US CFOs Are Leaving... 'Finance Teams' Facing Multiple Crises

CFO Turnover Rate Up 30% in the First Half of This Year

Global companies experiencing poor performance amid unprecedented multiple crises such as high interest rates and inflation have started replacing their Chief Financial Officers (CFOs).

According to Hydrick & Struggles, a global research firm, 103 out of the top 1,000 companies selected by Fortune in the U.S. replaced their CFOs in the first half of this year. This represents a 30% increase compared to one year ago (79 companies). If this trend continues, the number of companies replacing CFOs is expected to reach 200 (20%) by the end of this year, marking the highest level in the past decade. The average tenure of CFOs in these companies also shortened to 4.9 years in the first half of this year, compared to 5.3 years ten years ago.

The wave of CFO replacements mostly stemmed from punitive personnel changes due to deteriorating performance. Tesla, the world's largest electric vehicle company, announced on the 7th that CFO Zachary Kirkhorn would be leaving. They appointed Chief Accounting Officer (CAO) Vaibhav Taneja as his successor. Although the company did not disclose the reason for the CFO change, the market interprets it as a punitive measure related to Tesla's recent poor performance.

Walt Disney and U.S. pharmacy chain Walgreens, both suffering from chronic poor performance in their core businesses, also recently replaced their CFOs. Walgreens announced through a recent filing that CFO James Kehoe plans to leave this month to move to a technology company. Walgreens has experienced ups and downs, including a significant loss of market share due to the closure of offline stores amid the COVID-19 pandemic.

[Image source=AP Yonhap News]

There were also replacements due to promotions or changes in roles. Alphabet's Google revealed during a conference call after its Q2 earnings announcement that CFO Ruth Porat will assume the newly created position of President and Chief Investment Officer (CIO) next month. Former Comcast CFO Michael Cavanagh was promoted to President and currently leads NBCUniversal.

Hydrick & Struggles evaluated that the wave of CFO turnovers this year is distinctly different in scale and pattern from typical job changes. With inflation soaring to the highest level in 40 years, aggressive tightening by central banks worldwide, worsening macroeconomic conditions, and escalating U.S.-China tensions, combined with continued poor performance, the replacement wave among financial executives has intensified. According to financial information provider Refinitiv, the net profits of S&P 500 companies in Q2 this year decreased by an average of 3.8% compared to the same period last year.

This content was produced with the assistance of AI translation services.