Internal Control Material Weaknesses and CFO Compensation* Internal Control Material Weaknesses and CFO Compensation.

The article investigates the relationship between executive compensation and nonfinancial performance measures, particularly focusing on the link between chief financial officer (CFO) compensation and the economic impact of a disclosure of internal control material weakness (ICMW). It addresses the responsibility of CFOs for internal controls and the use of internal control effectiveness in CFO evaluation and compensation. It notes the impact of strength of governance on CFO compensation changes, as well as comments on the effects of misreporting financial information.