Datarails, the financial planning and analysis (FP&A) platform for Excel users, analyzed SEC filings by 2,056 of the biggest US listed companies between 2016 to 2021, the latest period for which official data exists. The methodology involved analyzing CFO tenure and compensation which is mandated by the SEC in annual filings.
The study finds that CFOs have the least staying power among their C-Suite colleagues, lasting an average of 3.51 years over this five-year period. In contrast, Chief Technology Officers have the highest staying power in this timeframe (4.64 years), followed by the Chief Marketing Officer (4.63 years), General Counsel (4.50 years) and the CEO (3.89 years).
The study finds that more than half (56%) of listed US companies have experienced at least one CFO turnover in this period. In addition 16% of companies experienced more than one turnover. The height of CFO departures was 2021 but early data suggests 2022 is likely to surpass this peak.
The revolving CFO: from Papa John’s to Starbucks
Showing the struggle for CFOs to remain in their role, three publicly listed companies got through five CFOs in five years: Superior Industries International, Sally Beauty Holdings and Harte Hank.
Beneath the five-in-five-year club, a further 52 U.S. companies announced four new finance chiefs in five years, including household names Papa John’s International, Health Corp, Citrix Systems, and Avis Budget Group. Below these, a further 269 companies cycled through three CFOs including Tesla, Under Armour, United Airlines, Starbucks, Shake Shack, Tenneco, Procter & Gamble, Ford Motor and Philip Morris.
The highest average CFO tenure is revealed to be the travel industry‒despite the challenge of COVID ‒ joint top for long CFO stays at 3.5 years, alongside the cable industry. The second highest compensation was also claimed by travel sector CFOs. Despite grounded flights and a cruise industry in crisis in 2021 and 2021 CFOs in the travel industry saw their average total compensation reach $6.3million‒the highest level for five years. The shortest tenure is claimed by advertising and railroad CFOs who lasted an average of only 2.5 years between 2016 and 2021.
2022: more of the same as exodus continues
Full US SEC records for 2022 are unavailable, however the study also analyzed a sample of 87 CFO departures at these top listed companies in 2022. Of these CFO departures, 70% of CFOs were replaced, while 22% of CFOs retired ‒at an average age of 60. A further 8% of CFOs were promoted to CEO within their company.
CFO pay hits $3.5million post-pandemic
Analyzing CFO pay across the 2056 biggest US listed companies, the study finds that average CFO compensation (comprising salary, bonuses, stock awards and options) rose on average from $2.4million in 2016 to $3.5million in 2021‒a 40% increase over the five-year period until 2021. Stock awards emerged as the fastest-rising component in CFO pay jumping to 63% of compensation, up 10% from 2016.
By sector, CFOs in the cable and satellite industry enjoy the highest compensation overall, averaging $8.1m pay annually in 2021. The sector with the lowest compensation is education, at an average annual compensation of $1.1 million.
The final part of the study focuses on the priorities of CFOs in 2023 to extend their staying power, including their responses to inflation, and prioritizing technological investment and automation.
Didi Gurfinkel, Co-Founder and CEO of Datarails: “CFOs are suffering the unwanted position of having the least secure role in the C-suite. The challenges are only intensifying as pandemic challenges have been quickly replaced by recession and inflation fears as we enter 2023. There has never been more scrutiny on the CFOs’s ability to forecast, show value, and tell a compelling story around the numbers. This will help to determine the staying power of CFOs in 2023. This is why more automation and investing in the capabilities to get the job done is a top priority for CFOs in 2023.”
Datarails is a financial planning and analysis platform that automates data consolidation, reporting and planning, while enabling finance teams to continue using their own Excel spreadsheets and financial models.
Automating these time-consuming manual processes paves the way for finance teams to spend more time analyzing data and less time gathering it. It also empowers them to answer essential strategic questions like what their organization can do to increase revenue and reduce expenses.