British American Tobacco PLC (LSE:BATS) will be ushering in a new boss after Jack Bowles resigned from his role on Monday.
Tadeu Marroco, the group’s former chief financial officer, has been labelled a “surprising” pick by analysts and will have a lot on his plate as the company look to transition towards next-generation products.
Another finance director turned boss making headlines is Vodafone Group PLC (LSE:VOD) chief, Margherita Della Valle, after the group's share price plummeted to 16-year lows on Tuesday off the back of weak results.
Analysts have raised concerns that the telecom boss’ new plan for growth is “not a strategy” and doesn’t aim to fix the structural changes that await Vodafone.
It’s understandable, Della Valle for much of her career has worked in the financial division of Vodafone and her cost-cutting measures as CEO clearly reflect that.
Her decision to axe 11,000 workers, while financially sound, seems like putting a plaster on a broken bone.
Vodafone’s issues, like many companies attempting to shift strategies, clearly require innovative lateral thinking and vision, not traits normally associated with the finance team.
Let us not forget, the telecom giant's last boss, Nick Read, was also promoted to the role after four and a half years as CFO at Vodafone.
Lasting just over four years in the top role, Read resigned in December 2022, with the group having shed around 50% of its share price value during his tenure.
Promoting a finance director to the boss can have its benefits though.
The CFO knows the company, and its accounts, and arguably has one of the best understandings of what drives profitability.
In periods when firms are struggling financially, but the core business is sound, a CFO as boss can be perfect.
Who better can trim the fat of a company than the person looking at the accounts every day?
There are examples of it working too.
Former PepsiCo (NASDAQ:PEP) boss, Indra Nooyi led the soft drinks company for around 12 years after being promoted from CFO.
In her time in charge, she prevented a bid to split the company up, almost doubled sales, introduced healthier products, made the business more environmentally friendly and raised the share price by close to 100%.
“The reason CFOs became considered for CEO roles at all is that regulations, Sarbanes-Oxley, confused the hell out of boards and CEOs,” Nooyi revealed in an interview.
She likened being a CEO to conducting a symphony orchestra but without having the music sheets.
Nooyi added: “Being a CEO is like leading a jazz orchestra. You improvise but herein lies the problem. CFOs tend to be good at a structured role, like playing in a traditional symphony.”
And there have been plenty of examples when a newly promoted CFO struggles to conduct the jazz orchestra.
In 2019, Bob Swan became boss of hardware producer Intel Corporation (NASDAQ:INTC), having been promoted from finance director.
During his tenure, he admitted delays in producing semiconductors had meant the company fell behind competitors.
The company also lost its contract with Apple and concerns began mounting over whether it was worthwhile producing chips rather than outsourcing them.
By 2021, Swan had resigned and only lifted the share price by five per cent during his reign.
Swan now works on various boards including Nike and the American Heart Foundation and is a global advisor for Kearney.
If Della Valle and Marroco can avoid a similar fate and still be in situ in five years' time, shareholders in both Vodafone and BAT should be very happy.
Time will tell.