Howard Hughes Corp.’s new chief executive, David O’Reilly, has joined a small club of finance executives who ascended to the top spot—a move that illustrates how the role of chief financial officer at some companies has evolved into a position more focused on broader strategies and growth.
The Woodlands, Texas-based Howard Hughes, a real-estate development company, Tuesday named Mr. O’Reilly as chief executive, effective immediately.
Mr. O’Reilly joined the company in 2016 as CFO and took on the additional role of president this June. He was appointed interim chief executive in September following the departure of former CEO Paul Layne. Mr. O’Reilly will continue to lead the finance function while the company searches for a new finance chief, Howard Hughes said.
David O’Reilly on Tuesday was named CEO of Howard Hughes.
Photo: Howard Hughes Corp.
About 7% of sitting chief executives at S&P 500 and Fortune 500 companies come directly from the CFO post, a percentage that hasn’t changed much in recent years, according to the Crist|Kolder Volatility Report, which tracks executive moves. The most common internal route to the CEO position—making up about 24% of cases—is through the role of the chief operations officer, Crist Kolder said.
But recruiters see the potential for more frequent CFO-to-CEO promotions, including at smaller companies such as Howard Hughes, which isn’t in the S&P 500 or Fortune 500.
“In some companies, the CFO functions more like a No. 2 executive to the CEO, and the role is looked upon increasingly for CEO succession potential,” said Jeff Constable, co-head of the global CFO practice at recruitment firm Korn Ferry.
The role of the chief financial officer has become more focused on the bigger picture in recent years, said Cathy Logue, who heads up the financial officers practice at Stanton Chase, an executive recruitment firm. She said Mr. O’Reilly’s appointment “goes hand in hand with the evolution of the CFO role.”
Mr. O’Reilly said he played an active role in strategic planning and developing growth opportunities as CFO. “I always prided myself on being a CFO that was a partner to the C-suite and the board,” he said.
Other examples for this type of executive elevation include the appointment of Corie Barry as Best Buy Co.’s CEO and Bob Swan as chief executive of Intel Corp., both in 2019. Canopy Growth Corp., the cannabis company, at the end of last year recruited the CFO of shareholder Constellation Brands Inc., to lead its business. And in June, Carol Tomé, the former CFO of Home Depot Inc., took over the CEO seat at United Parcel Service Inc.
More CFOs have a background in corporate development or investment banking these days, and bring a different skill set to the job than their predecessors, Ms. Logue said. Mr. O’Reilly, for example, worked as a chief investment officer and banker in the earlier stages of his career, according to his LinkedIn profile.
“Having been on the ground and in the weeds, not just in finance, but also responsible for human resources and information technology, [means] I understand that complexity,” Mr. O’Reilly said.
In his new role, Mr. O’Reilly said he would be focused on streamlining the company’s operations and divesting it of noncore assets, targeting net proceeds of about $600 million. The company raised new funding this year, including through a $750 million bond issuance and a more than $600 million equity raise.
Mr. O’Reilly said he would be collaborating with Jay Cross, the company’s new president, and be involved with recruiting a new finance chief.
“For more than four years, the board has had the opportunity to work closely alongside David O’Reilly,” said Bill Ackman, the chairman of Howard Hughes. “Watching him execute on the company’s strategic plan and pivot quickly to adjust to changed market conditions furthered our confidence in him as our new leader.”
Write to Nina Trentmann at [email protected]
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