Hello, I Must Be Going

Only 25 percent of the current Fortune 500 CFOs have stayed longer than 5 years at one company. Why is that?

At a time when a few down quarters can lead to a forced resignation, Paul Coghlan, 57, is an anomaly. He’s been sitting at the same Formica-topped desk as CFO of Milpitas, California-based Linear Technology Corp. for 17 years, as revenues have gone from $22 million to $1 billion and back down to $600 million. Even with the stock at 1991 levels, he has no plans to move on any time soon.

“People might say I’ve missed out by not moving around more,” says Coghlan, who spent 5 years as a controller and general manager for GenRad Inc. (now part of Teradyne Inc.) and 12 years in public accounting before joining Linear. “I don’t put a lot of weight in that, though,” he adds, “as long as the challenge to grow the company profitably keeps renewing itself.”

Most of Coghlan’s peers spend less than half that long at any one company. “My hat is off to the CFO of any large, publicly traded company who has been able to make it more than 10 years,” says Peter Crist, president of executive recruiter Crist Associates, in Hillsdale, Illinois. In fact, only about 40, or 8 percent, of the current Fortune 500 CFOs have stayed longer than 10 years at one company, with just under 25 percent lasting past the 5-year mark, according to data compiled for CFO by executive-recruiting firm Spencer Stuart. Thirteen have been in the same seat for more than 15 years, as of press time (see the chart at the end of this article).

So, what does it take to go the distance? Coghlan thinks long tenure is directly related to the success of the company. He points to 64 straight quarters of positive cash flow and a 39 percent profit margin (which dropped only about 5 percentage points as the company’s revenues were cut in half last year) as the keys to keeping his seat for so long. An impressive history of meeting Wall Street forecasts — 45 quarters in a row — has also contributed to his longevity.

At least one analyst agrees. “I think one of the reasons Coghlan has stayed a long time is that the company has had very consistent results and hasn’t changed strategy,” says Jack Geraghty, an analyst with New York- based Gerard Klauer Mattison who has been following Linear for more than five years. “If you like the people you’re working with and the results are good, why would you leave?”

The correlation between financial performance and CFO tenure, however, is weak. Of the 13 longest-serving CFOs in the Fortune 500, only 2 can boast double-digit profit margins. Dillards and Winn-Dixie, both in notoriously low-margin industries, have actually returned negative profits during the long tenures of their CFOs.

Experts say the intangibles — in particular the immeasurably crucial CEO relationship — largely determine how long a CFO endures. “Skill set and contribution are important,” says E. Peter McLean, vice chairman and head of Spencer Stuart’s CFO recruitment practice, “but there’s also got to be chemistry between the two key players.” While it isn’t impossible to keep the job when a new CEO is brought in — Hewlett-Packard’s Bob Wayman and Newell Rubbermaid’s Bill Alldredge have both done it — most CFOs who have survived beyond 15 years have worked either with only one CEO or with new bosses who moved up from inside the company.


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