Corporate Finance Chiefs Face New Pressures
Turnover of CFOs at Major Companies Rises Sharply and Outpaces
CEO Departures, Amid Credit Crisis and Slowing Economy
By Cari Tuna
The Wall Street Journal
Monday, December 1, 2008
The credit crisis and slowing economy are creating new pressures
for chief financial officers, spurring turnover and increasing
demand for experienced finance professionals.
CFO turnover hit a 13-year high in 2007, and accelerated earlier
this year. Executive-search firm Crist|Kolder Associates
says 19.5% of finance chiefs at Fortune 500 and S&P 500
companies left their posts last year, up from 14.1% a year
earlier. By comparison, 13.2% of those companies changed
chief executive officers last year.
In the first seven months of 2008, 70 CFOs departed these 659
companies, compared with 49 over the same period last year.
The average CFO's tenure is 4.8 years, down from 5.5 years a
year ago. The average CEO stays in office for 6.2 years.
Chief financial officer is "the least secure job in corporate America," says
Gordon Grand, head of CFO recruiting at search firm Russell
Alcatel-Lucent SA last week said Hubert de Pesquidoux will
leave the telecommunications-equipment maker after 13 months as
CFO. In October,
Ford Motor Co. finance chief Don Leclair announced plans to
Procter & Gamble Co. will replace longtime CFO Clayton Daley
on Jan. 1, and by year's end
Sears Holdings Corp. will bid farewell to its third CFO
since March 2005.
Other blue-chip companies that changed their CFOs in 2008
UAL Corp. and
Allstate Corp. CFOs at some financial-services firms
left or were ousted amid meltdowns, bailouts and takeovers.
Recruiters and finance chiefs say CFOs are quitting or being
ousted because the demands of the job are growing. CFOs were
handed new responsibilities in 2002 by the Sarbanes-Oxley
corporate-reform law. This year, many had to scramble to keep
their companies afloat when credit markets dried up.
CFOs also handle outreach to investors and serve as strategic
advisers to CEOs, but close ties to a CEO can make finance
chiefs vulnerable when the top job changes hands. Some companies
are eliminating the role of chief operating officer and giving
CFOs more operational responsibilities.
The CFO "gets asked all of the hard questions," Mr. Grand says.
"When the numbers don't work, the accountability is enormous."
The surge in CFO turnover puts a premium on finance veterans.
Dessa Bokides says she received about a call a week from
recruiters since stepping down as CFO of Denver
real-estate-investment trust ProLogis last year. She worked as
chief operating officer for an educational start-up and recently
was named global treasurer of GMAC Financial Services.
"For a long time, there was a real accounting emphasis on CFOs,"
she says. "But CEOs have realized that they need a business
partner who is forward-looking [and] who knows how to talk to
the markets and set the financial strategy."
As demand for CFOs rises, so does pay. The median compensation
for finance chiefs in the S&P 500 rose 5.2% to $2.9 million last
year, including salary, bonuses, the value of equity grants and
other compensation. The increase was bigger than the 1.3% jump
in CEO compensation, according to data tracker Equilar Inc., of
Redwood Shores, Calif.
Joseph Zubretsky joined
Aetna Inc. last year as CFO at a salary of $700,000, 23%
more than predecessor Alan Bennett was paid in 2006. Mr.
Zubretsky also is eligible for a larger bonus than Mr. Bennett
was, and received a $6.5 million equity grant as compensation
for equity he left behind at his former employer, Unum Group. In
a Securities and Exchange Commission filing, Aetna said it
believed the package "was necessary to induce Mr. Zubretsky to
leave" Unum and join Aetna.
Some companies, including eBay Inc. and Rohm & Haas Co., this
year granted their CFOs special bonuses or equity awards valued
at $1 million or more. "This is actually the biggest and best
sign that CFOs are increasingly important and that companies are
making an extra effort to retain top finance officers," says
Equilar research manager Alexander Cwirko-Godycki.
CEO turnover contributes to CFO churn, particularly as finance
chiefs increasingly act as partners and advisers. Over the past
five years, one-third of companies with a new CEO changed CFOs
within 12 months, Crist|Kolder says.
Andrew Bonfield resigned as CFO of
Bristol-Myers Squibb Co. this year, shortly after James
Cornelius was named permanent CEO. Mr. Bonfield had served as
Bristol's CFO for more than five years
and says it was "time to do something different." Mr. Cornelius
"needed somebody who was going to be committed to working with
him for the long term," he says.
Mr. Bonfield says recruiters have approached him with more than
50 job opportunities since he announced plans to leave in
February. "There is plenty of opportunity out there," he says.
"It's finding the right one that suits you as an individual."
Some experts expect the high turnover to continue amid the
slowing economy and depressed stock market. CFOs "will
absolutely bear the brunt and, in some cases, take the fall,"
says George Herrmann of Right Management, a unit of
Manpower Inc. "All of that stuff has really made the job, in
a nutshell, less fun than it used to be."
Write to Cari Tuna at