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Finance Departments and Training CEO's

With the proliferation of corporate takeovers, leveraged buyouts, and restructuring in the U.S., it would seem that chief financial officers (CFO) hold the keys to executive wisdom. Recruiters report a growing trend of grooming CFO's for chief executive officer (CEO) positions, with some estimating that nearly 25% of top corporate leaders are former CFO's. Analysts, academics, and headhunters agree that the ideal CEO communicates well, is adept at managing managers, understands the company's product and operations, and provides a consistent vision. A recent survey by Management Practices Quarterly reveals that, of 83 new CEO's appointed in 1988, more than 18% came from operations-production backgrounds, some 23% had technical training, while only 14.4% had a financial background. D. Wayne Calloway, who became CEO of PepsiCo in May 1986, was formerly the company's CFO and is probably the best example of the valuable experience CFO's can bring to the CEO position.

Do you think finance departments are the best place to train future CEO's? Provide two actual examples of CFO's of publicly-traded companies who became CEO's of publicly-traded companies within the past 5 years. Do these individuals have the CPA and/or CFA designations?

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Some companies turn to a CFO to temporarily run a company whenever the CEO leaves unexpectedly. For example, Miramax CEO Mike Lang left the company and the CFO was selected to be the interim CEO. This occurred at the following organizations as well: Yahoo, Hewlett-Packard and Advanced Micro Devices. Several studies have determined that at least 20 percent of current United States CEO's were former CFO's (The information was obtained at "Across the hall: The benefits of promoting CFO's to CEO's").

Yes, the finance department is an excellent place to train future CEO's. Today, the emphasis is to have a ...

Solution Summary

The finance departments and training CEO's are examined.