Pity the poor CFO. The chief financial officer position suffers from the worst job security in the so-called C-suite, according to a new study by Israeli financial planning and analysis startup Datarails.
Datarails analyzed 2,056 US companies and discovered that CFOs lasted only 3.5 years in their jobs – lower than any other C-suite position. The methodology involved reviewing CFO tenure and compensation, which is mandated by the SEC to be disclosed in annual filings.
Of the companies in Datarails’ list, 53 have gone through four CFOs, while 269 companies have accumulated three CFOs, between 2016 and 2021.
CEOs (chief executive officers) lasted 3.9 years in their positions, only slightly longer than CFOs. It’s better to be a CTO (chief technology officer) or a CMO (chief marketing officer), it seems. They did the best, both averaging 4.6 years on the job in the same five-year timeframe.
More than half (56%) of the companies experienced at least one CFO change in the same period. And 16% of companies of companies experienced more than one turnover.
Three companies went through five CFOs in five years (Superior Industries International, Sally Beauty Holdings, and Harte Hank), while 52 companies had four CFOs in five years (Papa John’s International, Health Corp, Citrix Systems and Avis Budget Group).
In the three-CFOs-in-five-years category, we find Tesla, Under Armour, United Airlines, Starbucks, Shake Shack, Teneco, Procter & Gamble, Ford Motor and Philip Morris.
The CFOs who lasted the least amount of time in their positions were in the advertising and railroad industries, averaging 2.5 years in the job between 2016 and 2021.
CFOs in the travel industry lasted the longest in their jobs and received the second highest compensation levels. Despite grounded flights during lockdowns, these CFOs saw their average total compensation reach $6.3 million – the highest level for five years.
Of the CFOs who left, 22% retired at an average age of 60. The majority (70%) were fired and replaced. The remaining 8% were promoted to CEO within their company.
Still, it’s never a bad time to be a CFO from a salary perspective. Average CFO compensation, including salary, bonuses and stock options, jumped from $2.4 million a year in 2016 to $3.5 million in 2021. Some 63% of that compensation was in stock awards, up from just 10% in 2016.
If you really want to do well as a CFO, consider joining the cable and satellite industry, where overall compensation averaged over $8 million in 2012.
The rock-bottom pay was in education, where CFOs earn “only” $1.1 million a year.
“There has never been more scrutiny on the CFOs’ ability to forecast, show value, and tell a compelling story around the numbers,” notes Didi Gurfinkel, CEO of Datarails. “This will help to determine the staying power of CFOs in 2023.”
While 2021 was the worst year for CFO departures, Datarails estimates that 2022 (for which data was not available yet) was even worse.
You can download the Datarails CFO report here.