Tag: CFOs

You’ve Got a New CEO. How Soon Will Your CFO Leave?

Boards often devote plenty of time to succession planning and the compensation aspects of the CEO position, but a key piece involves the second in command. Even if the new CEO pick is the right choice, changes at the top can destabilize the C-suite, particularly if the CFO isn’t meshing with the CEO or feels left out of the transition process. Boards are increasingly being advised to develop succession planning processes for the CFO role that mirror the CEO’s succession plan to prepare for various eventualities.

So far this year, 17 CFOs have retired or resigned their positions after the appointment of a new CEO, according to data from public company intelligence provider MyLogIQ. The number was 26 in 2020 and 23 in 2019. The findings underscore the delicate and important dynamic between the two executives that may become strained. New CEOs often implement strategic shifts, particularly if they come from outside the company. Meanwhile, the CFO may have come in second place for the CEO position and could be harboring some bitterness. In addition, general communication and personality conflicts can also be a factor, former CFOs, board members and consultants said.

Burnout Hits CFOs as Boards Grapple With Departures

Chances are the executive who serves as the right hand to the CEO and key liaison to the audit committee is considering their options, experts say. The Covid-19 pandemic and increased pressure to balance strategic issues such as environmental, social and governance factors with careful capital allocation, growth opportunities and liquidity management is increasingly driving companies to consider replacing first-time or untested CFOs with seasoned executives who can navigate an uncertain and evolving business environment.

The result?

A CFO market that is “red hot and will continue to be for the foreseeable future,” said Cathy Logue, managing director at executive search and consulting firm Stanton Chase’s Toronto office.

CFO Pay Rises as Their Companies Navigate Coronavirus Pandemic

Finance executives at America’s biggest companies received a collective 7% pay rise last year as many of them steered their firms’ finances through the pandemic, though not all saw their compensation increase.

Chief financial officers at the largest 100 companies in the S&P 500 by market capitalization that disclosed executive pay through April 12 received 7% more in median pay in 2020 than a year before, equal to about $6 million total, according to data provider MyLogIQ. Pay packages were boosted by an increase in equity-based compensation. Median pay represents the midpoint of all companies in the data set.

CFOs last year played a central role in navigating their companies through the economic downturn caused by the coronavirus pandemic. Many businesses shored up cash, slashed costs and temporarily cut executive salaries amid lockdown orders aimed at slowing the spread of the virus.

Why Finance Executives Rely on Supply-Chain Finance: A Guide to the Financing Tool

The struggles of Greensill Capital have shone a light on the increasing use of supply-chain financing, a tool that gives companies the ability to extend their payment terms to vendors.

Regulators and standard-setters are closely watching if and how companies disclose their use of the financing tool, which has come into focus amid the recent problems seen at Greensill, a major provider of supply-chain finance. The firm filed for insolvency earlier this month and is facing regulatory scrutiny.

How Does Supply-Chain Finance Work?

As part of a supply-chain finance agreement, banks provide funding to pay a company’s supplier of goods and services. The supplier is then paid earlier—but less—than it would be paid without the agreement.

…It is unclear how many companies have supply-chain finance programs. Twenty-seven companies in the S&P 500 disclosed in their 2020 annual reports they are using the tool, up from 13 the previous year, according to data provider MyLogIQ.

More Finance Chiefs Resigned in 2020 Than in Previous Years

More chief financial officers resigned from large U.S. companies in 2020 than in previous years, as the pandemic put pressure on corporate balance sheets and the executives who manage them.

Thirty-seven companies in the S&P 500, including General Motors Co. and HP Inc., last year said that their CFOs would quit, up 27.6% from 2019. The figure for 2020 is higher than the average number of resignations over the past decade, which totaled about 25 a year, according to data provider MyLogIQ. Resignations are typically voluntary, as opposed to terminations, but the language in corporate filings can sometimes be ambiguous.

That is contrary to what recruiters had expected in the early days of the pandemic—some predicted executives would stay put—and comes after years of heated competition for finance talent.

For many CFOs, the pandemic added to an already high workload and long hours. Their roles have become more central in recent years, as finance chiefs, the right hand to their chief executives, often not only manage the books, but also their company’s strategy.

CFO Exits Pick Up Amid Covid-19 Pandemic

Three large U.S. companies this week said goodbye to their chief financial officers, continuing a surge in CFO departures following months of relative stability.

The Wall Street Journal reports that so far this year, 83 CFOs at Fortune 500 companies have left their posts, compared with 84 last year at the same time. But it took several recent departures —  including Dhivya Suryadevara of General Motors Co., Kelly Kramer of Cisco Systems and John F. North III of Avis Budget Group — to draw even with 2019 as the early days of the coronavirus pandemic seemed to bring about a slowdown in CFO turnover.

According to the Journal, 2019 saw a total of 129 Fortune 500 CFOs leave their roles, thanks to a robust stock market, which made equity packages more appealing. The recent spike seems to be driven not by money, but by a more demanding workload amid the pandemic. With more frequent board meetings, investor calls and town hall sessions as a result of the coronavirus crisis — not to mention the stress of raising money, cutting costs and renegotiating loans — CFOs are starting to contemplate their futures.

Finance Chiefs Are on the Move as Pandemic Adds Strain

Finance chiefs are changing jobs again after a slowdown in exits and recruitment in thespring, as the pandemic is forcing them to rethink their business models and adding to an already high workload.

Three big public companies this week said their CFO would exit. General Motors Co.’s Dhivya Suryadevara is joining Stripe Inc., while Kelly Kramer, the finance chief of Cisco Systems Inc., plans to retire. Avis Budget Group Inc. on Thursday said finance chief John F. North III would exit the company to pursue other interests.

The number of CFO departures at companies in the S&P 500 and Fortune 500 has crept up in recent weeks following a slowdown in the spring. Eighty finance chiefs left their positions through Aug. 1, compared with 84 at this point last year, according to the Crist|Kolder Volatility Report, which tracks recruitment trends in corporate leadership.

In total last year, 129 CFOs in the S&P 500 and Fortune 500 left their job, buoyed by a strong stock market that made equity compensation more attractive.

CFO Pay Rises as Responsibilities Expand

CFOs saw an increase in pay last year as responsibilities for non-financial issues, including operations and strategy, expanded, sources say. Moreover, the Covid-19 pandemic is driving a redoubled focus on operations and emergency planning from CFOs, and some companies are bringing in battle-hardened finance veterans to tackle the issues related to the crisis.

However, it remains unclear how 2020 will unfold in terms of compensation for CFOs, who are shouldering much of the workload in managing liquidity and capital allocation. Annual bonuses will likely decrease more dramatically in the future as the 2020 pandemic roils company financials, sources say.

“We expect a lot of companies are probably going to have lower bonuses again next year on the equity side; however, we will have to wait and see because most companies granted equity before the pandemic impact really started for calendar-year companies,” says Roman Beleuta, principal at Compensation Advisory Partners.