Good morning. More finance chiefs are being considered for chief executive roles. But the C-suite trend of CFO-to-CEO increasingly includes execs with operational acumen of the core business and strategy experience, in addition to finance.
Take, for instance, Bob Frenzel, CEO of Xcel Energy (No. 302 on the Fortune 500), one of the largest public utilities in the country. Frenzel joined the company in 2016 as EVP and CFO. In 2020, he began serving as president and chief operating officer, where he led Xcel Energy’s four utility operating companies, in addition to the transmission, distribution, and natural gas operations. Frenzel was promoted to chairman, president, and CEO in 2021. His operational experience first began after college when he served in the U.S. Navy for six years, working as a nuclear engineering officer and weapons officer.
Frenzel’s CFO roots continue to serve him well. “We spend a lot of time thinking about the cost of capital,” he said of Xcel Energy during a fireside chat last week at Semafor’s World Economy Summit in Washington, D.C. “We deploy probably $10 billion of capital a year. As an industry, we’re probably $200 billion a year of capital deployment.”
U.S. electricity demand is projected to grow by 3% annually through 2030 following decades of stagnation, driven by the adoption of new devices and technologies, Al-driven data centers and the resurgence of manufacturing, according to the company’s latest white paper.
Following his talk, I asked Frenzel about what prepared him for the CEO role and his thoughts on leading during uncertain times. Here’s what he had to say:
How has your financial background contributed to your leadership as CEO?
I attended the University of Chicago to get an MBA and our accounting professor there, who is world-renowned, would say that accounting is the language of business, and sometimes business is the language of leadership. As a company, we’re very capital-intensive, one of the most capital-intensive industries in the United States. And so understanding how to raise capital, deploy capital, manage budgets, and balance budgets, is important in the business, and it could be in making electricity or making a manufacturing device. I think having that financial background is very helpful.
Is operational experience helpful as well?
I’m a recovering CFO, but I’m also a nuclear engineer, so I did start my career in making electricity. I always like to think I’ve been making electricity for three decades. Yes, in this industry, having a background in energy, generation, transmission, engineering, or construction, all those things are things that we do, is helpful.
What’s your take on the skill sets needed for the CEO role?
Looking at the big picture, the skill sets to become a CEO are broad. But not everybody comes in with the full slate of all the skills you need to be the CEO of any company. You have to be able to hire great talent, understand where your blind spots might be in terms of your own skills and talent, and then fill those spots with great people. And, where you have more expertise, you may be able to lean on yourself a little bit more, as opposed to your team. I think having great teams, whether it’s a finance, communications, or HR team, is necessary for a CEO to be successful.
What’s your advice for leading during uncertain times?
When I come to work and I talk to my team or the broad organization, it’s about focus. There’s just so much news media, there’s so much social media, and it’s kind of all the time on and you can see how it wears on people. I know that if we show up and deliver for our customers, we keep the customer at the center of everything we do, and we focus on delivering our life-essential product to our customers when and where they need it, at a price that’s as low as possible, then I know we can deal with all the uncertainty that comes—whether it’s a headline or it’s a financial challenge.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Richard Orazietti will step down as CFO of Aris Mining Corporation (NYSE-A: ARMN) following the completion of the company's Q1 reporting. As part of a planned leadership succession, Cameron Paterson will join Aris Mining as CFO in July. Paterson joins the company from Pan American Silver where he served in executive roles, including as VP of financial reporting, and SVP of finance and information technology.
Tatyana Kosheleva was appointed CFO of NMS Labs, a forensic and clinical toxicology services provider, effective April 28. Kosheleva brings more than 20 years of global financial leadership experience. Most recently, she served as CFO of Nordic Pharma, Inc., where she led initiatives in financial infrastructure development, internal controls, strategic acquisitions, and product commercialization.
Big Deal
The latest EY-Parthenon Deal Barometer projects total U.S. deal volume (private equity and corporate M&A) will only rise 1% in 2025, following a 19% advance in 2024.
The Barometer framework considers factors such as U.S. GDP growth, corporate profits, corporate bond spreads, changes in short- and long-term interest rates, and CEO confidence as drivers of deal activity.
For U.S. deal volume over $100 million, the beginning of Q1 showed early positive signs relative to 2024, surpassing last year’s levels by about 9% in total (6% for corporate M&A and 16% for private equity). However, slower monthly momentum in dealmaking activity at the end of Q1 along with slower expected GDP growth, elevated policy uncertainty, and heightened financial market volatility will challenge dealmaking through the rest of the year, according to the report.
Looking specifically at corporate M&A, deal volumes are projected to remain flat in 2025, totaling 1,142 deals, following an 18% rebound in 2024. In an optimistic macroeconomic scenario where GDP growth and corporate profits are stronger, inflation cooler, and interest rates lower, EY anticipates the total number of deals to increase by 6% this year.
Going deeper
“Can We Still Detect AI-generated Content?” is a new report in Wharton’s business review. As models like OpenAI’s GPT-4, Anthropic’s Claude, and Google’s Gemini get better at mimicking humans, Penn and Northwestern researchers offer a new way to test watermarking, which is the hidden markers used to identify machine-made text. Their work has broad implications for media, education, and business, where detecting machine-written content is important for combating misinformation and protecting intellectual property, according to the report.
Overheard
“The question was whether our strategy was adequate in this new world. Michelin has developed better agility.”
—The CEO of The Michelin Group, Florent Menegaux, argues that the flexibility his company has developed during the last decade will help it prevail through turbulent times.
