Being the CEO’s strategic partner landed this Fortune 500 CFO the top job
About a year ago, I talked with Donald Allan, Jr., president and CFO at Stanley Black & Decker. We discussed the strategic partnership between a CFO and CEO. Next month, he will trade in his CFO hat to become the strategic leader of the company.
Allan was promoted to CEO of Stanley Black & Decker, effective July 1, succeeding James Loree, CEO since 2016. Allan will retain his title as president and join the board of directors. His appointment “reflects the board’s succession planning, and in naming him as our next CEO, we have chosen a world-class executive with exceptional experience and leadership skills,” Andrea J. Ayers, chair of the board of directors, said in a statement. Allan has been “instrumental in driving the company’s growth and transformation strategy,” Ayers said.
I contacted Stanley Black & Decker to ask why a CEO transition is taking place now. “With the recent strategic refocusing of the business around our leadership positions in the global tools and outdoor power equipment markets in place, the time was right for this transition as Stanley Black & Decker looks to drive its next phase of growth across this more focused strategy,” a company representative said.
Stanley Black & Decker ranked no. 212 on the 2022 Fortune 500 list, which debuted on May 23. That’s three spots down from last year’s ranking of no. 209. Loree led Stanley Black & Decker through a “period of significant growth, increasing annual revenues from continuing operations from $11 billion in 2016 to over $19 billion expected in 2022,” Ayers said in a statement.
A Fortune report released in conjunction with the Fortune 500 list highlights the 10 most overpaid CEOs. Loree was ranked at no. 6. The findings focused on pay vs. performance, based on returns for shareholders. “Loree became CEO in August 2016 and has since provided meager annualized returns of 1.5%,” according to the report.
Stanley Black & Decker released its Q1 2022 earnings results in late April. Net sales for the quarter were $4.45 billion, up 20% versus the prior year, but below the FactSet consensus of $4.62 billion. Amid high inflation and supply-chain issues, the company is “accelerating our manufacturing 4.0 automation and digitization efforts across the supply chain,” Allan said on the earnings call. He has been CFO at the company since 1999.
“I look forward to working with our 60,000 outstanding employees as we navigate through the challenges of the current market environment and execute on our strategy to deliver value to our customers and shareholders,” Allan said in a statement about his new role.
When I spoke with Allan last July, he explained why a CFO should be a strategic partner to the CEO. “If you look at it from the CEO’s perspective, he or she will have a strategic framework that they want to reinforce, develop, or adjust for the company,” he said. “When one individual goes through that process on their own, there’s no way it can be as good. What I try to [say] is, ‘Let’s work together to try and figure it out.’ But let’s also get input from other senior executives, and let’s collectively pull together what we think the right strategy is for our company.”
This approach allows a CEO to be focused on strategy and “making sure that you’re investing enough energy with all of the different stakeholders” and having “a leadership mentorship perspective,” he said.
As Allan moves into the CEO role, Corbin Walburger, VP of corporate business development, will serve as interim CFO, effective July 1. Heidrick & Struggles is assisting in the search for a permanent finance chief.
In addition to leading finance, Allan has also been responsible for overseeing the execution of the company’s operating model and shared responsibility for global operations and supply chain. He’s also overseen the Stanley Security business, the outdoor products group and Asia tools and storage.
Allan previously shared with me how his role as CFO has evolved. “At the beginning of the tenure, I was very focused on finance,” he said. Further, into his tenure, he wanted to “really be that business partner to the CEO of the company,” Allan explained. “And that’s really the role that I’ve been trying to play for the last eight years or so, which is almost operating more like a chief operating officer,” he said.
Sounds like his experience will come in handy.
See you tomorrow.
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