From CFO to CEO: An increasingly popular path (2024)

FAQs

From CFO to CEO: An increasingly popular path? ›

Even with more opportunities for CFOs to take over as CEOs, the most common path to CEO remains a move from a COO or president role. In 2023, 45.3% of CEO roles were filled by COOs or presidents. Seventy-eight percent of departing CEOs were replaced by internal candidates in 2023; 57% of CFOs were.

Research from Russell Reynolds Associates showed that, in 2022, 33% of S&P 500 CFOs who changed jobs became CEOs, compared to 8.8% in 2021. But the shift has been happening for a while, often resulting in great success for the organisation. Take PepsiCo for instance.

Yet, the transition demands a comprehensive understanding of the expanded scope and demands of the CEO position. Success hinges on meticulous planning, a strategic approach to team-building, and alignment between the CEO and their successor in the finance role.

In the US's largest companies, more CFOs are being tapped for CEO roles. According to the latest Crist Kolder Volatility Report, in 2023, among Fortune 500 and S&P 500 companies, 8.4% of CEOs were promoted directly from CFO positions, up from just 5.8% in 2013.

CEOs appreciate CFOs who not only identify potential risks but also propose risk-mitigation strategies that align with the company's growth objectives. CEOs wish for CFOs to possess a comprehensive understanding of all facets of the company, transcending their traditional financial roles.

More large companies have been promoting their CFOs to CEO in recent years. According to Crist|Kolder Associates' 2023 Volatility Report, leaders at 8.4% of Fortune 500 and S&P 500 companies had taken this path, up from 5.8% a decade ago.

CEO in salaries. In most companies, the CEO earns much more than the CFO. According to Salary.com, the average annual salary of a CFO in the US is $420,000, usually ranging from $319,000 to $537,000, while the average salary of a CEO is $800,000 ranging from $420,000 to $1,200,000.

The position most likely to become a CEO is that of a Chief Executive Officer ( CEO ) or a Chief Operating Officer ( COO ) . These roles are typically held by individuals who have a strong combination of leadership skills , business acumen , and strategic thinking abilities .

More Finance Chiefs Reaching CEO

CFOs have historically been known for number crunching, but they are increasingly taking on more operational responsibilities. That helped a record number of finance chiefs ascend to the top job last year at America's biggest companies.

The CFO is someone who most people want to have confidence in." Employees, executives, shareholders and the public may start looking to CFOs for answers, so companies will have to work harder to ensure they are retaining this vital talent — that's where better pay comes in, explains Branthover.

Is CEO more powerful than CFO? ›

The CEO is the highest-ranking role in the organization. CEOs and CFOs are not equal in the organizational hierarchy, despite both having 'Chief' in their titles. Generally, the CEO reports to the board of directors, whereas the CFO reports to the CEO.

Becoming a Chief Financial Officer (CFO) is a significant career achievement that represents the pinnacle of the finance profession.

If you work as a CFO, you oversee the investment of funds held by the company and assess and manage associated risks. You also supervise cash management activities, execute capital-raising strategies to support a firm's expansion, and deal with mergers and acquisitions.

Reasons for Departure: A CFO might leave for a variety of reasons—retirement, better opportunities, disagreements with the board, or personal reasons. The reason for the departure can heavily influence the impact it has on the company's performance.

Top of mind for CFOs in 2024

How to use cost as an effective lever to create value: With the economy slowing down and revenue growth under pressure, SG&A optimization is being used as one of the key levers to unlock greater profitability and increase enterprise value, aside from seeking other growth opportunities.

They are seen to have smaller egos (at least compared with some table-thumping chief executives), an attention to detail, an understanding of risk management and an intense focus on the bottom line.

CEOs want CFOs with the ability to plan for growth and the foresight to anticipate and prepare for possible financial setbacks. In addition, they want CFOs who can adapt their plans and strategies quickly.

The most difficult decisions for a CFO often involve balancing risk and reward in financial investments, determining the right time for expansion or cost-cutting, and allocating capital between competing projects or departments.

Based on full compensation data for 2022, the top paid CFO in the US is Joe Berchtold of entertainment group LiveNation (52.4M)–capping a bumper executive year for the entertainment concert company whose CEO Michael Rapino also bagged the highest earning chief executive in the US at $139 million.

Both the Chief Operating Officer (COO) and the Chief Financial Officer (CFO) positions offer lucrative salary and compensation packages. However, there are differences in how the compensation is structured for each role. When it comes to salary comparison, the CFO tends to have a higher base salary compared to the COO.

Can you go from CFO to CEO? ›

The typical career path for CFOs who aspire to become CEOs frequently takes them into operating roles, often as chief operating executives or presidents of large divisions, even if their compensation exceeds the typical salary for that position.

“That's why a lot of companies do put in a CFO and a CEO from the beginning or fairly early on, because stakeholders in that company will insist on it,” she says. Typically, Reiner sees the dual role in smaller, emerging private companies that “are picking and choosing their investments carefully,” Reiner says.

The education background of CEOs

The Bachelor of Arts and Bachelor of Business Administration was the most popular undergraduate degrees among Fortune 100 CEOs, with 53% of CEOs identified as having obtained one of these two degrees.

CEO is the highest position to occupy in a company. The CFO, who is responsible for the financial discipline of a company along with identifying the strengths and weaknesses of a company, ultimately reports to the CEO.

The odds of becoming a CEO are 1 in 135,000. These odds are very large, but doing what we have talked about will bring these odds to a much smaller percentage. One of the best things that can lower the odds is getting a job at McKinsey Consultant, which is 1 in 690.