There's good reason why CFO pay is rising.

I sat down to lunch with someone recently who immediately launched into a discussion on the recent trend of rising CFO salaries. "Why are CFOs demanding so much money? Why are they so greedy?"

Perhaps you have been under a rock for the last few years. Maybe you haven't heard about the increasing demands as a result of regulatory scrutiny (SOX aren't just on your feet!). Or the increased need for finding operational efficiencies to compete internationally (China isn't just something you eat off!). Or the pressures of managing increasing demands for transparency and disclosure of future operating trends, as well as fair values of assets and liabilities with no market, in an environment where the plaintiff's bar is searching for every "wrong" prediction or estimate, ready with a lawsuit. (A bar isn't just a watering hole!)

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Or the increased difficulty of implementing accounting standards based in academic theory but completely un-implementable (OK--I ran out of witty quips!) Or the fact that the chief operating officer (COO) position is trending downwards, with the CFO taking on many of the COO's responsibilities. Or the amount of time that CFOs spend updating the board of directors and senior management on compliance issues, while at the same time keeping all of their traditional responsibilities with the investment community, managing the company's capital and liquidity needs and certifying the financial statements.

I like to think that the CFO's salary is undergoing "deferred maintenance." It's similar to the refrain we often hear from others regarding the cost of implementing Sarbanes-Oxley Section 404. Over the last five years or so, the CFO role has expanded significantly. It kind of crept up on us, something like that story of the frog that sits in a pot of water and ends up slowly boiling to death.

Many Skills Are in Play

CFOs must not only be financially savvy and serve as the company's corporate conscience, but also have operational experience and stellar leadership and communication skills. CFOs are thinking more like general managers and still have to deal with the day-to-day demands of the finance function.

Technology continues to be the enabler for the transition in which financial executives are spending less time worrying that the numbers are right and more time making sure that the operating trends are aligned with the strategy. Standardization and simplification, mainly through technology, have enabled the CFO to become more operational. There has been a lot of press lately about more and more CFOs becoming CEOs. This trend should not surprise anyone, given the expanded responsibilities that CFOs have taken on.

I also think that all of the Sarbanes-Oxley work, as painful as it may have been, has entrenched finance in operations, enabling the finance organization to obtain a better understanding of operations and vice versa. It has shown that the finance team can handle more than just numbers.

Finance was the driving force in the company in the implementation effort. It also renewed an emphasis on ethical conduct and strong internal controls throughout the company. Process efficiency has now become a priority, as we move from project to process. All of these forces match well with the traditional skills of the CFO. If anything, the traditional skills that finance staffers have embedded in their DNA are more in demand and more appreciated by operations than ever.

The CFO role has also evolved as a result of the finance chief being the chief communicator to the investment community. The advent of 24-hour cable business news puts CFOs in the limelight like never before. They need to be media-savvy, in addition to being financially proficient.

At the same time, finance has become a bigger part of the CEO job. The high-profile scandals have thrust finance to the forefront, and the finance chief is more involved in strategy and decision-making. The CFO is at the table at every big decision the company makes. In many cases, the CFO is the chief counselor to the CEO.

There is no question that the CFO job has become more demanding over the last few years. You wonder why the salaries for CFOs have increased? As my 12-year-old would say, "Well, duh!"