S&P 500 CFO Turnover Persists, Gaining Momentum After Sluggish Start

Russell Reynolds Associates’ latest analysis of CFO turnover in the S&P 500 finds that CFOs continue to be flight risks. At the end of 2023, CFO turnover ticked slightly above 2022’s departure rate, after an unseasonably active latter half of the year. Analyzing the CFOs of S&P 500 organizations from 2019 to end of 2023 (N=500), we learned:

1. After a slow start to the year, S&P 500 CFO turnover increased to slightly above 2022 levels

2. The majority of newly appointed CFOs (66%) are in the role for the first time

3. More women CFOs are coming from outside the organization, as internal talent is scarce

4. Increased CEO turnover continues to result in CFOs taking the top seat

After a slow start to the year, S&P 500 CFO turnover increased to slightly above 2022 levels

After a sluggish start, followed by turnover in the latter half of the year, CFO turnover has reached 17.4%, slightly below a record high in 2021 (Figure 1a. and b.), with significant activity in the financial services and industrial and natural resources sectors (Figure 2).

As the S&P 500 market slowed from its 2021 high, Fortune 1000 turnover simultaneously increased from 17% to 19% in 2023, driven by increases in S&P MID CAP 400 and SMALL CAP 600 turnover. This may provide opportunities to next-generation S&P 500 finance talent; as these leaders eye their next move, a first-time CFO opportunity at a smaller organization might be enough to lure them away.

Figure 1a. Trending CFO Turnover

^{Source: RRA analysis of S&P500 CFOs from 2019 to the end of 2023, N= 500
Note: 15 of the first time CFOs are interim}

Figure 1b. Trending Number of S&P 500 Newly Appointed CFOs

^{Source: RRA analysis of S&P500 CFOs from 2019 to the end of August 2023, N= 500 Note: 7 of the first time CFOs are interim}

Figure 2. Trending Turnover by Sector

^{Source: RRA analysis of S&P500 CFOs from 2019 to the end of 2023, N= 500
Note: 15 of the first-time CFOs are interim}

The majority of newly appointed CFOs are in the role for the first time

This year, 66% of new CFOs were in the role for the first time, largely due to internal succession plans coming to fruition (Figure 3). While many organizations are open to embracing people with different tenures and experiences, those hiring externally in our difficult market are increasingly looking for proven experience as exhibited by the increase in external sitting CFO hires (900 basis points YoY).

Figure 3. Internal versus External Appointments

^{Source: RRA analysis of S&P500 CFOs from 2019 to the end of 2023, N= 500
Note: 15 of the first-time CFOs are interim}

More women CFOs are coming from outside the organization, as internal talent is scarce

More women have been appointed to the top financial job than ever before, as women now hold 18% of CFO roles in the S&P 500. Organizations without a gender-diverse bench are looking externally for more talent, typically recruiting experienced women CFOs. In fact, in 2023, 47% of women’s CFO appointments were externally promoted, versus only 30% of men (Figure 4). These increases in external appointments indicate that, while we’re slowly closing the CFO gender parity gap, efforts to increase gender diversity at organizations are still in their nascent phase. While diverse internal pipelines are becoming more robust, they haven’t yet been developed to the senior level.

As of the end of 2023, we are still 45 years from a representation CFO landscape—doubling down on developing women in finance within organizations will be key to achieving gender parity.

Figure 4. Internal versus External Women CFO Appointments

^{Source: RRA analysis of S&P500 CFOs from 2019 to the end of 2023, N= 500
Note: 15 of the first-time CFOs are interim}

Increased CEO turnover continues to result in CFOs taking the top seat

CFOs are increasingly being considered as succession candidates for the CEO role. Similarly to 2022's record numbers, CFOs were 3x more likely to transition into the top seat this year than they were in 2021. If these leaders don’t move directly into the top seat, they often do a stint as a division CEO or as COO to get familiar with operations before assuming the CEO position. Luckily, the majority are doing so in their own organization (Figure 5).

Figure 5a. 2023 CFO Exits

^{Source: RRA analysis of S&P500 CFOs from 2019 to end of year 2023, N= 500
Note: 15 of the first-time CFOs are interim}

Figure 5b. Number of departing CFOs per new role
Of the CFOs transitioning beyond finance, they are more likely to transition to CEO/President or Division CEO roles

^{Source: RRA analysis of S&P500 CFOs from 2019 to end of year 2023, N= 500
Note: 15 of the first-time CFOs are interim}

Retirement rates jumped year over year, with 51% of departing CFOs retiring — a 400 basis points increase since 2022 (Figure 6). This is the highest rate of CFO retirement we’ve observed in the past five years, and we expect this trend to continue (or even increase) in the next few years, as 27% of S&P 500 CFOs are currently 59 or older.

Figure 6. Trending CFO Departures

_{Source: RRA analysis of S&P500 CFOs from 2019 to the end of 2023, N= 500
Note: 15 of the first-time CFOs are interim}

Authors

• Linda Barham leads Russell Reynolds Associates' Americas Financial Officers Practice. She is based in Chicago.
• Jenna Fisher co-leads Russell Reynolds Associates' Global Financial Officers Practice. She is based in Palo Alto.
• Jim Lawson co-leads Russell Reynolds Associates' Global Financial Officers Practice. He is based in New York.
• Clare Metcalf is a member of the Financial Officers Practice at Russell Reynolds Associates. She is based in Chicago.
• Catherine Schroeder leads Knowledge for Russell Reynolds Associates’ Financial Officers Practice. She is based in Toronto.