CEOs & CFOs.


TODAY, MORE THAN EVER BEFORE, a CEO and CFO must function as a team. Financial expertise has always been critical to managerial strategy, but rampant mergers and acquisitions, shareholder activism and ever more complex regulatory requirements are recasting the CFO role--and, in turn, the relationship between finance chiefs and their CEOs. The change isn't always positive. While many CFOs report having more involvement in strategy, others say that intense scrutiny from regulators and Wall Street, coupled with onerous compliance requirements, have turned the job into one of endless drudgery. This Chief Executive Special Report examines why some CEO-CFO partnerships work--and why some implode.

The CEO-CFO Partnership

Why do some CEO-CFO pairings soar--while others crash and burn?

"I USED TO JOKE 'they are the kite, and I am the string,'" says Andrew Greenebaum, referring to his CFO tenures at three different firms. "CEOs are dreamers and thinkers, and CFOs are the watchers of the purse strings."

That point of view jibes with results of a recent survey in which 47.5 percent of CFO respondents reported that their CEOs are more optimistic about their companies than they are. Conducted by CFO Magazine in conjunction with Duke University's Fuqua School of Business, the survey reported that just 5.1 percent of CFOs said the opposite--that they are more optimistic than their CEOs.


Visionary vs. realist--or even pessimist--is, by nature, an adversarial relationship. And yet even CFOs happy in their roles invariably describe the CEO-CFO relationship with some variant on that theme. What's more, most say the nay-sayer aspects of their jobs have grown significantly since Sar-box hit Corporate America in 2002. "The CFO is becoming the official bad guy," says Bill Wheeler, CFO of MetLife since 2003. "When it comes to compliance with SEC regulations or Financial Accounting Standards Board (FASB) rules, we're the internal cop who gets to deliver the bad news."

Reality Checker

DOLING OUT MORE BUBBLE-BURSTING doses of reality isn't exactly Wheeler's--or any CFO's--dream job. But it comes hand in hand with the greater emphasis on regulatory compliance and financial reporting that all companies have had to contend with over the past five years. Some CFOs find their post-Sarbox compliance workloads intolerable, switching companies or even careers to escape the drudgery. Greenebaum, for example, left the CFO spot at the lifestyle company Vans to pursue a new career in investor relations at Integrated Corporate Relations. But many take the enhanced reporting responsibilities in stride--even finding an upside.

"There's less mystery than there used to be," says John Ma-honey, CFO of Framingham, Mass.-based Staples and a former partner at Ernst & Young. "The accounting blowups at some companies wound up with CEOs and CFOs pointing fingers at each other. But for most it created a healthier, more robust dialogue about ensuring that financial statements are properly prepared."

Shoulder-to-shoulder vetting of numbers is just one area where regulatory changes have had an impact on the CFO's role and top-level corporate relationships. More and more often, CFOs are called upon to walk CEOs and board members through the intricacies of financial statements and explain the nuances of the more complicated accounting processes--particularly when a rule change or court case about a given practice makes headlines. "Board members, and particularly audit committee members, are much more concerned about truly understanding the numbers themselves," says Julia Homer, founding editor of CFO Magazine. "CFOs uniformly report that they spend more time educating the board and individual board members about finances."

Talking the Walk

COMMUNICATING WITH EXTERNAL constituents--whether they be investors, NGOs or even regulators--is also increasingly falling to the CFO. While CFOs must first and foremost lead the charge in producing timely, accurate financial statements, CEOs increasingly rely upon their finance chiefs to be good communicators capable of not only accurately representing the company's finances, but also painting a picture of where it has been and where it is going from a financial perspective.

"If you want the CEO to run the business, someone has to run the relationship with the...

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