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The number of CFOs promoted to CEOs hits an all-time high

Ryan McVay for Getty Images

Good morning,

So far this year, we’ve been hearing of several CFOs moving into the CEO role at major companies. For example, Christina Spade, the CFO and COO, at AMC Networks was named the next CEO. And Donald Allan, Jr. was promoted from CFO to CEO at Stanley Black & Decker. In fact, the percentage of sitting CEOs coming directly from a CFO chair has reached an all-time high.

In the first half of 2022, 8.1% of CFOs at some of the largest companies in the U.S. were promoted to CEOs, according to executive search firm Crist Kolder Associates's latest volatility report based on data from 681 companies in the Fortune 500 and S&P 500. In 2012, just 5.6% of finance chiefs were promoted to CEOs.

I asked Clem Johnson, president of Crist Kolder Associates, whether companies looking to hire CFOs want candidates with CEO qualities. “It’s not a requirement, but a distinct, very positive differentiator,” Johnson says.

"If a company is evaluating CFO candidates who have roughly equal finance competencies, the one that has some operational or commercial leadership experience can separate from the pack," Johnson says. "They can be much more interesting as a candidate because they have demonstrated another dimension to their business acumen. It's not just confined to the finance realm."

Not surprisingly, the path from CFO to CEO is most common in the financial sector (25.5%). The path least common is the retail sector (3.6%), the report found. However, a commonality that the financial and retail sector share is having the longest tenured CFOs, which is an average of five years.

C-suite executives are not immune to the Great Resignation. And the past few years have been tumultuous for some companies. The report found that the industrial and services sectors accounted for over a third of all CFO turnover. For example, there are new CFOs at Intel Corporation (David Zinsner) and McDonald's (Ian Borden).

The pandemic-induced supply chain crunch placed pressure on the industrial sector, and the services sector certainly took a hit from the lack of workers. "Some companies were feeling the heat, and had to poach from others to bring in new CFO leadership," Johnson says.

The report found that since the beginning of the pandemic, there has been a significant dip in external hiring of CFOs. "In periods of heightened risk and turbulence, as we're in now, where possible companies would prefer to de-risk the appointment of their CFO and oftentimes, 'the devil you know,' is deemed less risky than bringing in someone who is not known to the enterprise," Johnson says. "This goes back to the breadth of the CFO role now, as being at the hub of the central nervous system of the organization. And as a consequence, they have to have relationship capital and partnering skills and really be trusted."

During these tumultuous times, “Having a mindset of being incredibly aggressive and bold on the upside while absolutely continuing to manage the downside is something we see the best CFOs doing,” Ishaan Seth, a senior partner at McKinsey & Company, recently told me.

Since the return to work debate—hybrid or remote—continues, I asked Johnson what type of work environment most CFO candidates want. "The reality is they might, in the normal course of their duties, only be in the office one day," Johnson says. "Especially CFOs who have to be all over the place more than ever. In practical terms, what most executives are saying is, 'I will commit to being in headquarters whenever necessary to conduct the affairs of the role successfully,' Johnson says. "'But since the affairs of the role require me being all over the place, let's just be practical. Do I need to relocate my family, you know, to that city?'"

By next year, Johnson says he should have the data to gauge, “How many Fortune 500 CFOs are living in the same city where their headquarters are?”

Stay tuned.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

This story was originally featured on Fortune.com