How are CFOs able to fire CEOs?
The Wall Street Journal has just reported on the ouster of Disney CEO Bob Chapek. Robert Iger, who had stepped down as Disney’s long-time CEO less than one year ago, will be back in control as CEO. This story had already been broken. This article focused on the role of Disney’s CFO, Christine McCarthy. Their sources indicate that Christine, who has been with Disney for 22 years, has the board's confidence. At some point, Christine lost faith in Bob Chapek as CEO and supposedly made her opinions known to the board. Her vote of no confidence may have either triggered or significantly contributed to the decision to remove Bob Chapek from the top executive role at Disney.
Finance chiefs usually deliver on their chief executive’s strategy and aren’t known to commonly speak against them. But Ms. McCarthy <blockquote-link>had raised concerns<blockquote-link> to Disney directors, The Wall Street Journal reported earlier this week. Bob Chapek was out as CEO Sunday.
While the CFO reports to the CEO, the board often looks to the CFO's role for governance, stability, and financial control. Many CEOs need to take large bets and be visionaries to navigate their companies through challenges. While the board waits to confirm if their CEO has made the right bets, they look to the CFO for guidance on the health of the company in real time. In other cases such as at Disney, the CFO may simply have been around longer and developed direct lines of communication to key board members long before a new CEO ever took the helm. Does this create a safety net for board members to be alerted when a CEO has lost the faith of its CFO and is leading the company astray? Or is this a dangerous trend that can lead to insubordination and unhealthy corporate politics and disarray in the C-Suite?
Should more CFOs develop a direct line to the board or should they always be subordinate to the CEO role in that aspect? These are difficult questions to answer but clearly, these situations do occur.