Good morning.
CEOs and CFOs are strategic partners. But If a company has a succession plan on the books for its CEO, must it have one for the CFO as well?
There have been some recent CFO transitions at Fortune 500 companies where a permanent successor wasn’t immediately announced.
For example, Uber Technologies announced on Tuesday in its Q2 2023 earnings report that its CFO, Nelson Chai, will leave the company on Jan. 5, 2024, and a search for his replacement is underway.
Alphabet announced on July 25 that its CFO Ruth Porat was promoted to the newly created role of president and chief investment officer, effective Sept. 1. A successor wasn’t named, but Porat will continue as CFO of Alphabet and Google while the company searches for and selects the next finance chief. However, since Porat joined the company, she has brought on several former CFOs of public companies—like Palo Alto Networks, HP, and BlackRock.
Chewy, Inc., an online retailer of pet food and other pet-related products, announced on July 20 that its CFO Mario Marte has decided to retire from the company, effective July 28. Stacy Bowman, chief accounting officer, has been appointed interim CFO while the company continues its search for a permanent CFO.
In June, The Walt Disney Company announced Christine McCarthy, CFO, would be stepping down from her role and taking a family medical leave of absence, and Kevin Lansberry, EVP and CFO of Disney Parks, experiences and products, began as interim CFO on July 1. The announcement said that McCarthy will assist in the process of identifying a long-term successor. (At Disney, Bob Iger returned as CEO in November 2022, when his successor Bob Chapek, stepped down).
I contacted the companies to ask about their succession planning process for CFOs. But there was no further comment other than the announcements.
'There is more emphasis placed on CEO succession'
In general, choosing a CFO successor is a tricky business, says Clem Johnson, president of Crist Kolder Associates, an executive search firm, “especially when unforeseen circumstances force a CFO change outside the original succession timeline," he says. "Sometimes, internal successors disappointingly wilt under the glare of the board and public spotlight, or the chemistry with the CEO and former CFO just isn’t there. Or an interim CFO position is established while a search is conducted, 'just to be sure' a better alternative isn’t available," he says. Also in "today’s incredibly dynamic landscape," experienced CFOs have "unprecedented leverage and options," Johnson says.
“A robust succession process generally includes at least an external scan of the market if not some active recruitment of specific individuals,” says Jeff Constable, who leads Korn Ferry's Financial Officers Practice in North America and coleads it globally. “You can look at recent larger company CFO announcements and see a mixture of external candidate hires as well as internal candidate promotions.” Each situation may depend on the specific circumstances of the company, he says.
"There is more focus and emphasis placed on CEO succession, which makes sense given that the rest of the C-suite roles report to the CEO," Constable says. "So succession in the C-suite cascades down from CEO succession."
"There is no 'set' timing in terms of naming a successor, but most companies seem to minimally name someone four to six months prior to the change," he says. Constable also notes that succession scenarios are dynamic. “They have to be continually revisited as there are changes to the business and talent landscape, or if there are changes to the individual situations of potential successors,” he says.
Sheryl Estrada
sheryl.estrada@fortune.com
