Companies Broaden CFOs’ Responsibilities to Retain Them In Strong Job Market

The pressure is on for boards to hold onto these executives and help their companies manage through a potential recession later this year or next. That’s similar to the early stages of the Covid-19 pandemic in 2020, when companies asked their CFOs to stay on and assist with navigating the economic impact from the health crisis.

One way to retain finance leaders is by broadening their responsibilities. CFOs are often the second or third in command after the chief executive and responsible for financial, but also strategic and operational decisions, for example potential dealmaking, supply-chain matters and information-technology issues.

“Companies create these broader roles and titles to engage and recognize and motivate the very best of the best,” said Joel von Ranson, head of recruitment firm Spencer Stuart’s global functional practices, which includes the financial officer group. “It’s also a reflection of a very competitive and tight CFO market,” Mr. von Ranson said.

Companies including biopharmaceutical firm AbbVie Inc., consumer-goods conglomerate Newell Brands Inc. and commercial real-estate finance business Walker & Dunlop Inc. in recent months have given their CFOs the title of president—which involves leading critical parts of the company—or promoted top finance executives to chief operating officer roles.

About 6% of CFOs at companies in the S&P 500 had additional operational or presidential responsibilities as of June 29, Russell Reynolds said. Of those 30 finance chiefs, nine had additional operational duties, two were their company’s vice president with expertise in specific areas of the business, or chief strategy officer, and 19 were also division chief executive or president, Russell Reynolds said. That is up from 2020, when only seven CFOs at companies in the S&P 500, or 1.4%, had added responsibilities, Russell Reynolds said. The company doesn’t have data for 2021.

CFOs at companies in the S&P 500 and Fortune 500 on average stay about five years in their job, a figure that hasn’t changed much in recent years, according to Crist Kolder Associates, an executive search firm. Companies have to make sure to keep CFOs engaged so that they don’t get tempted by outside offers—before and after they hit the five-year mark—said Peter Crist, chairman of the firm.

“Good CFOs are so valuable that companies all day long think about, How do we keep this person in the chair and interested?” he said. These considerations have become more front and center for companies amid the current economic uncertainty, Mr. Crist said.

Newell Brands, the owner of Rubbermaid, Sharpie and Elmer’s glue, in May said Christopher Peterson would become the company’s president in addition to CFO. He will continue to lead Newell’s financial operations and oversee its 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 named CFO and president of business operations in February 2020.

Taking on new responsibilities yielded a pay rise for Mr. Peterson. His base salary went up to $900,000 per year, an increase from $835,000 in 2021, Newell Brands said in a filing with securities regulators. Mr. Peterson also received an equity award with a target value of $500,000. The move is a “well-deserved recognition” of Mr. Peterson’s work at Newell Brands, including navigating through supply chain constraints and high inflation, the company said.

Illinois-based AbbVie in late June said 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 commercial operations to his title in December of last year.

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 and affordable housing debt and equity, brought on the need for leadership changes, Walker & Dunlop said. Moving Mr. Theobald into the role of chief operating officer was a “natural move,” the company said.

CFOs’ job duties have been evolving for some time to include not only finance, but operational and strategic responsibilities as well, according to Alyse Bodine, a partner at recruiting firm Heidrick & Struggles. With oversight of the entirety of a company’s finances, from mergers and acquisitions to IT and real estate, comes broad knowledge about a business, making the CFO role a natural path to positions such as president, COO and CEO, Ms. Bodine said.

Some CFOs are indeed moving into the role of CEO, even though those changes remain relatively rare. Toolmaker Stanley Black & Decker Inc. last month said that CFO Donald Allan Jr. would become chief executive on July 1, succeeding James Loree. Mr. Allan, who joined the company in 1999, was named CFO in 2008 and added president to his title in 2021. He is “ideally suited” to lead Stanley Black & Decker, the company said.

In 2021, just under 8% of CEOs at companies in the S&P 500 and Fortune 500 came from the CFO seat, according to Crist Kolder Associates. That’s an increase from 6.6% in 2020, the firm said.

A potential recession could make it more pressing for companies to keep their CFO, Mr. von Ranson said. “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 said. “Companies might be competing for CFO talent” who can assess how a downturn will impact their finances, Mr. von Ranson added.

Write to Jennifer Williams-Alvarez at [email protected]