The number of CFOs promoted to CEOs hits an all-time high

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So far this year, we’ve been hearing of several CFOs moving into the CEO role at major companies. For example, Christina Spade, the CFO, and COO at AMC Networks was named the next CEO. And Donald Allan, Jr. was promoted from CFO to CEO at Stanley Black & Decker. In fact, the percentage of sitting CEOs coming directly from a CFO chair has reached an all-time high.

8.1% of CFOs at some of the largest companies in the U.S. were promoted to CEOs in the first half of 2022, according to executive search firm Crist Kolder Associates’ latest volatility report based on data from 681 companies in the Fortune 500 and S&P 500. In 2012, just 5.6% of finance chiefs were promoted to CEOs.

Courtesy of Crist Kolder Associates

I asked Clem Johnson, president of Crist Kolder Associates, whether companies looking to hire CFOs want candidates with CEO qualities. “It’s not a requirement, but a distinct, very positive differentiator,” Johnson told me. 

“If a company is evaluating CFO candidates who have roughly equal finance competencies, the one that has some operational or commercial leadership experience can separate from the pack,” Johnson says. “They can be much more interesting as a candidate because they have demonstrated another dimension to their business acumen. It’s not just confined to the finance realm.”

Not surprisingly, the path from CFO to CEO is most common in the financial sector (25.5%). The path least common is the retail sector (3.6%), the report found. However, a commonality that the financial and retail sector share is having the longest tenured CFOs, which is an average of five years.

C-suite executives are not immune to the Great Resignation. And the past few years have been tumultuous for some companies. The report found that the industrial and services sectors accounted for over a third of all CFO turnover. For example, there are new CFOs at Intel Corporation (David Zinsner) and McDonald’s (Ian Borden)

The pandemic-induced supply chain crunch placed pressure on the industrial sector, and the services sector certainly took a hit from the lack of workers. “Some companies were feeling the heat, and had to poach from others to bring in new CFO leadership,” Johnson says.

The report found that since the beginning of the pandemic, there has been a significant dip in external hiring of CFOs. “In periods of heightened risk and turbulence, as we’re in now, where possible companies would prefer to de-risk the appointment of their CFO and oftentimes, ‘the devil you know,’ is deemed less risky than bringing in someone who is not known to the enterprise,” Johnson says. “This goes back to the breadth of the CFO role now, as being at the hub of the central nervous system of the organization. And as a consequence, they have to have relationship capital and partnering skills and really be trusted.”

During these tumultuous times, “Having a mindset of being incredibly aggressive and bold on the upside while absolutely continuing to manage the downside is something we see the best CFOs doing,” Ishaan Seth, a senior partner at McKinsey & Company, recently told me.

Since the return to work debate—hybrid or remote—continues, I asked Johnson what type of work environment most CFO candidates want. “The reality is they might, in the normal course of their duties, only be in the office one day,” Johnson says. “Especially CFOs who have to be all over the place more than ever. In practical terms, what most executives are saying is, ‘I will commit to being in headquarters whenever necessary to conduct the affairs of the role successfully,’ Johnson says. ‘But since the affairs of the role require me being all over the place, let’s just be practical. Do I need to relocate my family, you know, to that city?’”

By next year, Johnson says he should have the data to gauge, “How many Fortune 500 CFOs are living in the same city where their headquarters are?” 

Stay tuned.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

A record 43 states have the cash they need to weather an economic recession without having to resort to severe spending cuts or tax increases, according to a new study from Moody’s Analytics. In the event of a moderate recession, economists at Moody’s Analytics ran stress tests on all 50 states to arrive at an estimate of each state’s recessionary needs. Thirty-nine states have the funds to significantly reduce stress from a recession, according to Moody’s. But four states would have to raise taxes or cut spending by less than 5% of their budgets. States most flush with cash include California, Delaware, Idaho, North Dakota, and Wyoming. The bottom five states with less than a 10% revenue gap are Alaska, Arizona, Illinois, Mississippi, and New Hampshire, according to the report.

Courtesy of Moody’s Analytics

Going deeper

Despite economic pressures, just 7% of CFOs surveyed plan to decrease customer service spending over the next 12 months, a Gartner report released on Sept. 28 found. Meanwhile, 21% plan to increase customer spending, and 72% to maintain spending, despite economic pressures. “The bright spot for customer service and support organizations is that their function is not a top priority for cost-cutting compared to real estate/facilities management and finance, which are the most likely to face budget cuts in the next year,” Sarah Dibble, a director in the Gartner Customer Service and Support practice, said in a statement.

Leaderboard

Amar Maletira, president and CFO at Rackspace Technology (Nasdaq: RXT), a cloud technology solutions company, was promoted to CEO, effective immediately. Outgoing CEO Kevin Jones will take on the role of operating advisor with Apollo. Maletira has more than 25 years of leadership experience. He began his current position in November 2020. Prior to joining Rackspace Technology, he was CFO at Viavi Solutions. Previously, Maletira was at Hewlett-Packard for 15 years where he held several roles, including CFO of Enterprise Services for Americas. Maletira becomes Rackspace Technologies’ fifth CEO since private equity firm Apollo Global Management bought the company in 2016.

Joshua Dickinson was promoted to SVP and CFO, North America, at Schneider Electric, a multinational company that specializes in digital automation and energy management. Dickinson will be responsible for all financial operations in the North American region, and will also lead the finance transformation. He began his career at Schneider Electric in 2015 as the division controller and CFO for the company’s Industry U.S. division and held various leadership positions throughout his tenure. Most recently, he served as the NAM Deputy CFO leading the North America FP&A team while also serving as the finance business partner to the U.S. Country President. Before joining Schneider Electric, Dickinson worked in multiple industries and four Fortune 500 companies.

Overheard

“As we move forward, ESG is gradually being split in two: On one hand, financial products that integrate ESG policies, data, and practices, with the aim of identifying new financial risks and unlocking opportunities for value creation; and on the other hand, funds that intentionally generate positive social or environmental impact and are therefore aligned with moral values.”

—Rodrigo Tavares, an adjunct full professor of sustainable finance at NOVA School of Business and Economics, writes in a Fortune opinion piece.