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ASX 100 CFOs Unlocked

Identifying the Leadership Advantage that counts
By Jean E. Chiswick and Lucy Smith-Stevens
December 2024

Authors

A senior leadership position, one pivotal to company performance, has undergone a profound shift.

Today’s chief financial officer (CFO) must influence beyond financial issues and offer cross-enterprise leadership on a range of different challenges. The role requires strong communication — someone able to seamlessly switch from internal to external audiences on a range of contemporary industry themes. They have to deftly navigate opportunities and risks, juggle a myriad of stakeholders and be co-pilot to the chief executive, working shoulder to shoulder in many cases, both inside and outside of the company.

No wonder the CFO so often looms large as a strong candidate when a CEO succession is underway.

But it’s not always smooth sailing.

The last two years have been pockmarked by a variety of economic challenges, increased complexity and ambiguity, as well as intense geopolitical disruption. Perhaps unsurprisingly, we have observed a shift in ASX 100 CFOs appointed with more proven CFO track records, classical accounting backgrounds and established credibility in public markets.

Does this mark a return to linear pathways to ASX 100 CFO succession? Well, not necessarily. We have found that 25% of internal CFO promotions have had exposure to P&L or operational leadership positions. This shows that breadth of experience is still important.

With more proven CFOs appointed in ASX 100 CFO positions, coupled with growing CEO succession from CFO roles, one thing is clear: an experienced CFO is the leadership advantage that counts.

More than ever, CFOs are classically trained accountants who have stepped up from divisional or regional financial leadership positions. Nearly three-quarters of ASX 100 CFOs are chartered accountants and close to half have previously served as divisional or regional CFOs. Experience in investment banking and M&A is less prominent than in the past, declining from 30% to 22% since 2022. Instead, those who have risen the ranks through accounting, control and commercial finance are now coming to the fore.

Backgrounds of ASX 100 CFOs

Proven public company experience is increasingly desirable; in 2024, 35% of ASX 100 CFOs had previously served as CFO in a public company. This is a notable jump from only 26% in 2017. This echoes a trend in the United Kingdom, where 42% of FTSE100 CFOs bring prior listed experience. This is higher than in the US Fortune 500, where only 25% of CFOs have previously served as CFOs of public companies.

In keeping with the preference for proven CFOs, external appointments from the same industry sector are also most common. This is a strong theme in financial services (90% of external hires are from the same industry), industrial and resources (86%), and infrastructure and real estate (80%). Technology, media and telecommunications sectors are more open to industry diversity, with over 70% of the external CFOs joining the organisation from lateral industry segments.

Industry backgrounds of external CFOs

The path to CFO is more varied among internally promoted CFOs. P&L leadership and operations are the most common roles CFOs served in immediately prior to becoming CFO, at 25%, followed closely by group finance, divisional and regional CFO, and deputy CFO. The least common prior role is treasury and investor relations at just 7%. The large proportion of CFOs who opt for P&L experience helps explain the increasing prevalence of CEOs who have previously served in the CFO position.

The prior roles of internal CFO appointments

The number of women CFOs in the ASX 100 is at 25%. This represents a significant advance toward gender equality since 2017, when only 11% of ASX 100 CFOs were women. However, our 2024 research finds an undeniable stagnation since our last study in 2022, where women CFOs comprised 24% of Australia’s top 100 public companies. Illustrating some progress, women representation among the ASX 100 CFOs does compare slightly favorably to the FTSE 100 and Fortune 500, where 22% and 18% of CFOs are women.

Gender equality among ASX 100 CFOs

Women CFOs also have significantly shorter time in post than their male counterparts; the average tenure of women in the role is 2.7 years compared to five years for men.

Whilst board exposure is today one of the quintessential and core elements of the CFO remit, it is curious that only six of the ASX 100 CFOs have board seats in their current organisations. Two of the six are based in the United Kingdom where CFOs who serve on their company boards is a common feature. The ASX 100 CFOs who do have board seats have an average tenure of 12.8 years — a significantly higher than average tenure. It will be interesting to observe if ASX CFO board appointments change over the coming years.

The CFO position continues to be a growing platform role to CEO. Data from 2024 shows that 19% of ASX 100 CEOs were promoted directly from the CFO position. This is closely aligned with the Fortune 500, where 17% of CEOs stepped up to the position from CFO.

However, it is important to note that the CFO is by no means guaranteed to perform well if appointed to the CEO role.

Our recent article, Is the CFO the best successor to the CEO? Well, it depends … considered the performance of CEOs from CFO background across Europe, UK and Asia Pacific. Whilst CFOs are often strong candidates due to their board exposure, business knowledge, strong stakeholder relationships and analytical mindset, they may come up against challenges that relate to their character, broader leadership and learning agility. Are they too risk averse? Can they drive growth? Ensuring CFOs are highly compatible with what the context demands to be successful as a CEO is key.

Conclusion

The future continues to be bright for ASX 100 CFOs aspiring to become CEO. A key consideration will be how to create a successful transition that brings out the best of their leadership abilities and leverages their critical experience.

For executives who are keen to move into a public company CFO position, there is no linear route to the top. Although those with traditional skill sets such as chartered accounting are increasingly stepping into the role, breadth of experience beyond finance will continue to be important and leave candidates well placed for future positions beyond that of the CFO.

Authors

© 2024 Spencer Stuart