee |
| Big Four and consulting (for comparison) | Partner income or director salary and bonus; partner capital contribution | Partner income variable with firm performance | The floor that a lateral into a CAE seat negotiates against; see Big Four vs industry | Not a CAE role, but the main source of CAE hires |
Two spreads are worth stating in words. The gap between a bank CAE and a comparably sized industrial CAE is wide and persistent, reflecting regulatory expectation and the price of a function that supervisors inspect. The gap between a listed company and a private one of the same size is mostly a vehicle difference rather than a level difference: private companies substitute cash LTI or exit participation for stock, and the realizable value depends on events the CAE does not control.
Reading an offer: target, realizable and downside
Executive offers are quoted as target total direct compensation: base, target bonus and the grant-date value of LTI. Three other numbers matter more to the person accepting the job.
| Number | Definition | Why it matters for a CAE | How to calculate it |
|---|---|---|---|
| Target total direct compensation | Base + target bonus + grant-date LTI value | The headline recruiters quote; useful for comparing offers at a glance | As quoted, but check whether the LTI figure is an annual grant or a one-off |
| Realizable compensation | What will actually be received given vesting schedules, performance conditions and share price assumptions | Front-loaded grants and performance shares tied to earnings can make target and realizable diverge widely | Model the vesting calendar for three years at a flat share price and at a 30 per cent decline |
| Year-one cash | Base from the start date, bonus prorated or guaranteed, sign-on | Starting in the fourth quarter at a company with no proration guarantee produces a thin first year | Base × months worked ÷ 12, plus the prorated or guaranteed bonus, plus sign-on |
| Walk-away cost | Unvested awards, deferred bonuses and pension accruals forfeited at the current employer | The make-whole discussion starts here; a lateral CAE from a bank may be leaving several years of deferred pay | List every unvested tranche with its vesting date and value |
| Downside value | Severance, bonus treatment and equity acceleration on termination without cause or for good reason | CAE tenures end when CEOs change or when the function’s candour is unwelcome; the downside is the insurance | Months of base and bonus continued; which unvested awards accelerate; the good-reason definition |
The good-reason definition is the CAE-specific line in a standard executive agreement. Most templates treat a material reduction in duties, title or compensation as good reason. A CAE should ask that the removal of the functional reporting line to the audit committee, or a change of administrative reporting line to a level below the CEO or CFO, count as good reason as well: it is the structural change most likely to precede an uncomfortable departure, and it is one the committee will usually be comfortable including, since it aligns with its own interest in the role’s independence.
Negotiation levers
CAE negotiations differ from other executive negotiations in one respect: the counterparty that matters is the audit committee chair, and the levers that protect the function are as valuable as those that increase pay. The table lists both kinds, with an indication of how negotiable each tends to be.
| Lever | What to ask for | How negotiable (indicative) | Why it matters for this role |
|---|---|---|---|
| Base salary | Placement within the band of comparable control-function heads, with evidence | Moderate; bands are firm but position within them moves | Anchors every percentage that follows |
| Target bonus percentage | The percentage used for the CFO’s senior direct reports rather than a finance-director percentage | Moderate | Signals the tier the role sits in |
| First-year bonus treatment | A guaranteed minimum or full-year treatment when joining late in the year | High; commonly granted to senior hires | Removes the start-date penalty |
| Sign-on cash | Compensation for forfeited current-year bonus | High when the forfeiture is documented | Standard for executive laterals |
| Make-whole equity | Replacement of forfeited unvested awards, matched to the original vesting dates | High when documented; vehicle and vesting are the negotiation | A CAE leaving a bank may forfeit several years of deferred pay |
| LTI grant size and vesting | Annual grant at the executive tier; ratable rather than cliff vesting; time-vested RSUs rather than earnings-linked performance shares | Moderate on size; vehicle often negotiable by reference to objectivity | Realizable value and the clawback exposure both turn on the vehicle |
| Change-in-control and severance | Twelve to twenty-four months of base and target bonus; equity acceleration; the good-reason clause covering the reporting line | Moderate; usually follows the executive template but the good-reason addition is often accepted | The insurance against the structural change that ends CAE tenures |
| Officer designation | Clarity on whether the role is designated and what follows | Low; a policy decision, but worth understanding | Changes the legal context of the equity and the clawback exposure |
| Reporting line and committee access in writing | Functional reporting to the audit committee and administrative reporting to the CEO, documented in the charter and the offer | Moderate; committees usually support it | The structural basis of independence; see the first ninety days as CAE guide |
| Resource commitments | Headcount, budget and co-source commitments for the first plan year, in writing | Moderate | Prevents accepting a role whose plan cannot be delivered |
| Professional terms | Certification maintenance, professional body membership, conference attendance, legal fee reimbursement for contract review | High | Small items that signal how the role is regarded |
| Indemnification and D&O | The standard officer indemnification agreement and written confirmation of D&O coverage | High for designated officers; worth asking for regardless | Protection for a role that documents what others would rather not have documented |
Order matters. The reporting line, the committee’s role in setting pay and the incentive metrics are discussed with the committee chair; the cash and equity figures are discussed with the CEO, the CHRO and the recruiter. Candidates who negotiate only the figures leave the function’s protections to the template, and the hiring a CAE guide, written for the committee side, shows that good committees expect and respect the structural questions.
Worked example: two offers compared
The figures below are illustrative, chosen so that the arithmetic is easy to follow; they are not market data for any sector or year. A sitting head of audit at a regional bank, currently paid a base of 350, a target bonus of 50 per cent and annual deferred awards of 150 (all figures in thousands, in a single currency), holds 300 of unvested deferred awards vesting in three tranches of 100 over the next three years. She receives two offers in October.
| Term | Offer A: listed industrial, mid-cap | Offer B: listed mid-sized bank | Observation |
|---|---|---|---|
| Base | 400 | 375 | A pays more in cash up front |
| Target bonus | 50% (200) | 70% (263) | B’s percentage places the role in a higher tier |
| Annual LTI | 250 in RSUs, vesting one third a year | 350, half deferred cash vesting over three years, half RSUs with the same vesting | B’s LTI is larger and more deferred |
| Target total direct compensation | 850 | 988 | The headline comparison favours B by 138 |
| First-year bonus | Prorated to months worked (no guarantee offered) | Full-year treatment guaranteed at target for year one | Starting in October, A’s prorated bonus is 50; B’s is 263 |
| Make-whole for 300 forfeited | Sign-on cash 150; RSUs 150 vesting over two years | Deferred cash 300 matched to the original three vesting dates | A delivers more sooner; B matches the forfeiture exactly |
| Incentive metrics | Standard executive scorecard: 60% company EBITDA, 40% individual | Function scorecard set by the audit committee: plan delivery, QA, committee assessment, regulator feedback | A’s metrics create an objectivity problem and, since A designates the CAE an executive officer, a clawback exposure |
| Officer designation | Executive officer and Section 16 officer | Not designated; SMF-equivalent regulatory approval applies | Different legal contexts, each with obligations |
| Severance | 12 months base; unvested RSUs forfeited | 12 months base plus target bonus; deferred awards continue to vest on termination without cause | B’s downside protection is materially stronger |
| Good-reason clause | Standard: material reduction in duties or pay | Standard plus removal of audit committee reporting line | B has the CAE-specific protection |
| Who approves the package | CEO recommends; audit committee informed | Audit committee chair interviewed the candidate and approves the package | B’s process matches Standard 7.1; A’s does not yet |
The year-one arithmetic, starting 1 October: Offer A yields 100 of base (three months), 50 of prorated bonus, 150 of sign-on and the first RSU tranche a year away, so 300 in cash in the first twelve months plus 83 of RSUs vesting at month twelve. Offer B yields 94 of base, 263 of guaranteed bonus, 100 of make-whole deferred cash at the first original vesting date, and 58 of RSUs plus 58 of deferred cash at month twelve, so 457 in cash and 58 in equity. Over three years at a flat share price, B’s realizable total exceeds A’s by roughly 500, before counting the severance difference. More important than the arithmetic, Offer A’s incentive metrics and approval process describe a company that has not yet thought about why the CAE’s pay is different; the candidate took that back to A’s committee chair, who had not seen the scorecard, and A revised it. She accepted B, for the structure as much as the money, and the committee chair’s involvement in the process was the deciding signal. The divisional chief auditor guide describes the seat she had come from.
Frequently asked questions
Who sets the chief audit executive’s compensation?
Under the Global Internal Audit Standards (Standard 7.1), the board, in practice the audit committee, approves the CAE’s remuneration as a condition of organizational independence, alongside the CAE’s appointment and removal. US bank supervisory guidance and UK and EU remuneration rules place the same expectation on the committee. The CEO and CHRO contribute, and a compensation consultant benchmarks, but the approval belongs to the committee.
What does a CAE compensation package consist of?
Base salary, an annual incentive against a target percentage of base, long-term incentives (restricted stock, performance shares, options or deferred cash) vesting over three to five years, executive-tier benefits, and severance and change-in-control protection. The fixed share falls as company size rises; at large banks most of the package is variable and deferred.
Should a CAE’s bonus be tied to company earnings?
No. Incentives tied to the financial results of the business being audited conflict with objectivity, the Standards expect the board to structure CAE remuneration so as not to impair independence, and bank regulators require control-function pay to be independent of business performance. A function scorecard with committee assessment, and time-vested rather than earnings-linked equity, is the usual design.
Is the CAE an executive officer for securities-law purposes?
It depends on the company. The definition covers officers who perform policy-making functions, and large banks and heavily regulated companies commonly designate the CAE while many mid-caps do not. Designation brings Section 16 reporting and the short-swing profit rule, inclusion in the clawback policy under Rule 10D-1, affiliate status for resales, and usually officer indemnification and D&O coverage. Securities counsel confirms the position for a given role.
How does the clawback policy affect a CAE?
If the CAE is a designated executive officer, incentive-based compensation calculated on a financial reporting measure or stock price is subject to mandatory, no-fault recovery after an accounting restatement, for the three fiscal years before the restatement date. Keeping the CAE’s incentive metrics away from financial results limits the exposure as well as protecting objectivity.
What should a CAE negotiate besides salary?
First-year bonus treatment, make-whole for forfeited awards, the LTI vehicle and vesting schedule, severance with a good-reason clause that covers loss of the audit committee reporting line, the reporting line and resource commitments in writing, indemnification and D&O coverage, and clarity on officer designation. The structural items are negotiated with the audit committee chair; the figures with the CEO, CHRO and recruiter.
Where can I find actual CAE salary data?
The Institute of Internal Auditors publishes recurring compensation studies, the large executive search and staffing firms publish salary guides by role and region, and proxy statements disclose full compensation where a CAE is a named executive officer, which happens at some large banks. Market levels change and differ by country, so this guide describes the structure rather than quoting them.
Related guides
- What is a chief audit executive? — the role, reporting lines and responsibilities explained.
- How to become a chief audit executive — the paths, the skills and the timing.
- Your first 90 days as chief audit executive — the plan for the opening quarter.
- Hiring a chief audit executive — the committee’s side of the appointment.
- The audit committee playbook for internal audit — what the committee owes the function and how it is delivered.
- Audit committee charter template — clause by clause, including the remuneration clause.
- Portfolio heads and divisional chief auditors — the MD-grade seat below the CAE.
- What does an internal auditor do? — the job description level by level, with pay and hours.
- The internal audit career ladder — from staff auditor to CAE.
- Internal audit by role — the careers hub.
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