When Dick Cheney proclaims on Larry King Live that the nation’s Vice Presidency is a “weird duck” — for its combination of ceremonial and serious duties — what kind of bird does that make its corporate equivalent, the vice chairmanship? As it turns out, it’s becoming a more common species, and one that often brings more responsibility for CFOs.
Take EMC Corp.’s Bill Teuber. Since he joined the Hopkinton, Massachusetts-based storage giant a decade ago, his job has grown from managing the finance function to serving as CEO Joe Tucci’s operational right-hand man. So Teuber considered his promotion to vice chairman last year “a natural succession,” he says. “We had talked about it in the past and I was very pleased when it came through.”
Teuber, who was succeeded as CFO by David Goulden, now oversees everything from business development to customer relations to acquisition strategies to worldwide sales and distribution. That makes him the clear No. 2 at a company with $11.2 billion in annual revenue. “The title allows me to walk into any meeting as one of the most senior people at the company,” says Teuber, who now routinely fills in for the CEO in speaking engagements and board interactions. “My job is to make his job easier by helping him manage the company.”
Vice Chair of What?
Other former and current CFOs in vice-chair roles include Dell Computer’s Donald Carty, Wal-Mart’s John Menzer, and Pfizer’s David Shedlarz. In July, General Electric added the title for CFO Keith Sherin — extending its tradition of CFO/vice-chair combinations that includes the elevation of longtime CFO Dennis Dammerman to the post 10 years ago. (In that case, Dammerman shifted from CFO to CEO of the GE Capital Services unit, making way for Sherin to become corporate CFO.) “These individuals clearly have more responsibility outside finance, covering operations and strategy,” says Chuck Eldridge, co-managing director of Korn/Ferry International’s financial-officers sector. So when Eldridge sees a CFO add the vice-chair title, he regards it as an acknowledgment of the extra work that CFOs are taking on, especially at a time when there are fewer chief operating officers at companies.
Others aren’t always sure how to regard it. A sense of puzzlement can surround the title, leaving people to ask, for example, “Vice chair of what?” Only a few CFOs-turned-vice-chairs, after all, actually serve on the board. At some companies, vice chairmanships are largely honorary titles or simply serve as a consolation prize for being passed over for the top job.
“The title is nicely ambiguous; companies can use it differently in different circumstances,” says Jim Lawrence, vice chairman and CFO of General Mills. Named vice chairman when Kenneth Powell became president and COO — and the likely successor to CEO Steve Sanger — Lawrence saw his new title as recognition of his six years of responsibility for all of the company’s international business. “It was nicely dealt with,” he adds.
Still, Lawrence recently announced that he is leaving General Mills to become CFO at London-based Unilever.
Keep Up the Good Work
A vice chairmanship “reflects the trend among companies for the CFO to develop into a valued business partner of the CEO,” says Chuck Noski, now retired from the post he held from 1999 to 2002 as AT&T’s vice chairman and CFO. Plus, “the title is also a reflection of the expectation that they will sustain their performance.” Noski says his COO experience at Hughes Electronics, for the two years preceding his move to AT&T, helped prepare him for a Ma Bell finance role that a former AT&T director once called “the toughest CFO job in America.”
Companies facing severe challenges — automotive and telecommunications concerns, for example — often add vice-chair responsibilities to the CFO position, Noski says. Among Noski’s accomplishments: reducing AT&T’s debt from $65 billion to $15 billion and managing the company’s restructuring into four business units.
At other companies, the vice chair is the unofficially designated successor to the CEO. Stephen Roell, now CEO of Johnson Controls, started at the company in 1982 and in nine years worked his way up to CFO. When he was named vice chair in 2005 he became the first choice to replace John Barth, who recently announced his retirement as CEO. “There is a precedent in [the company's] history for this type of move,” notes Christopher Langhoff, a member of the financial-officer practice at Russell Reynolds Associates. Johnson Controls has long been known for its careful succession planning.
The addition of the vice-chair title for Brown-Forman CFO Phoebe Wood in March was part of a succession plan. Her appointment, she says, fits into a bigger picture that involves the retirement of longtime chairman Owsley Brown II, also a former finance chief, and general counsel Michael Crutcher, who has served as company vice chairman as well. Being vice chair “reflects expectations that I will provide strong leadership and work with CEO Paul Varga to ensure that the company is well run and generating value for our shareholders,” Wood adds.
It’s no surprise that with a shiny new title may come higher pay. When former CFO David Coby was named vice chair of health-care company WellPoint — before he was fired in June for violating the company’s conduct policy — the company awarded him $1.6 million in restricted stock, along with 40,000 stock options, and bumped his salary from $710,000 to $740,000.
The addition of the vice-chair title says something about a company’s chief executive as well. At least that’s the view of Noski, who considers himself to have been the business partner of then-AT&T CEO Mike Armstrong (Armstrong also was Noski’s boss in his previous CFO job at Hughes Electronics). “CEOs who are experienced and confident are willing to share the responsibility,” and don’t feel threatened by a strong CFO taking a strategic role, says Noski.
Laura DeMars is a reporter at CFO.