The title chief financial officer may still evoke green eyeshades and rote bean counting. But today's business environment ensures that such a one-dimensional figure hardly exists any more.
In assembling its first ever Best CFOs list, The Wall Street Journal sought to identify executives who both run top-performing finance operations and take a lead role in setting strategy at their companies.
The Wall Street Journal compiled the ranking using quantitative and qualitative measures, including the role the CFO plays in each company and how peers and competitors regard the CFO's work.
Median compensation for CFOs in the S&P 500 climbed 2.1% last year to $3.3 million. Median compensation for the Top 25 CFOs was $4 million.
No. 1 Mark Loughridge, IBM
International Business Machines Corp. IBM +0.15% has become a voracious acquirer, with over 100 deals in the past decade. Mark Loughridge, 58 years old, has stitched many of those companies together since becoming CFO in 2004. He has made few mistakes along the way.
The mix of finance and strategy means he 'defines the modern CFO,' says Peter McLean, chairman of the Global Financial Officer Practice at the executive recruiter Korn/Ferry International.
In particular, Mr. Loughridge is lauded for his role in helping outsiders make sense of IBM following the divestiture of its hardware business in 2005.
'Investors were unsure whether IBM could continue to [improve] earnings,' says Ben Reitzes, a Barclays Capital stock analyst. 'When Mark took over, IBM had made a lot of hard decisions. What investors didn't understand was what the new IBM would look like. He took [the opportunity to define that] and ran with it.'
Mr. Loughridge helped simplify IBM's message in a road map that was first created in 2007. It laid out IBM's plans through 2010 for how to grow profit and earnings per share and how to invest its cash. The company is now on its second road map, which will take it through 2015.
'We don't get comments anymore that 'IBM is too complex' or 'I don't understand IBM,'' Mr. Loughridge wrote in an email. 'Every investor may not agree with everything that we are doing, and that is a fair discussion to have,' says Mr. Loughridge. 'They have the right to kick the tires, but the conversation is no longer about how hard we are to understand.'
Mr. Loughridge, who received compensation valued at $8.0 million for 2011, says the biggest impact has actually been on insiders, which is essential for a company as big as IBM, which surpassed $100 billion in revenue last year.
'One of the most impressive things he's done isn't only put out the road map, but get every division across the company to focus on it and then hit the targets, despite the macro choppiness,' says Amit Daryanani, an analyst with RBC Capital Markets.
A major piece of IBM's strategy has been acquisitions. While none have been huge, they've been done with very specific targets for metrics like accretion and internal rate of return.
'They've become a model in the industry for how to acquire companies in an continuing way, and Mark has been at the epicenter of that,' says Toni Sacconaghi Jr., a hardware analyst with Sanford C. Bernstein & Co.
'He's humble enough to listen,' says Barclays' Mr. Reitzes. 'In a company like IBM, the CFO is more important than at a growth company, I would argue.'
No. 2 Carol Tome, Home Depot
Carol Tome is known for restraint. The Home Depot Inc. helped slow the retailer's pace of new-store openings in the U.S. from one almost every 48 hours in 2001 to one or two a year. Instead of spending money on new stores, the home-goods seller is investing about $1 billion a year from cash flow into technology and employee training to boost productivity in existing locations.
'Carol has been committed to not overgrowing the store base and is diligent about returning cash to shareholders through buybacks and dividends,' says Laura Champine, an analyst with Canaccord Genuity Securities.
Ms. Tome has overseen $33.6 billion in share buybacks between 2002 and 2011, and in 2010 she helped initiate an aggressive dividend policy that now pays out at least 50% of annual earnings.
'We don't hold cash idly,' says Ms. Tome, who has been Home Depot's CFO since 2001 and received compensation valued at $5.6 million last year.
Home Depot's stock surpassed $50 for the first time in 2012. It has returned a 45% gain over the past five years, compared with a 5% loss for the broader Standard & Poor's 500 stock index.
Slowing sales are the biggest risk facing the retailer. Janney Montgomery Scott analysts recently downgraded the company to neutral from buy on those fears, citing weakening U.S. census figures for building-material and garden-supply dealers.
Ms. Tome's vow to maintain the outsize dividend, regardless of business disruptions, could prove a drag if those predictions come true.
Ms. Tome, 55 years old, says a stint early in her career helping Johns Mansville through bankruptcy helped to inoculate her against fears of volatility. During the recession, 'I didn't lose any sleep, because I had been through trouble before, and I knew we would be fine.'
Ms. Tome is also audit committee chair for United Parcel Service Inc., chairs the board of the Federal Reserve Bank of Atlanta, and heads the Metropolitan Atlanta Chamber of Commerce.
When insomnia does strike, Ms. Tome says she takes up her knitting and makes baby hats for everyone from security guards to investment-bank analysts.
No. 3 Karen Hoguet, Macy's
Macy's Inc.CFO Karen Hoguet is credited with bringing strength to the retailer in a long struggle to avoid extinction at the hands of e-commerce companies and specialized fashion competitors.
During her 15-year tenure as CFO, Ms. Hoguet, 55, has led multiple acquisitions, including the $17 billion deal for May Department Stores Co. in 2005. and, in its wake, a string of divestitures and the repayment of more than $3 billion in debt.
More recently, she has been heavily involved in remaking the company's corporate structure, including unifying acquired brands such as Marshall Field & Co. under the Macy's moniker.
Ms. Hoguet, whose 2011 pay was valued at $4.3 million, is also trying to improve online-sale operations, including figuring out how to manage combined store and website inventory while cutting costs along the way.
'She has had the most complex job in retail, given all that Macy's has done, and has done a tremendous job of it,' says Liz Dunn, a retail analyst with Macquarie Securities.
Macy's earnings have more than doubled over the past three years, return on invested capital edged close to 20% last year, and the stock is outperforming most of its peers.
Macy's Chief Executive Terry Lundgren says Ms. Hoguet is one of the most accessible executives on his team, answering even midnight emails within minutes.
She often accompanies him on his weekly surprise store visits, looking for ways to refine the mix of merchandise and selling techniques.
'One of the problems today is that we rely on all these computer reports─we know what customers buy, and how rapid the sell-through is on any given item─but no report will tell you how much they would have bought if things had been different,' Ms. Hoguet says.
On Macy's quarterly earnings calls, Ms. Hoguet often runs the show solo, adding color about sales strategies and the future of retail to the standard litany of metrics. She goes 'beyond what you'd expect of a CFO,' Mr. Lundgren says.
But like many retailers, Macy's is being pushed by competitive pressures to invest in its physical stores before consumer confidence fully rebounds.
If the economy sags, the $850 million that is slated for capital projects this year, including a prolonged prolonged makeover of Macy's flagship Herald Square location in New York, could be a risky bet.
No. 4 Stacy Smith, Intel
When Intel Corp.'s INTC -1.00% Stacy Smith was promoted to CFO in 2007, the U.S. was teetering into recession. Intel, whose main business is semiconductors, was hit hard as demand for computers dropped: The company's profit fell 24% in 2008 and another 17% in 2009.
'I don't think anybody when they take the reins of a Fortune 50 company really is fully prepared' for how broad and complex the job is, says Mr. Smith. 'I don't think I was ready when I took the reins back in 2007.'
It took until 2010 for computer spending to rebound. Last year Intel's annual revenue surpassed $50 billion for the first time and income rose to almost $13 billion.
Stifel Nicolaus analyst Patrick Ho credits Mr. Smith with being 'really good for Intel's gross margins' during that recovery, moving them from the 55%-60% range up to 60%-65%.
The 49-year-old Mr. Smith, a corporate lifer who joined Intel in 1988, spent time as the chip maker's chief information officer and the general manager of its Europe, Middle East and Asia operations. He also served as assistant CFO for about a year under Andy Bryant, Intel's finance chief of 13 years.
'A long career in finance is what makes him technically qualified for the job,' wrote Intel CEO Paul Otellini in an email. 'And, the number of positions he's held outside of finance have allowed him to learn [about] our company in intimate detail.'
Cody Acree, an analyst with Williams Financial Group, sees a close relationship between Mr. Smith and his CEO. 'You can talk utilization rates and cost structures with Stacy, but he'll give you the same high-level strategic message that you'll get from Paul,' he says.
Despite the difficult economic environment of those first years, they were simpler in some ways.
'If you think about the Intel of five years ago, we were a company that was almost exclusively in the PC and server markets,' says Mr. Smith, whose 2011 compensation was valued at $6.4 million last year. 'Our market has moved to everything' that connects to the Internet.
That expansion into areas such as mobile devices entails huge investment for Intel, with spending expected to breach $18 billion this year.
Intel needs to make sure those investments are targeted to markets with the size and growth opportunity to make 'financial sense,' says Mr. Acree. 'That is a huge tightrope for somebody like Stacy to walk.'
No. 5 Paul Clancy, Biogen Idec
At the start of his tenure as Biogen Idec Inc.'s CFO, Paul Clancy faced a drawn-out battle with activist-investor Carl Icahn.
Despite those conditions, Mr. Clancy acquired a reputation for levelheadedness and a focus on shareholder return.
'What's striking about Paul is that regardless of the environment, there is an underlying calm and a sense of precision about analyzing what is happening and what to do next,' says Brian Posner, an investor who joined Biogen's board in 2008.
Mr. Clancy, who came to the biotech company in 2001 after 13 years at PepsiCo Inc., PEP +0.68% was promoted to the top finance job in August 2007. That year, Mr. Icahn called for the sale of the company but ultimately failed to find a buyer. Between 2009 and 2010, he won three board seats. In 2010, Biogen CEO James Mullen retired at the age of 51.
During that time, the maker of multiple-sclerosis and hemophilia drugs kept repurchasing shares, while revenue and profits grew steadily.
'Paul has probably created more shareholder value than any other CFO I've covered in this industry with the series of buybacks he orchestrated a few years ago,' says Eric Schmidt, an analyst with Cowen & Co. 'They were perfectly timed to the bottom of the market.' 'They were perfectly timed to the bottom of the market.'
Since Mr. Clancy, 50, became CFO, Biogen has spent more than $5 billion to repurchase more than 82 million shares at an average cost of about $61 apiece. That is about 58% below the current stock price. Mr. Icahn sold all his shares last year at more than double his purchase price.
Expectations remain high. Biogen has five products that could produce milestone events in the coming quarters.
'You have to be balanced in how much you spend and how you prepare' for new products, says CEO George Scangos, who took over in July 2010. 'Beyond that, assuming one or two of those are positive, the company should be in a period of some growth, one would hope. And we'll have to manage that carefully, and Paul will be at the center of that as well.'
Mr. Schmidt of Cowen says the optimism 'can in itself be a big challenge for a CFO. Paul is going to have to make sure that expectations don't get out of whack with reality.'
Mr. Clancy, whose pay was $2.9 million in 2011, says he is trying to take a similar approach to his early years on the job. 'We're having remarkable success now, but you still need two feet on the ground,' he says.
