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For one of my corporate boards, the relatively new CEO is considering changing his direct reports so that the CFO reports to the Chief Administrative Officer rather than directly to the CEO. He asked me what the general practice was for corporate boards on this matter and I told him that I thought that "virtually all" CFOs reported directly to the CEO. Do you know of any actual studies on this?
Anonymous
Response:
I agree with your statement that "virtually all" CFOs reported directly to the CEO.
There are a few FERF studies that refer to this.
First, the 2007 Financial executives compensation survey. 916 of the1,844 FEI members (1/2 public co. 1/2 private co.) identified themselves as CFOs. 1,021 members said they reported to the CEO.
Secondly, I recall from both our SOX studies and our one sourcing studies, the reporting structure was CFO reporting to CEO. These studies were based on experiences of anywhere from 15 to 30 companies.
Let me know what follow up questions you may have.
Cheryl Graziano, CPA (cgraziano@financialexecutives.org)
Response:
When I was told I would report to a newly hired COO rather than the CEO, I had a similar reaction to yours. I did my best to research the topic and asked Big 4 audit partners, etc. The answer was not as clear cut as I would have liked. I think it depends on the expectations the owner/CEO has for the CFO and how much time the owner wants to spend on the business. In my case -- and with the advantage of hindsight, the owner wanted to focus on selling the business and did not want to be involved in day-to-day issues. The newly hired COO thought he was a pretty good CFO. To lower costs in preparation for sale, the CEO eased me out of the company and sold the company 6 months later. Good luck!
Ed Clarke (eclarke3@aol.com)
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