Good morning. Elevating CFOs to the top job is a practice that is gaining steam in corporate America and, as Fortune’s recent "9 CFOs ready to make the jump to CEO" list suggests, the trend is likely to continue. But the C-suite trend of CFO-to-CEO didn’t happen overnight—its growing popularity is the result of several factors.
For starters, companies are looking for leaders who can navigate an increasingly unsteady economic climate. But there’s also been an evolution at the corporate level that has seen the role of CFO change from a back-office function to a leader of company strategy. For example, drugstore giant Rite Aid, which emerged from federal bankruptcy protection, needed a new leader. And so it turned to its trusted CFO Matt Schroeder, naming him CEO in September.
I asked Alyse Bodine, global managing partner of the Financial Officers Practice at Heidrick & Struggles, what she’s seeing. In many instances, companies are considering CFOs as potential CEO succession candidates, she said. Although specific remits are bespoke to companies and their needs, there are common factors. “At a minimum, CFOs who have led and have had an impact on operational, commercial, and strategic activities will strengthen an executive’s ability to ascend the ranks to CEO,” according to Bodine.
Shawn Cole, president and founding partner of executive search firm Cowen Partners, is also finding that companies are hiring CFOs as CEOs who have operational acumen of the core business and strategy experience. “CFOs have become real strategic partners to CEOs, and I would call them ‘truth-tellers,’” he said.
According to Scott W. Simmons of the executive search firm Crist Kolder Associates, CFOs looking to move up should own the profit and loss (P&L) report as general manager and possess effective communication and emotional intelligence. "CFOs have a unique vantage point since their work crosses all segments of the company," he said. The firm's Volatility Report provides data on the increase in the promotions of CFOs to CEOs at Fortune 500 and S&P 500 companies since 2014.
So which big company CFOs possess this type of experience? Simmons shared with Fortune his take on current Fortune 500 CFOs who could potentially step into a CEO role in the next three years.
One finance chief he named is Yanela Frias who began her tenure in March as EVP and CFO of Prudential Financial succeeding Ken Tanji. Frias is the insurance giant’s first female CFO and has built a 27-year career at Prudential.
“This is a deep-rooted Pru person,” Simmons said. Looking at her track record, she ran businesses and worked in international markets, he said. In addition to her finance leadership roles during her time at the company, she also led the Investment & Pension Solutions business within Prudential Retirement, served as president of Prudential Retirement, and was appointed president of Group Insurance in 2021. Over the years, she gained experience central to the CFO role, like running a P&L.
You can read more of Simmons' and Fortune’s discussion in "9 CFOs ready to make the jump to CEO."
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna
