With Stocks Up, Finance Chiefs Are On the Move

A recruiting firm's latest annual report on the career movements of C-suite executives is a treasure trove of interesting tidbits.
David McCannAugust 23, 2018
With Stocks Up, Finance Chiefs Are On the Move

An interesting fact about turnover in the C-suite is that it generally tracks the movements of the S&P 500 Index. That is, when stocks go up, the number of executives leaving or switching jobs does, too. And vice versa.

Accordingly, given this year’s bountiful stock returns, the turnover rate among top corporate leaders — CEOs, finance chiefs, and chief operating officers — is on track to reach a 24-year high in 2018.

The rate is expected to edge past 18% by year-end, against a historical average of 14.4%, according to the latest edition of recruiting firm Crist Kolder’s annual Volatility Report. For CFOs this year’s projected turnover rate of 16.6% compares with 15.8% in 2017 and a long-term average of 15.1%.

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Overall, it’s not a surprising trend. When stock prices climb, executives become likelier to cash in equity awards and then take advantage of the corresponding flexibility to make job or life changes.

This is Crist Kolder’s 15th Volatility Report, although its database of information goes back to 1995. The new report includes data through Aug. 1 on the 673 companies that are in either the Fortune 500 or S&P 500.

The report is filled with interesting aggregate information about the careers, movements, and backgrounds of corporate executives. There are worse ways to spend a few free minutes than browsing through it. Here is a sampling:

> Year to date, the financial and industrial sectors have seen the greatest CFO turnover (15.1%). Retail has seen the lowest (6.8%).

> Companies that seek to hire a finance chief with prior experience in the role may be out of luck. Just 18.5% of sitting CFOs held the title in their immediately previous position.

> The percentage of CEOs who were finance chiefs in their immediately previous position ticked up this year, to 6.9% from 6.2%

> The count of female CFOs has reached an all-time high at 12.5%, almost exactly double the 6.3% recorded in 2004, the debut year for the Volatility Report. The financial sector has the most women in charge of finance (20), and the health-care sector the fewest (3).

> The prevalence of ethnically and racially diverse finance chiefs has shot up even more. Whereas in 2004 the number of Hispanic/Latino, African-American, and Asian/Indian CFOs was just 18, there are now almost three times that many (53).

> Does it seem like most CFOs started out in public accounting? If so, it’s an illusion. Only 39% of them have that experience in their background.

> The proportion of companies with a COO fell for the 17th time in the past 19 years, to just 31.5%.

> Less than 10% of CFOs are over 60 years of age. The oldest is Walter Berman of Ameriprise Financial, at 75. The youngest: David Knopf of Kraft Heinz, at 30. The average age is 53, and far more CFOs are 54 than any other age.

> The average age of hire is increasing for both CFOs and CEOs — 49.3 and 53.4 this year, respectively, compared with 44.0 and 45.9 in 2001.

> The longest-tenured finance chief is Jeffrey Julien at Raymond James Financial. He’s been living the CFO life for more than 31 years.