As another earnings season arrives, focus seems to be turning not just to results — but to the role of the CFO. And much of the focus is not necessarily on how CFOs can cause their companies to shine, but rather on how they can avoid messing things up. A CFO can be seen as an important part of a company, with many looking at getting an Outsourced CFO to help where needed.
The Wall Street Journal spoke with several CFOs and reports that “some of them have found strategies to minimize the risks and keep the quarterly rituals from spiraling out of control.”
- According to Cisco Systems Inc. CFO Kelly Kramer: “The goal of any CFO is not to surprise your investors.”
- Domo Inc. CFO Bruce Felt Jr. “said that the worst calls happen when companies try to overstate the case for their success.”
- Said Paul Atkinson, who oversees a $3 billion portfolio for Aberdeen Asset Management: “They are literally on stage, and a wrong word or wrong phrase can get some people to move the stock based on a poor explanation.”
And the focus comes at a time when, according to a separate Wall Street Journal piece, corporate boards are spending more energy on choosing their CFO: “Corporate boards are playing an increasingly pivotal role in choosing CFOs. Some directors had a heavy hand in recent CFO choices at McDermott International Inc.,Avon Products Inc. and Newell Rubbermaid Inc. Boards also can help unseat underperforming finance chiefs.”
One reason for the shift: Sarbanes-Oxley Act of 2002, “which required CFOs and chief executive officers to sign off on the accuracy of their company’s books. It continued apace after the financial crisis, which proved the value of having a veteran at the helm. Recruiters’ phones started ringing again after new regulations that spanned everything from initial public stock sales to revenue accounting.”
Another possible reason might be the growing importance of cyber security. CFO Magazine writes: “The importance of cyber security is no secret to anyone who watches the nightly news. Senior executives at businesses of all sizes understand all too well that today’s global economy is still not adequately protected against cyberattacks, despite years of effort and spending in the multi-billion dollar range each year. But until recently, many CFOs may not have been considered an integral part of an organization’s security team or understood how to respond to security risks and the implications for their organizations. But times have changed and many CFOs are being called upon to help promote cyber security and identify threats.”
Further, the WSJ reports, CFOs might get more board scrutiny “because more finance chiefs now rise to the top job: 12 of the Fortune 50 CEOs are former finance chiefs, up from nine in 2010, according to recruiters Heidrick & Struggles International Inc.”
Even more reason for CFOs not to mess up that upcoming earnings call.