The NY Times is reporting that CFO’s are disappearing, or at least quitting in large numbers:

E. Peter McLean, a vice chairman at Spencer Stuart, the executive search firm, said that this year through mid-November, 62 chief financial officers at Fortune 500 companies had left their jobs; by year-end, he expects that total to reach nearly 70, a number that would mirror last year’s. Over the last three years, more than 225 C.F.O.’s of the Fortune 500 companies have left.[...]

Nor will the pace slow down, said Gordon Grand, a managing director at Russell Reynolds Associates, an executive search firm. “When the economy was bad and Sarbanes-Oxley was new, many companies and C.F.O.’s didn’t want to risk change,” he said. “Now, there’s a greater willingness to make change on both sides of the equation.”

Some finance chiefs, of course, are just changing companies. But many are leaving the field entirely. Debby Hopkins, a career chief financial officer, recently switched to chief technology officer at Citigroup, while Thomas A. Madden, the chief financial officer of Ingram Micro, has announced that he will leave in April to teach at the Graduate School of Management at the University of California at Irvine.

Here’s what you need to understand. The whole title of “Chief (Insert here) Officer” was a creation of the original SEC acts, which require that companies have someone who signs off on the operations of the company (CEO) and someone who signs off on the finances (CFO). Sarbanes Oxley, in asking the CEO to sign off on the finances, creates instant conflict between a CEO who feels his ass is on the line for somebody else’s work, and a CFO who feels he can’t get his work done properly without having a CEO meddling with his work all the time. In other words, with two people personally liable for the same task, they both feel a need to get their hands all over that task, and thus, eventually, one of them has to leave. I don’t know what the long term implications of this are going to be, but I doubt they’ll be good.

Read more here.

(thanks adam)

This entry was posted on Monday, November 29th, 2004 at 5:09 pm and is filed under News & Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.