Analysis: Is CFO Job Losing its Appeal?
Many of North America's biggest companies are finding it hard to hang on to their chief financial officers, often viewed as corporations' No. 2 executives.
Experts say turnover of CFOs has increased and tenure has shortened as incumbents struggle with a multitude of issues that include mounting regulation and the demands of investors, boards and chief executives.
Some argue that many CFOs are being asked to perform in at least two different arenas -- compliance and strategy -- and that the model of the modern CFO is broken and in need of reform.
At some firms, experts say what used to be a "Holy Trinity" of chief executive, chief financial officer and chief operating officer has become a "Dynamic Duo" of just the CEO and CFO.
But more and more, it seems the second in command is jumping ship.
Even among the most successful, there are reservations about the CFO role.
When Bank of America CFO Alvaro de Molina announced his resignation last month, he said he found the CFO job "suffocating" because of regulatory and oversight hassles, including compliance with the Sarbanes-Oxley Act of 2002, which implemented a range of corporate governance reforms.
On Monday, Citigroup said its CFO Sallie Krawcheck would return to her old job as head of wealth management. Krawcheck called being CFO "a terrific, terrific experience," yet added: "I have a lot more gray hair, which is the downside of it ... I'm a lot stronger for it, and I'm glad
Last year, about 2,300 CFOs of public companies in the United States and Canada moved on, compared with about 1,870 in 2005, according to Liberum Research, a firm that tracks
regulatory filings and corporate announcements on such moves.
"The job of the CFO has never been harder," said Cindie Jamison, national director of CFO services at Tatum LLC, an executive services firm.
"Government regulations like Sarbanes-Oxley and unrelenting pressures from CEOs and boards are making life miserable for many CFOs," said Jamison. "We'll continue to see high CFO turnover until CEOs and boards realize the position is no longer a one-person job. Today's CFO needs a team of experts."
Another seasoned CFO-watcher agreed that the modern financial chief's role is too big. "Tenure has gotten shorter -- I can tell you that," said Julia Homer, editor-in-chief of CFO Magazine.
Homer said CFOs are having to spend much more time on strategy and on explaining issues to company boards than they did before. "They are doing two jobs now," said Homer. "The compliance piece of it is very difficult and challenging, and they are very much more involved in strategy."
One executive placement expert said CFOs are often the bearers of bad news for company stakeholders -- and they pay the price. "It's shoot the messenger," said John Challenger, chief executive of Chicago-based Challenger, Gray & Christmas.
"The CFO often is the fall guy or the scapegoat for companies that don't make their numbers -- the CFO, with the increased rules and demand for transparency, has to tell people the bad news and they have to tell the truth."
An ongoing options backdating scandal at some firms has led to the departures of even more CFOs. More than 160 companies are investigating their practices for granting stock options or are under investigation by U.S. authorities like the Securities and Exchange Commission and the Justice Department.
"When new sorts of second-wave scandals break out like the stock options backdating scandal, the CFO always must be in the center of it because he or she had to know what is going on," said Challenger.
He said while some CEOs at scandal-ridden companies claim they did not know what was going on as they were too busy running the business, it is harder for a CFO to make such a claim.
When it comes to uncovering any wrongdoing by their companies, it seems CFOs are damned if they do and damned if they don't. "They're caught either way -- if you turn up things you don't want to turn up and you have to tell about them, you can be caught in the 'shoot the messenger' thing," said Challenger.
"If you don't put enough financial controls in ... you are caught either way."
Of course, many executives excel as CFO despite all the challenges and leave simply because they are unable to become CEO or because they have made enough money to do without the
And with the potential rewards so high -- for bank balance and career -- there is no shortage of young hopefuls lining up for their shots at glory.
The most resilient and fortunate will end up rich and famous. Others may not be so lucky. "In public companies particularly, the job is very precarious," concluded Challenger.