Faced with sturdy competitors for expertise and the prospect of an financial slowdown, corporations are beefing up chief monetary officers’ duties or elevating their positions altogether to retain high executives.
Demand for finance chiefs continues to be excessive as U.S. companies face risky inventory markets, hovering inflation and rising rates of interest. CFO turnover at corporations within the S&P 500 rose to 18% final yr, in contrast to 15% the yr earlier than and 14% in 2019, in accordance to Russell Reynolds Associates, an govt search agency.
The strain is on for boards to maintain onto these executives and assist their corporations handle via a possible recession later this yr or subsequent. That’s comparable to the early levels of the Covid-19 pandemic in 2020, when companies asked their CFOs to stay on and help with navigating the financial influence from the well being disaster.
One means to retain finance leaders is by broadening their duties. CFOs are sometimes the second or third in command after the chief govt and answerable for monetary, but additionally strategic and operational choices, for instance potential dealmaking, supply-chain issues and information-technology points.
“Companies create these broader roles and titles to engage and recognize and motivate the very best of the best,” mentioned Joel von Ranson, head of recruitment agency Spencer Stuart’s international useful practices, which incorporates the monetary officer group. “It’s also a reflection of a very competitive and tight CFO market,” Mr. von Ranson mentioned.
Companies together with biopharmaceutical agency
AbbVie Inc.,
consumer-goods conglomerate
Newell Brands Inc.
and business real-estate finance enterprise
Walker & Dunlop Inc.
in latest months have given their CFOs the title of president—which includes main crucial components of the corporate—or promoted high finance executives to chief working officer roles.
About 6% of CFOs at corporations within the S&P 500 had further operational or presidential duties as of June 29, Russell Reynolds mentioned. Of these 30 finance chiefs, 9 had further operational duties, two have been their firm’s vp with experience in particular areas of the enterprise, or chief technique officer, and 19 have been additionally division chief govt or president, Russell Reynolds mentioned. That is up from 2020, when solely seven CFOs at corporations within the S&P 500, or 1.4%, had added duties, Russell Reynolds mentioned. The firm doesn’t have information for 2021.
CFOs at corporations within the S&P 500 and Fortune 500 on common keep about 5 years of their job, a determine that hasn’t modified a lot lately, in accordance to Crist Kolder Associates, an govt search agency. Companies have to ensure that to hold CFOs engaged in order that they don’t get tempted by exterior affords—earlier than and after they hit the five-year mark—mentioned
Peter Crist,
chairman of the agency.
“Good CFOs are so valuable that companies all day long think about, How do we keep this person in the chair and interested?” he mentioned. These concerns have change into extra entrance and heart for corporations amid the present financial uncertainty, Mr. Crist mentioned.
Newsletter Sign-up
WSJ | CFO Journal
The Morning Ledger gives every day information and insights on company finance from the CFO Journal workforce.
Newell Brands, the proprietor of Rubbermaid, Sharpie and Elmer’s glue, in May mentioned
Christopher Peterson
would change into the corporate’s president as well as to CFO. He will proceed to lead Newell’s monetary operations and oversee its provide chain, procurement, info know-how, actual property and international enterprise companies, the corporate mentioned. Mr. Peterson joined in December 2018 as CFO, turned interim CEO in June 2019 and was named CFO and president of enterprise operations in February 2020.
Taking on new duties yielded a pay rise for Mr. Peterson. His base wage went up to $900,000 per yr, a rise from $835,000 in 2021, Newell Brands mentioned in a submitting with securities regulators. Mr. Peterson additionally obtained an fairness award with a goal worth of $500,000. The transfer is a “well-deserved recognition” of Mr. Peterson’s work at Newell Brands, together with navigating via provide chain constraints and excessive inflation, the corporate mentioned.
Illinois-based AbbVie in late June mentioned it promoted
Robert Michael
from CFO to vice chairman and president. Mr. Michael was appointed CFO in October 2018 and added vice chairman of finance and business operations to his title in December of final yr.
Walker & Dunlop, primarily based in Maryland, in June elevated
Stephen Theobald
from chief monetary officer, a task he has held since April 2013, to govt vp and chief working officer. Recent acquisitions and the corporate’s growth into new enterprise areas, together with business actual property information analytics and reasonably priced housing debt and fairness, introduced on the necessity for management modifications, Walker & Dunlop mentioned. Moving Mr. Theobald into the function of chief working officer was a “natural move,” the corporate mentioned.
CFOs’ job duties have been evolving for a while to embrace not solely finance, however operational and strategic duties as properly, in accordance to
Alyse Bodine,
a associate at recruiting agency
Heidrick & Struggles.
With oversight of the whole lot of an organization’s funds, from mergers and acquisitions to IT and actual property, comes broad information a couple of enterprise, making the CFO function a pure path to positions corresponding to president, COO and CEO, Ms. Bodine mentioned.
Some CFOs are certainly transferring into the function of CEO, regardless that these modifications stay comparatively uncommon. Toolmaker
Stanley Black & Decker Inc.
final month mentioned that CFO
Donald Allan Jr.
would become chief executive on July 1, succeeding
James Loree.
Mr. Allan, who joined the corporate in 1999, was named CFO in 2008 and added president to his title in 2021. He is “ideally suited” to lead Stanley Black & Decker, the corporate mentioned.
In 2021, slightly below 8% of CEOs at corporations within the S&P 500 and Fortune 500 got here from the CFO seat, in accordance to Crist Kolder Associates. That’s a rise from 6.6% in 2020, the agency mentioned.
A possible recession might make it extra urgent for corporations to hold their CFO, Mr. von Ranson mentioned. “If there’s a change in the economy, that could be a different reason to put a lot of pressure on the CFO market,” he mentioned. “Companies might be competing for CFO talent” who can assess how a downturn will influence their funds, Mr. von Ranson added.
Write to Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
