Good morning! This is Sheryl Estrada, author of CEO Daily's sister publication CFO Daily. Like Alan's newsletter, it's a daily briefing on the biggest stories shaping the C-suite—but with a special focus on finance. If you haven't yet subscribed to CFO Daily, you can do so here.
One of the questions I get asked most often by readers is: Do CFOs make good CEOs? It's a tricky one to answer. There are plenty of examples of executives who have nailed the transition. Indra Nooyi, for instance, served as the highly-respected chairman and CEO of PepsiCo from 2006 to 2019 after working as the company’s president and CFO. Then there are those who’ve had a tougher time. Shou Zi Chew, CEO of TikTok and former CFO of the app’s parent ByteDance, might land in the latter category at the moment after his grilling on Capitol Hill yesterday.
“We would characterize today's testimony by TikTok CEO Shou Zi Chew in the Beltway as a ‘disaster’ moment that will likely catalyze more calls by lawmakers and the White House to look to ban TikTok within the U.S. if ByteDance does not look to sell,” Dan Ives, a tech analyst at Wedbush Securities tweeted on Thursday
Finance chiefs are pursuing the CEO seat now more than ever, Jenna Fisher, managing director and head of the CFO practice at the global firm Russell Reynolds Associates (RRA), told me. Last year, 33% of S&P 500 CFOs who changed jobs became CEOs, compared to 8.8% in 2021, according to RRA research.
“For a long time, CFOs were not given that opportunity from a skill set succession planning perspective,” Fisher says. But companies are getting smarter about pressure testing CFOs for the top job by giving them stretch opportunities and developmental challenges, she said. “I think a lot of CFOs perform well because many can think quickly on their feet,” Fisher said. “They tend to be very pragmatic and data rational.”
However, there are some roadblocks for a CFO turned CEO who’s not used to being in the spotlight. “Generally speaking, CEOs, without a CFO background, tend to be more optimistic,” Fisher explained. “They tend to be more extroverted than a typical CFO. Can they inspire the team broadly? Can they sell the company's vision to the Street? A great CFO will tell the story but might be more matter of fact about it.”
One of my first interviews when launching CFO Daily in March 2021 was with Ali Dibadj, who was then the CFO and head of strategy at the investment firm AllianceBernstein. In June 2022, Dibadj joined global active asset manager Janus Henderson Group as CEO. I asked him what CFO skills apply to the top job.
“Successful CFOs typically have a proven track record of weighing investments in top-line growth with bottom-line results, working closely with the CEO and board,” he said. “To be a good CEO, financial executives must offer the organization they lead a broader set of skills.” Dibadji listed team problem-solving, developing a strategy, articulating a vision, and creating a followership as among those traits.
I asked Fisher to identify the telltale signs of a CFO eyeing the next rung. Perhaps unsurprisingly, it’s about the numbers. "A lot of what I'm hearing in the market right now comes down to compensation," she said. "If you have a CFO who came in at the high peak of the market and their equity is underwater, there's probably a good chance that they're listening to other opportunities."
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
@SherylEstrada
