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The retailer's new finance chief maps out the long and winding road from controller to CFO.
Jennifer Caplan, CFO.com | US
November 1, 2001
Barely two weeks after Bruce Nelson took over as CEO of Office Depot Inc. in July 2000, the company's longtime CFO Barry Goldstein retired. Nelson and several headhunters immediately commenced a search to fill the vacant position. From the very beginning of the recruitment process, however, Nelson had a definite idea of what kind of person he was looking for to head up the company's finance department. In a September interview with CFO Europe's Justin Wood (see "Taking Care of Business? Office Depot Still Looking for a CFO"), Nelson said he was seeking a candidate with more than just the requisite financial skills. He was also looking for a trustworthy partner — a loyal, mature, finance chief who commanded the respect of Wall Street analysts and institutional investors.
In the same interview, Nelson made it equally clear he was in no hurry to hire someone just to fill the position. ''This is a key post," he told Wood. "If it takes me from now until the sun goes down to find the right CFO, then so be it.''
Actually, the sun went down about 450 times before Nelson finally found his CFO. In October, following a 15-month search, Office Depot hired Charles E. Brown as CFO. Ironically, Nelson's long search for a new finance chief had led him right back where he started: Brown had been serving as company controller since 1998.
In a statement announcing Brown's promotion to CFO, Nelson said: "Throughout the company's lengthy and comprehensive external search process, I interviewed many highly qualified candidates, each with strong skills sets and solid financial experience." He added, "However, it became increasingly clear to me that Charlie's performance over the past year had placed him at the top of my list of candidates. His strong financial background and experience, his disciplined approach to capital spending, and his knowledge of Office Depot have made him an invaluable member of our leadership organization."
For Brown, it's just all part of the plan. He readily acknowledges having joined Office Depot in 1998 with his sights fixed squarely on the CFO position. Toward that, he set out to learn the ins and outs of the company. But Brown insists that his varied work experience also played a crucial role in his landing the top finance job at Office Depot.
Certainly, Charles Brown has built an impressive résumé over the years. After graduating with a degree in management science from Duke University, he joined KPMG's audit practice in Greensboro, North Carolina. After four years in that regional office, Brown made the big move to the audit firm's New York City office. After five years in New York, he joined PepsiCo's internal audit department, and was shortly thereafter put in charge of the company's international audit division. That job led directly to Brown's next assignment with Pepsi — CFO of the company's Pizza Hut business in the U.K. Three years later Brown moved back to New York and became controller for PepsiCo's international restaurant business, which, at the time, included Pizza Hut, Taco Bell, and Kentucky Fried Chicken. Following a stint at Aromark, a managed services outsourcing company, Brown was hired as CFO of Denny's, the restaurant-chain operator. Then, in 1998, Brown took what seemed to be a backward step: he resigned his position as Denny's CFO and signed on as controller of Office Depot.
Apparently, he knew what he was doing. CFO.com recently spoke with Brown about his career choices, landing the CFO post at Office Depot, and working his way up the finance ladder.
Managers at Office Depot spent nearly 15 months searching for a CFO, only to promote you. Why so long?
While Bruce Nelson had worked in the company for some time, we didn't know each other very well. We knew each other only from periodic management meetings. Prior to becoming CEO, Bruce was running the international business at Office Depot, so our paths really didn't cross very much. When he became CEO and looked around the organization and asked, "Is there anyone here who I could see as my CFO?" he didn't know me. He didn't know that I had been hired two years earlier with the idea that when Barry retired, I would have a shot at the CFO job. Over the following year, when Barry announced his retirement, it allowed me to begin to work very closely with Bruce. It was that working relationship, which I think after a year, ultimately led Bruce to appoint me as CFO.
In every career, there are pivotal experiences that take you in a certain direction. What have those experiences been for you?
The movement from a small regional office in North Carolina with KPMG to New York was a huge cultural change, perhaps even larger than moving from New York to London. The same thing was true when I made the move to international at Pepsi. At the time I took over as director of international audit I didn't even have a passport.
The willingness to take some big risks in a career is key, particularly when it is something that is going to broaden your experiences. My experience in the U.K. was interesting because I was working with a start-up business that was growing rapidly. It was also an opportunity to work in a truly multicultural environment. I was the token American in this largely British company, which was also a joint venture of very different cultures and expectations. I would say that was probably one of the toughest early jobs I had. Managing high growth in a joint venture where frequently the parents would have different expectations was challenging.
Some people would perceive the move from CFO to controller as a step down. In 1998 you went from being the CFO of Denny's to being the controller of Office Depot. You obviously didn't see the controllership as a lesser position.
No. As a matter of fact, Denny's was a $2 billion company that unfortunately had a lot of financial issues, which I knew going in. They were a product of the leveraged-buyout syndrome of the late '80s. So you had a company that was essentially living quarter to quarter.
Office Depot had a much stronger balance sheet and was all-around a stronger company. Also, part of the attraction was that the former CFO of Office Depot was looking to retire. It was a chance to come in and be part of a large and growing franchise, and if things worked out, become CFO someday.
So would you advise others faced with a similar career choice to accept a position, which in terms of title alone, would appear to be a step down?
I think people get too caught up in titles. You really have to focus on scope of responsibility and the momentum of the brand. I have resumes that cross my desk all the time. Someone who is an EVP of finance in a $100 million company is clearly not going to be EVP of finance at a $12 billion company like Office Depot. Titles are important, but you have to give priority to broadening your experience every chance you get. That's what you take with you.
You worked in the restaurant and food sector through much of your career. Then, you switched to Office Depot. Do you think it's wise for financial executives to stay within an industry rather than switching sectors?
Actually, there are a lot of parallels in this business to the food-services industry. If I were moving from food services into applied science, then that would be a little different.
There is risk involved in choosing companies in, say, just the restaurant area. If I had decided to work only for restaurants, that would have been very limiting. I think you want to understand the things that are interesting to you and that you can leverage. But I would be very cautious about not thinking broadly about your career. I really think it's the diversity of experience that ultimately will hold you in good stead.
What skills do you think a controller needs to be considered CFO material?
Most people look at the controller function in a large public company as a very technical, detailed function. And it really is. There are a lot of technical requirements around external reporting, banking relationships, etc. But ultimately it is not those skills that will allow a controller to grow to be CFO. It really is the ability to take a step back and divorce yourself from the more technical aspects of the job, and become more of a business partner.
That's not an easy thing for a controller, or other finance department employees, to do. The role of corporate strategist is typically reserved for the finance chief.
That's the issue. But to be a good partner to the CEO you really have to know how to take a step back from the technical aspect. I was fortunate in the sense that over the last 14 months or so, I had the chance to work very closely with Bruce. I think his initial position was that he wanted to find someone who was a sitting CFO — that is, a CFO of another company. But as time went on I was able to demonstrate to him some of the things he was looking for, in addition to having the controllership skills.
Initially, I think one of the things Bruce did not understand was the breadth of my experience prior to coming to Office Depot. He viewed me as the technical accounting guy. But in working together, he was able to see some of the breadth in my background.
When I am asked what was the silver bullet or epiphany in the selection process I say there really wasn't one. Bruce had a fiduciary duty to go out and look, and find the very best candidate for the job at Office Depot. He spent several months doing that and saw a number of very strong candidates. At the end of the day, when he tallied it all up, he felt that he had gotten to know me a lot better. Having had the opportunity to work with him in the last year has been a tremendous learning experience for me. Our partnership gradually grew, and it worked out in the end.
One of the experiences that is required of CFOs — and an experience which few controllers have — is communicating with Wall Street. How can midlevel finance employees prepare for dealing with analysts and institutional investors? Or can they?
If life just takes its course, chances are, the average controller will never have that opportunity. But that's the reason why controllers need to establish a development plan with the CFO. It's really such a critical need. I was very fortunate because Bruce has really allowed me to participate quite a bit over the last 10 months, starting with an analyst meeting in January of this year. Up until that point I had very little exposure at this level. Most of my exposure in previous jobs had been as an "operating CFO," if you will. When the analysts came to visit Denny's, they generally met with operational management.
Every controller that really aspires to being a chief financial officer really needs to work with his or her boss to get that exposure. It's a very important area, and one in which I still have a lot to learn.