Wall Street Journal / Life - Entertain

Finance Chiefs Are Staying on the Job Longer, and That Is Good for Companies

A growing number of chief financial officers are boasting tenures of more than a decade, and the companies they help run tend to generate better shareholder returns than the rest of Corporate America.

By

Joann S. Lublin

Few chief financial officers hold their high-pressured post for a decade, but that elite club is growing.

Jeff Julien belongs to this rare breed, whose longevity often reflects their sustained performance. Named CFO of brokerage Raymond James Financial Inc. 30 years ago, he helped lead his 118th quarterly earnings call last month.

Not a single analyst question surprised the 61-year-old executive. “We prepare days ahead of time for the call,’’ he says.

Mr. Julien’s tenure is longer than any other finance chief at the 673 biggest U.S. businesses—a group that comprises all companies belonging to the S&P 500 or Fortune 500, or to both—according to an analysis for The Wall Street Journal conducted in late July by executive recruiters Crist|Kolder Associates.

Ten years ago, 64 CFOs of the largest companies had served for more than a decade. Today, 85 have.

“Most of the 85 companies have been efficient users of capital,’’ notes Peter Crist, Crist|Kolder’s chairman.

Seven of the 10 most-tenured finance chiefs help run companies whose investors reaped far better returns during the past decade than the S&P 500 index, Crist|Kolder found. Those businesses include Raymond James, health-care information-technology company Cerner Corp. and energy-drinks maker Monster Beverage Corp.

Total shareholder return at Raymond James—which consists of stock price changes plus reinvested dividends—was 182% as of July 25, compared with 86% for the S&P 500 index. The 10-year return at Cerner was 378% and 646% at Monster Beverage.

Mr. Julien partly attributes Raymond James’s performance to “consistent, long-term focus instead of overreacting to the crisis du jour.’’

Monster Beverage couldn’t be reached for comment. Cerner CFO Marc Naughton “has played a critical role’’ in helping Cerner to outperform the S&P500, company president Zane Burke said in an emailed statement.

There are signs of boards’ growing preference for experienced finance chiefs to remain longer in their posts. While decadelong stints are rare, the average tenure of CFOs at Fortune 500 companies rose to 5.7 years in 2016 from 4.7 years in 2005, according to search firm Spencer Stuart.

More CFO Journal

  • Finance Chiefs Centralize to Cut Costs, Make Smarter Decisions October 3, 2017
  • Mattel Taps Former Sprint CFO in Executive Revamp October 3, 2017
  • International Paper to Transfer $1.3 Billion Pension Liability to Prudential October 2, 2017
  • GGP Names New Finance Chief September 21, 2017
  • Hack Response Opens SEC to Criticism September 21, 2017

“Longevity is important in the CFO role,’’ said Judy Bruner, who occupied the highest finance spot at SanDisk Corp. for 12 years until the disk-drive maker merged with Western Digital Corp. last year. “You may have to manage through economic downturns and upturns,’’ she said.

Long-serving finance leaders like Mr. Julien typically survive by deftly handling economic and chief executive changes. The stock market crashed six months after he advanced to CFO from controller in 1987 at age 31. St. Petersburg, Fla.-based Raymond James weathered that downturn because “we keep very conservative levels of cash,” Mr. Julien recalled.

But during the depths of the financial crisis in September 2008, the brokerage finance chief says he lost sleep for several nights—and was forced to cancel a golf trip to Ireland. He worried about job cuts if Raymond James got acquired and the possibility that U.S. workers could lose trillions of dollars of net worth.

“It was really kind of scary,’’ Mr. Julien said.

Raymond James later “used the downturn quite opportunistically” and recruited more financial advisers, he said. “We were kind of a port in the storm.”

A new chief executive frequently replaces the finance chief—an effort now under way at Mattel Inc., where 17-year CFO Kevin Farr is set to depart once the toy maker picks his successor.

Mr. Julien and several other CFOs tracked by Crist|Kolder have rarely experienced upheaval in the corner office. Berkshire Hathaway Inc., for example, has been run by Warren Buffett since 1970—and had Marc Hamburg as its top finance officer for nearly 26 years so far.

Mr. Julien has served only two Raymond James CEOs. He has enjoyed close ties with incumbent Paul Reilly and his predecessor Thomas A. James because he began playing tennis with each of them while he was in high school, he said.

Carol Tomé, CFO of Home DepotPhoto: Jeff Herr for The Wall Street Journal

At  Home Depot Inc., 60-year-old Carol Tomé has worked for three chief executives since her 2001 promotion to CFO. She lost its CEO succession race to colleague Craig Menear in 2014. He asked her to stay.

“I did a lot of soul searching,’’ Ms. Tomé said.

She considered retiring, running for office or switching employers. She decided she would leave only if she landed a CEO spot elsewhere.

One reason Ms. Tomé remained: She also is Home Depot’s executive vice president of corporate services, overseeing such critical areas as strategic business development. Ms. Tomé relishes driving strategy while keeping a healthy cash position—a number she scrutinizes every day.

She realized she would have the most impact by staying. “My fingerprints are all over this company,’’ she added.

Most of the 85 longest-serving finance chiefs of big businesses hold an EVP title, according to an exclusive analysis by Patricia M. Flynn, a Bentley University economics and management professor. She believes their wide-ranging responsibilities explain why they have remained CFOs for so long.

Some well-tested finance executives with enlarged duties win the ultimate promotion. Last month, Citrix Systems Inc. replaced its CEO with David Henshall, the software company’s chief financial and operating officer.

Mr. Henshall joined as finance chief in 2003 and gained the COO role in 2011. “David’s combined experience is the best of both possible worlds,’’ a Citrix spokeswoman said.

Write to Joann S. Lublin at joann.lublin@wsj.com

ADS

LATER