Companies expand the responsibilities of CFOs to keep them in a strong job market

Faced with intense competition for talent and the prospect of an economic downturn, companies are increasing the responsibilities of CFOs or enhancing their positions purely to retain executives. Top.

Demand for CFOs continues to be high as US businesses face volatile stock markets, soaring inflation and rising interest rates. CFO revenue at companies in the S&P 500 grew 18% last year, compared with 15% the year before and 14% in 2019, according to Russell Reynolds Associates, an executive search firm.

Pressure is on boards to keep these executives and help their companies weather a potential recession later this year or next. That is similar to the early stages of the Covid-19 pandemic in 2020, when companies asked their CFOs to stay and assist in navigating the economic impact from the health crisis.

One way to retain financial leaders is to expand their responsibilities. The CFO is usually second or third in command after the chief executive officer and is responsible for financial as well as strategic and operational decisions, such as potential transactional issues, business issues, and other decisions. supply chain and information technology issues.

“Companies create these broader roles and titles,” said Joel von Ranson, global head of functional practice at recruitment firm Spencer Stuart, which includes the finance team. to engage and recognize and motivate the best. “It is also a reflection of a very competitive and tight CFO market,” said von Ranson.

Companies include biopharmaceutical company AbbVie Inc.,

Newell Brands consumer goods group Inc.

and commercial real estate finance business Walker & Dunlop Inc.

In recent months, their CFOs have given CFOs the title of president – related to leading key parts of the company – or promoted to top CFOs. ascended to the role of chief executive officer.

About 6% of CFOs at S&P 500 companies have added executive or presidential responsibilities as of June 29, Russell Reynolds said. Of those 30 CFOs, nine have additional executive duties, two are their corporate vice presidents with expertise in specific areas of the business, or chief strategy officer, and 19 who is also the chief executive officer or division president, said Russell Reynolds. This is up from 2020, when only seven CFOs at S&P 500 companies, or 1.4%, had additional responsibilities, Russell Reynolds said. The company does not have data for 2021.

CFOs at S&P 500 and Fortune 500 companies stay on average about five years, a number that hasn’t changed much in recent years, according to Crist Kolder Associates, an executive search firm. . Companies must make sure to retain CFOs so they aren’t tempted by outside offers — before and after they hit the five-year mark — said Peter Crist, the company’s president.

“Good CFOs are so valuable that companies think all day long, How do we keep this person in the chair and interested?” he say. These considerations have become more central and pervasive for companies amid the current volatile economy, Mr. Crist said.

Newell Brands, owner of Rubbermaid, Sharpie and Elmer’s glues, in May said Christopher Peterson would become the company’s president in addition to the CFO. He will continue to lead Newell’s financial operations and oversee supply chain, procurement, information technology, real estate and global business services, the company said. Mr. Peterson joined in December 2018 as CFO, became interim CEO in June 2019 and was appointed CFO and president of business operations in February 2019. 2020.

Taking on new responsibilities gave Mr. Peterson a raise. His base salary has gone up to $900,000 per year, up from $835,000 in 2021, Newell Brands said in a filing with securities regulators. Mr. Peterson also received an equity prize with a target value of $500,000. The company said the move was “deserved recognition” of Mr Peterson’s work at Newell Brands, which included overcoming supply chain constraints and high inflation.

Illinois-based AbbVie in late June said it had promoted Robert Michael from CFO to Vice President and President. Mr. Michael was appointed Chief Financial Officer in October 2018 and added Vice President of Finance and Commercial Operations to his title last December.

Walker & Dunlop, based in Maryland, in June elevated Stephen Theobald from chief financial officer, a role he has held since April 2013, to executive vice president and chief operating officer. Recent acquisitions and the company’s expansion into new business areas, including commercial real estate data analytics, debt and affordable home equity, have resulted in shifting demand. leadership, Walker & Dunlop said. The company said moving Theobald to the role of chief executive was a “natural move”.

According to Alyse Bodine, a partner at recruitment firm Heidrick & Struggles, the CFO’s job duties have been evolving over a period of time to include not only financial but also operational and strategic responsibilities..

Ms. Bodine said that overseeing a company’s entire finances, from mergers and acquisitions to IT and real estate, brings in-depth knowledge of a business, making the CFO role more challenging. become a natural path for positions such as president, COO, and CEO.

Some CFOs are actually transitioning to the CEO role, though those changes are still relatively rare. Toolmaker Stanley Black & Decker Inc.

last month said CFO Donald Allan Jr would become chief executive on July 1, succeeding James Loree. Mr. Allan, who joined the company in 1999, was appointed CFO in 2008 and added to the title of chairman in 2021. He is “well-suited” to lead Stanley Black & Decker, the company ty said.

According to Crist Kolder Associates, by 2021, just under 8% of CEOs at S&P 500 and Fortune 500 companies will be CFOs. That’s up from 6.6% in 2020, the company said.

Mr. von Ranson said that a potential recession could make it more urgent for companies to keep their chief financial officer. “If there is a shift in the economy, that could be another reason to put a lot of pressure on the CFO market,” he said. Mr. von Ranson added: “Companies may be competing for the best CFO talent.”

Write letter for Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com

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Luke Plunkett

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