Good morning. New data reveals that, when it comes to finding someone to lead their financial operations, an increasing number of big companies are looking beyond their internal ranks.
That’s according to the annual Crist Kolder Associates Volatility Report, which measures the turnover of C-suite executives in a portfolio of companies. The report looked at 671 Fortune 500 and S&P 500 companies, through Dec. 31, and found that external hiring of finance chiefs hit a 10-year high in 2024.
Crist Kolder, a senior-level executive search firm, has for years compiled data that compares the percentage of new CFOs recruited from outside the company per year versus internal hires. In 2014, 40.2% of CFO hires were external candidates, and that percentage increased to 47.1% in 2024, according to the report. The historical average is 39%.
Costco Wholesale is among the Fortune 500 companies that made an external hire last year. In March 2024, Richard Galanti, CFO at Costco for more than 30 years, retired. His successor Gary Millerchip spent 15 years at The Kroger Co., including serving in the CFO role. Before that, he spent more than 20 years in banking, most recently with the NatWest Group.
However, when Costco first announced that Galanti was stepping down, the move came as a surprise to Wall Street, Fortune’s Phil Wahba recently reported. The company’s long-standing goal is that 90% of its leadership roles be filled by insiders. But, the pandemic delayed any succession and forced the retailer to switch plans.
“Some key people had made a different choice in their life and decided to move on,” Costco CEO Ron Vachris told Fortune in April, regarding the short list of future finance chiefs. The board decided to look outside to find the company’s next CFO.
Another Fortune 500 company that chose an external CFO hire is Target Corp. Jim Lee, former deputy CFO at PepsiCo., began his tenure at Target as finance chief in September. Lee succeeded Michael Fiddelke, formerly both CFO and chief operating officer (COO), who continues his role of COO.
In September, Anurag Maheshwari began his tenure as the new CFO of 3M, a Fortune 500 company. Maheshwari is the former CFO of Otis Worldwide Corporation.
The increase in external hires seems to also coincide with a trend in fewer large companies actively practicing CFO succession planning to identify and develop internal talent for the role.
An additional interesting finding of the Crist Kolder report is that the technology industry has the longest-tenured CFOs, with an average of 5.4 years, compared to the CFO’s average tenure, overall, of 4.9 years. An example is at Google. Anat Ashkenazi, the former CFO of Eli Lilly and Company, became the CFO of Google and Alphabet on July 31. Ashkenazi succeeded Ruth Porat who was CFO for almost 10 years.
Sheryl Estrada
sheryl.estrada@fortune.com
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