Faced with robust competitors for expertise and the prospect of an financial slowdown, corporations are beefing up chief monetary officers’ tasks 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 comparison with 15% the yr earlier than and 14% in 2019, in line with Russell Reynolds Associates, an government search agency.
The strain is on for boards to carry onto these executives and assist their corporations handle by a possible recession later this yr or subsequent. That’s much like the early phases of the Covid-19 pandemic in 2020, when corporations requested their CFOs to remain on and help with navigating the financial influence from the well being disaster.
One solution to retain finance leaders is by broadening their tasks. CFOs are sometimes the second or third in command after the chief government and accountable for monetary, but in addition 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,” stated Joel von Ranson, head of recruitment agency Spencer Stuart’s world purposeful practices, which incorporates the monetary officer group. “It’s also a reflection of a very competitive and tight CFO market,” Mr. von Ranson stated.
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 vital elements 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 tasks as of June 29, Russell Reynolds stated. Of these 30 finance chiefs, 9 had further operational duties, two have been their firm’s vice chairman with experience in particular areas of the enterprise, or chief technique officer, and 19 have been additionally division chief government or president, Russell Reynolds stated. That is up from 2020, when solely seven CFOs at corporations within the S&P 500, or 1.4%, had added tasks, Russell Reynolds stated. 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 in recent times, in line with Crist Kolder Associates, an government search agency. Companies have to ensure to maintain CFOs engaged in order that they don’t get tempted by outdoors provides—earlier than and after they hit the five-year mark—stated
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 stated. These concerns have change into extra entrance and heart for corporations amid the present financial uncertainty, Mr. Crist stated.
Newell Brands, the proprietor of Rubbermaid, Sharpie and Elmer’s glue, in May stated
Christopher Peterson
would change into the corporate’s president along with CFO. He will proceed to steer Newell’s monetary operations and oversee its provide chain, procurement, info know-how, actual property and world enterprise companies, the corporate stated. 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 tasks yielded a pay rise for Mr. Peterson. His base wage went as much as $900,000 per yr, a rise from $835,000 in 2021, Newell Brands stated in a submitting with securities regulators. Mr. Peterson additionally acquired 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 by provide chain constraints and excessive inflation, the corporate stated.
Illinois-based AbbVie in late June stated 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 government vice chairman and chief working officer. Recent acquisitions and the corporate’s enlargement into new enterprise areas, together with business actual property information analytics and inexpensive housing debt and fairness, introduced on the necessity for management adjustments, Walker & Dunlop stated. Moving Mr. Theobald into the position of chief working officer was a “natural move,” the corporate stated.
CFOs’ job duties have been evolving for a while to incorporate not solely finance, however operational and strategic tasks as effectively, in line with
Alyse Bodine,
a accomplice at recruiting agency
Heidrick & Struggles.
With oversight of the whole thing of an organization’s funds, from mergers and acquisitions to IT and actual property, comes broad information a few enterprise, making the CFO position a pure path to positions resembling president, COO and CEO, Ms. Bodine stated.
Some CFOs are certainly shifting into the position of CEO, although these adjustments stay comparatively uncommon. Toolmaker
Stanley Black & Decker Inc.
final month stated that CFO
Donald Allan Jr.
would change into chief government 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 steer Stanley Black & Decker, the corporate stated.
In 2021, just below 8% of CEOs at corporations within the S&P 500 and Fortune 500 got here from the CFO seat, in line with Crist Kolder Associates. That’s a rise from 6.6% in 2020, the agency stated.
A possible recession may make it extra urgent for corporations to maintain their CFO, Mr. von Ranson stated. “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 stated. “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 [email protected]
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