Some of you grinding away in public accounting might have “champagne wishes and caviar dreams” of being a CFO one day. So, let’s see how well that job pays these days, courtesy of three accounting and finance salary guides that have been released in the past six months. Randstad Randstad organizes executive titles in its […]
As far back as I can remember, we have been discussing talent shortages within the accounting industry. My former esteemed colleague Colin (RIP bro) once referred to it as Groundhog Day, in that it felt like every other morning we woke up and wrote a story about it. I even put a considerable amount of […]
I like this CFO article on finance chiefs who prefer startups. Had I not bailed on my accounting and finance career for the glamorous world of writing on the internet, I think I would've pursued this route. The reasons for preferring smaller companies offered by the CFOs in the article are what you would expect: […]
[Jay] Rasulo was asked if he’d rather have five minutes with Federal Reserve Board chairman Janet Yellen or a five-year-old kid who’d just gone to a Disney park for the first time. “That’s an easy one — way too easy,” he said. “I’ve had a million of those conversations with kids and they’re all great. […]
Cornell Batie, CFO at Mack Avenue Records, as he appeared in Hour Detroit's 2013 Best Dressed List:
Sam Antar knows an inequitable situation when he sees one: Memo to SEC: If Weiner and Spitzer can run for office again, why am I still banned from being an officer or director of a public company? — Sam E. Antar (@SamAntar) July 23, 2013 A regular reader of GC wondered to us: "In Spitzer's […]
This came through the twitters this week and apparently we weren't the only ones who liked it: Someone needs to warn this child. @going_concern #busyseason #CPAproblems twitter.com/_JonEmerson/st… — Jonathan Emerson (@_JonEmerson) March 21, 2013 Er… daredevil kid in a helmet? What exactly is the problem here? Did he try to mount a 2 foot plywood […]
An Ontario judged dismissed a case against three former Nortel Networks Corp. executives who were charged with accounting fraud at what was once North America’s largest telephone-equipment maker before its collapse in 2009. Judge Frank Marrocco said the burden of proof was not met in fraud charges against former Chief Executive Officer Frank Dunn, former Chief […]
With apologies to Crazy Eddie's Sam Antar, Andrew Fastow might be the most notorious CFO in the history of financial reporting fiction. Mr. Fastow, as you're probably aware, was the Chief off-balance sheet-SPE web-builder at Enron. In other words, he's one of the guys you should probably be thanking for your jobs. Fastow was released […]
On Wednesday, a bunch of people stood in stupidly long lines to eat unhealthy food to demonstrate appreciation for a company whose president expressed a personal opinion about gay marriage. Some idiots took this personal opinion and extrapolated it to the employees of a company, some of whom, no doubt disagree with Chick-fil-A president Dan […]
Before she became CFO of AES (and now Gannett), Victoria Harker had the distinct pleasure of mopping the floor at WorldCom after the company imploded in 2002 and, yeah, it was pretty awful: What has been your worst day on the job?The WorldCom meltdown was likely the worst day on the job. I knew only how little […]
Yep! And he allegedly stole about $380,000 from the band. King County prosecutors say that Ricky Goodrich swiped the funds from 2007 to 2010, spending it on "lavish family vacations, spa treatments, life insurance and pricey California wines." Luckily for PJ, an accountant discovered the missing money and finally the jig was up. The Seattle […]
As CFO, I’m in a unique position within the organization, at the absolute center of the universe. The only other executive besides me that has that same presence at the center is the CEO. ~ Bruce Bensanko, CFO OfficeMax [E&Y]
According to an intrepid survey by Accountemps that investigated what stresses out CFOs, balancing work and life responsibilities was listed as the biggest drag. This beat out office politics, keeping up with accounting and finance regulations, higher workloads, and a "challenging commute." Maybe all these men and women wouldn't be so stressed if more of them […]
As many of you continue striving towards your career goals to occupy the CFO chair, we thought you might like to know a little information on how well that dream job pays. According to a recent Grant Thornton/Financial Executives Research Foundation survey, public company CFOs saw their average base salaries climb from to $286,500 to from […]
Mark Oleksik, CFO of Talos Partners has enthusiams: On April 30, Oleksik was in a business meeting with the CEO of Talos Partners, and a member of the board of directors at the company’s office at 175 South Main St., according to court records. Oleksik didn’t like the way the conversation was going between him and […]
Yesterday morning we linked to a little story about Francesca Holdings Corp. CFO Gene Morphis getting fired for "improperly communicat[ing] company information through social media." The Journal picked it up later in the day with details on some of this social media activity that we thought we'd share with you Board meeting.Good numbers=Happy Board. — […]
Rita Crundwell has been the CFO/comptroller of Dixon, Illinois since the 1980s; a typical tenure for even an unelected Illinois official. In those 30-ish years, it appears that she performed her duties adequately enough, but she was just put on unpaid leave. You see, at some point in 2006, it is alleged that Ms. Crundwell […]
Last Friday, Groupon announced that some of their numbers weren't exactly up to snuff. This didn't come as much of a surprise to the likes of Grumpy Old Accountants and others (read: everyone) who weren't exactly sold on metrics such as Adjusted Consolidated Segment Operating Income ("Adjusted COSI"). There have been questions about Groupon's financials […]
The Department of Justice trumpeted the guilty plea of Delton de Armas, the former CFO of Taylor, Bean, & Whitaker Mortgage Corp. today, marking the 8th conviction in the TBW fraud case. Assistant Attorney General Lanny Breuer seemed pleased in the DOJ press release: “As TBW’s chief financial officer, Mr. de Armas concealed a massive […]
Jeff Lasher brushes that dirt right off: It remains true that there is a subculture of Crocs haters, who are put off by the shoes’ colorful appearance and minimalist construction. For example, there’s a Facebook page called, “I don’t care how comfortable Crocs are you look like a dumbass.” It has two million “likes.” Offers Lasher, […]
Our favorite accounting fusspots, Tony Catanach and Ed Ketz have responded to the response of Groupon's CFO Jason Child who refuted the Grumpies' claims that the company's 4th quarter numbers weren't worth the paper they were printed on. Staying true to form, Tony and Ed pick apart Child's arguments against their arguments (without actually stating […]
In his time at PwC, you'd think Henri would've received the "don't write anything in email that you wouldn't want the front page of the Wall Street Journal," training. S&P provided the House Financial Services Subcommittee on Oversight and Investigations with an excerpt of the e-mail from MF Global CFO Henri Steenkamp. S&P also informed the […]
James Li and David Chow used to run a shop called Syntax-Brillian Company as the CEO and Chief Procurement Officer respectively. They sold high-def, LCD TVs under the Olevia brand in China. Problem was, they didn’t really sell TVs under the Olevia brand in China. According to the SEC:
[F]rom at least June 2006 through April 2008, Li and Chow engaged in a complex scheme to overstate Syntax’s financial results by publicly reporting significant sales of LCD televisions in China, when in fact the vast majority of these sales never occurred. Li and Chow initially concealed the scheme through the use of fake shipping and sales documents.
Of course, they couldn’t do it alone. They needed a CFO. A CFO who would backdate things when asked and ignore obvious signs of bogus revenue. That man was Wayne Pratt who, from the sounds of it, wasn’t too concerned about ANYTHING:
The SEC alleges that Wayne Pratt, Syntax’s Chief Financial Officer, ignored red flags of improper revenue recognition and participated in preparing backdated documentation that was provided to Syntax’s auditors to support fictitious fiscal 2006 year-end sales. Pratt also ignored indications of impaired assets, agency sales, and potential collectability issues.
So, budding criminals, get on the look out for a guy/gal who is accustomed to shrugging their shoulders and responding “Meh. Whatever.” to your demands. Should work out well for you.
Especially if you’re the jealous type.
According to accounting firm BDO, middle market CFOs typically earn 55% to 60% of their CEO’s pay, but in 2010 they earned just 40%, on average.
In a study of 600 public companies with annual revenues ranging from $25 million to $1 billion, BDO found that CFOs earned an average of $927,743 in 2010, a 19% increase from 2010, while CEOs earned an average of $2.34 million, representing a 25% increase from the previous year.
Apple Insider reported yesterday that when Apple CFO Peter Oppenheimer was asked about Google’s acquisition of Motorola he reportedly said, “$12.5 billion is a lot of money.” Now, I don’t know anyone that would say, “$12.5 billion is pocket change,” or “I piss on $12.5 billion.” Not even the most ostentatious Russian oligarch would be so bold to laugh in the face of that sum of money.
Having said that, it appears the Wall St. Journal seems to think that Oppenheimer’s statement are akin to fighting words, as illustrated by the headline: “Apple CFO Snipes at Google’s Motorola Bid” which included the following:
Peter Oppenheimer, Apple’s CFO, took a shot at Google when asked about the company’s $12.5 billion bid for Motorola Mobility Holdings during a conference call with investors hosted by Gleacher & Company. Oppenheimer said that companies should invent their own technology rather than buy it from the outside, adding that “$12.5 billion is a lot of money,” according to a report from Apple Insider.
First of all, to look at Peter Oppenheimer you wouldn’t think he’s capable of “sniping.” Secondly, “snipe” is defined as “To make malicious, underhand remarks or attacks” according to Wiktionary. For example, if Oppenheimer had said something like, “Larry Page couldn’t get laid in a monkey whorehouse with a bag of bananas” or “Androids are the Yugos of the smartphone world,” those would qualify as snipes. They are malicious, underhanded and are attacks.
Conversely, “$12.5 billion is a lot of money” is not a snipe. It is a statement of a fact-ish. It is a lot of money. You could argue that it is Oppenheimer’s opinion but as posited above, very few would argue that it isn’t a lot of money. Is Google overpaying for Motorola? That’s the question Michael Hickins ultimately asks in his article but somehow the hook for this was that Apple’s CFO brings the same level of snark as the CEO.
Goldman Sachs Group Inc. […] Chief Financial Officer David Viniar said the investment bank could layoff 1,000 employees globally as part of $1.2 billion in cost cuts.
During a conference call with analysts, Viniar said the potential headcount reduction is “as we sit here now and, of course, things can change,” adding that such layoffs would “come over the course of this year.” Viniar said the cuts could be “some senior, some junior people,” but “it’s really more dollar focused than head focused.” [MW]
Time was, a CFO functioned as the main consiliere to the CEO. Finance issues? The CFO is on it. Accounting irregularities? Done. Taking the flak from analysts on the earnings calls? It’s not all glitz and glam, now is it? Nowadays, after some not so solid decisions were made in the recent past, another member of the C-suite has successfully curried favor with the boss. Someone who would ordinarily be fetching the CFO’s 3 pm pick-me-up. That is, the Chief Risk Officer:
Citigroup Inc. (C), American International Group Inc. (AIG) and UBS AG (UBSN) are among other companies raising the profile of risk executives. The derivatives meltdown that sparked the 2008 Lehman Brothers Holdings Inc. collapse and an 18-month recession catapulted the role from obscurity to contention for future chief executive officers. “The person sitting in the risk chair now is reporting to the CEO so the caliber has to be higher,” said Neil Hindle, who runs the CRO search practice at Egon Zehnder International in New York. “There has been a real increase in power over the last two years.” That’s evident in the compensation, which can reach $10 million at large financial institutions now, compared with $500,000 as recently as 2001, Hindle said. Five years ago, a CRO typically reported no higher than the CFO, he said.
Granted, if you’re someone like Dave Viniar, you’ve got very little to worry about since you’re irreplaceable. But if you’re slightly lower on the intellectual scale, you best watch for that CRO buzzing right by you on the meeting that you weren’t invited to. Next thing you know, CFOs will be picking up their shirts and dry cleaning.
Chief Risk Officer Rises to $10 Million Job [Bloomberg]
Last month we told you about Patrice Lataillade, the former Marc Jacobs CFO who was fired, he claims, because he complained about all the porn floating around the office, mandatory pole dances forced upon employees and various other things. Lataillade has sued the company saying that after he complained about the rampant lewdness, he was later told that his services were no longer needed.
The company disputes this, saying that Lataillade was actually doing a little double-entry magic for about $20 million or so in order to earn himself a nicer bonus. Lataillade has now pulled a Chinese stunt of sorts, claiming that Deloitte said everything was hunky dory and that should convince anyone that doubts his CFO prowess:
Lataillade and his lawyers said that the company, which fired Lataillade last September, never had any trouble with his monitoring of its finances in his long tenure at Marc Jacobs International. His work was checked and rechecked not only by accountants for LVMH, the French luxury conglomerate that owns Marc Jacobs International, but also by the company’s accounting firm Deloitte and Touch [sic]. Lataillade claims he never heard a complaint about his performance, and that he was really fired for speaking out against sexual discrimination at work.
If W. Anderson Bishop wanted to sound like a person who is refusing to adopt a different system of measurement because A) it was developed outside the United States B) doing things the easy way is dumb or C) he’s a crusty old fart, he has succeed admirably.
“We didn’t join the metric system when everybody else did,” says W. Anderson Bishop, [Hallador Energy Co.’s] chief financial officer. U.S. accounting rules are “the gold standard, and why would we want to lower our standards just to make the rest of the world happy?”
Susan McFarland will be the third CFO at FanMa since the company entered conservatorship nearly three years ago.
In case you lost count, the U.S. taxpayer has thrown $86 billion at the company but Suz is still “incredibly excited to join the Fannie Mae team and to help lead the company into the future.” Mmmmhmmm. [WSJ]
Speaking at The Wall Street Journal’s annual CFO Network meeting in Washington D.C., Schapiro readily admitted that there isn’t a big push from either multinationals or shareholders to move to international financial reporting standards.
In response to a question from Bank of America’s CFO, Chuck Noski, Schapiro said, “We have not heard from a lot of shareholders that we have to go (to IFRS). We’ve heard the contrary… ‘Why would we take this step toward international accounting standards?’” [CFOJ]
Marc Jacobs International claims that its former COO and CFO, Patrice Lataillade, got a little fancy with the company’s numbers in order to give himself “hundreds of thousands of dollars” in bonuses. The Post reports that court documents state that audits revealed “false and inflated entries” for about $20 million or so. The company says Lataillade was fired from his job for all this financial hocus pocus,
This all came out because Lataillade sued the company alleging that he was fired for entirely different reason altogether. Apparently MJI co-founder and President Robert Duffy likes to have a little fun around the office that wasn’t appreciated by everyone, namely Mr. Lataillade.
“Examples of Duffy’s conduct which created a hostile work environment include his displaying gay pornography in the office and requiring employees to look at it; his production and dissemination of a book which includes photos of MJI staff in sexual positions or nude; his requirement that an MJI store employee perform a pole dance for him,” the suit said.
Accounting/finance types can be get a little stuffy, that’s a given but seeing co-workers in various compromising positions and/or working a pole at the boss’s behest could make for some awkward looks/conversations later. Not that it excuses running through some bullshit journal entries for your own personal financial benefit but I suppose there may be a legitimate beef in there.
Ron Fink at CFO Journal reports that CFOs that are breaking out in a rash due to auditor rotation anxiety might be having a knee-jerk hypochondriacal reaction.
You see, the company that the media loves to figuratively fellate, Apple, opted to put their audit business out to bid every five years and not only have costs gone down, “it has reported no problems with its financial results as a result of the change.” So now Apple is also more progressive and transparent with their corporate governance processes than your company. And you don’t have the iPad. [CFO Journal]
Reuters reports that David Viniar told an investor conference in California that God’s Shop “take[s] all of the criticisms quite seriously” and “We never at least intentionally take reputational risk.”
Timothy Mask worked at Flint Hydrostatics for 25 years calling the company “a true blessing in my life.” Not an extraordinary statement, considering many people have strong feelings for the companies they serve but it’s possible that Mask felt that Flint was such a “blessing” because he spent the last twelve years allegedly “stealing” $1.2 million.
Things started unraveling when Tim up and resigned on May 5th, leaving his boss a Dear John letter of sorts:
“Effective immediately, I resign from Flint Hydrostatics, Inc.,” said the letter Timothy W. Mask left on the president’s desk.
“Flint has been a true blessing in my life,” wrote Mask, 46, of Corinth, Miss. “I will always cherish friendships that I have built and my fellow employees. It has just come time for me to move on to new endeavors.”
You see, Kevin Fienup, Flint’s director of business development and secretary, as well as the son of the company’s president, started looking into Mask’s old endeavors and found a number of checks that were made out to Mask and the company’s janitor. Allegedly, Mask would have his assistant cut checks to the janitor (or Mask if the janitor wasn’t available) who would cash them and then place the cash in a locked drawer in Mask’s office. According to the Memphis Commercial Appeal, Fineup “left his office door open and had documents on his desk about the irregular transactions the night before Mask resigned.” One might conclude that Tim saw said documents, figured the jig was up and sat down to write his heartfelt letter.
As for his “new endeavors” it appears that Mask may have been trying to make a break for it, as the Appeal also reports that he had a “two-week vacation to Hawaii” scheduled to start yesterday, had recently sent mail to a passport processing center and had started transferring $200,000 from his 401k. But instead he got arrested which probably kinda threw a wrench into his plans.
Sometimes we get job reports from certain mainstream media outlets that shall remain nameless that look a tad suspect but in the case of this info from the AICPA, I think we can safely rely on the findings.
Here’s the good news via the Journal of Accountancy:
On the demand front, hiring is back on the upswing after decreasing from 2007 to 2008. In 2007, the total number of accounting hires was 36,111. That dropped to 25,488 in 2008 but climbed to 33,321 in 2010. A large portion of that increase was in firms with fewer than 10 CPAs on staff. Firms of that size increased their hiring projections from 11,432 in 2008 to 16,342 in 2010 (see Exhibit 1).
In terms of the types of positions CPA firm new hires were recruited to fill across firms of all sizes, accounting and auditing still commanded a narrow majority at 51%; followed by taxation at 25%; other at 16%; and information technology at 8%.
The accounting and auditing share of new hires was down from 60% in 2007, with the declines coming from firms with 50 or more CPAs. Hiring of new CPA graduates likewise decreased for information technology (down 5 percentage points from 13%). Tax showed a slight increase (2 percentage points) with the strongest gains coming from firms with fewer than 10 CPAs, while the largest growth since 2007 was in the “other” category.
The percentage of overall firms expecting to hire the same or more new accounting graduates than last year also is up—to 89% from 74% when the question was asked in 2008.
Here’s the next obvious question: are we talking about real, created-from-nothing jobs or are we talking about covering massive staff turnover popularized in public accounting by serf-like working conditions and disappointing compensation? Because hiring the same guy in four different firms doesn’t add up the same as hiring four new accounting grads. Duh.
Oh, and something else – where’s 2009? It doesn’t appear in any of the included exhibits, nor is it mentioned in the Journal of Accountancy article even once. The full survey, available from the AICPA’s website, doesn’t specifically mention the exclusion of 2009 in the survey methodology. We aren’t one for conspiracy theories (yeah, right) but it seems suspect that an entire year would just disappear and fail to get a single mention. I mean it was only two years ago.
We’ll dig into the survey results in more detail later, maybe once we track down 2009. Though not specifically mentioned in the above charts, the entire 2009 Trends in the supply of Accounting Graduates and the Demand for Public Accounting Recruits report can be found here.
Technically! He’ll be in a halfway house until later this year (BOP says December 17) but getting out of the big house has to feel good.
However, Drew won’t be able to apply for a position at one of those Chinese companies who are losing CFOs left and right. He still has to get reacquainted with society and whatnot:
“It’s a bridge, if you will, a transition period,” said bureau spokesman Edmond Ross. The purpose of the halfway house is for prisoners to reestablish family ties and adjust to society outside of prison, he said. Prisoners are allowed to leave the facility to go to their jobs, but their movements are still controlled. “They cannot come and go as they please,” said Ross. “Their lives are restricted to the rules of the halfway house.”
First things first, Andy – Twitter account. Oh, and maybe subscribe to our enewsletter.
Virgin Galactic is racing to be the first company to launch a commercial space flight and since these sort of things usually need someone that’s good with numbers, the company is CFO shopping:
Virgin Galactic, a leader in the race to launch commercial space flights, is looking to hire the first CFO in a brand-new industry sector. “It’s a historic thing,” says George Whitesides, the former NASA chief of staff who is the company’s chief executive. “The executives here are thinking back to the early days of aviation, when companies like American Airlines were getting started. For the right person, it would be tremendously exciting.”
Naturally, this particular job isn’t for just any ol’ finance and accounting sage. You need experience in aerospace, raising both private and public money, and a little exuberance might be nice:
The right person will have strong experience in raising funds from private-equity investors and public offerings, ideally some prior experience or relationship with the aerospace industry, and a hint of merriment.
Virgin Galactic wants a CFO who “fits the Virgin brand,” which means someone who is hard-working but also dynamic and able to integrate work and fun, à la company founder and committed thrill-seeker Richard Branson. Yes, this will not only be the first CFO in a new sector, but quite possibly the first one to rocket into space.
So for you buttoned-up types, just keep moving along. Virgin will be needing for someone who won’t be ashamed by wearing adult diapers and projectile vomiting in front of the billionaire boss.
USANA Health Sciences, Inc. […] today announced that Fred W. Cooper, President and Chief Operating Officer; Jeffrey A. Yates, Chief Financial Officer; and Mark H. Wilson, Executive Vice President of Sales have each stepped down from their respective offices to pursue other business endeavors. […] Continuing on the realignment of the executive team, [CEO Dave] Wentz said “I also want to offer Fred, Jeff, and Mark our sincerest appreciation for their years of service to USANA. We wish them well in their future endeavors.”
Of course it could be that these guys had a foursome at Pebble Beach they weren’t about to reschedule OR they knew there was going to be openings at Novartis. Other theories are welcome. PwC’s Salt Lake City office serves as USANA’s auditor so if you’ve got the scoop or heard something interesting, email us.
We are extremely cautious about pricing. We recognize the consumer environment is still very fragile. We have had a great success over the past year, and in fact 18 months, in building our customer traffic almost against the odds, again despite what is a very difficult consumer environment still. [BBW]
John Carney points out that Bank of America, JP Morgan and Wells Fargo have all appointed new CFOs recently that are not accountants. It harkens him back to a time when another bank made a similar change.
Of course Carney is talking Lehman Brothers and Erin Callan. Oh and Ian Lowitt too. Both served as Lehman’s CFO prior to the bankruptcy. Funny thing – Francine McKenna wrote a post about the problematic situation of having a CFO with no accounting experience three months before Lehman went bankrupt. But BofA, JPM and Wells aren’t Lehman are they? GAAP is really NBD, right? [CNBC]
Sound good to everyone?
Chief financial officers at large North American companies polled by Deloitte LLP said it would take a 20% surge in revenue before they felt comfortable adding to their payrolls.
The quarterly survey released Thursday found that nearly half of respondents would seriously consider adding employees if revenues rose 20%, but few would be moved by a 5% increase. A 10% bump in revenue would only be a major hiring consideration for 11% of CFOs.
Worse yet, perhaps, actual growth isn’t expected to reach such heights: respondents estimate top line growth at North American companies will be just 8.2% this year. (This is, however, a rosier picture than the fourth quarter when respondents forecast 6.5% for the coming year.)
And don’t bother trying to bait them with tax reform, revisions to the healthcare reform bill or payroll tax incentives because they’re all non-starters.
General Motors Co’s new chief financial officer told analysts the automaker remains committed to the low-debt strategy and discipline on vehicle pricing emphasized by his predecessor. In a dinner meeting with analysts on Thursday, Dan Ammann said GM faced limited impact from the Japan crisis, was increasing its auto credit capabilities, and was reducing its exposure to incentives in the U.S. market, according to research notes from Barclays Capital and J.P. Morgan. “Dan emphasized fundamental continuity around GM’s financial strategy and philosophy with his predecessor,” Barclays analyst Brian Johnson said. “Dan plans to continue the low-debt strategy of his predecessor.” [Reuters]
When is this officially a pattern? Or is it simply a trend? Qiao Xing CFO Jiang Aijun resigned today but have no fear investors! – the company has appointed a financial controller and is on the hunt for a new CFO.
Plus they’re planning to file their fiscal 2010 results a month ahead of schedule. The company’s stock was down 12% for the week prior to today’s announcement and unfortunately, all this fresh news doesn’t seem to have calmed anyone down. [Dow Jones, Earlier, Earlier]
CFOs admit that if technology is implemented correctly it can be pretty damn swell but over half of those surveyed said the biggest barrier to improving the finance department is “out of date and inflexible” IT systems. Also, nearly three-quarters of respondents said that these systems are also to blame for failing to reach objectives. Not good. How can we possibly solve this problem?
According to KPMG’s Steve Lis, “By adopting a unified approach to technology, CFOs and CIOs can transform their organizations to become more proactive, innovative and flexible.” That’s a pretty interesting thought but another possibility not addressed in KPMG’s press release was: spending money. I know, I know. Pretty crazy concept so it’s probably best to just keep things the way they are. [KPMG]
It could be that Stephen Park really is pursuing another professional opportunity but most people (and by that I mean investors) don’t believe that story.
Duoyuan Global Water Inc. (DGW) said Chief Financial Officer Stephen C. Park would resign from the China-based water treatment equipment supplier to pursue another professional opportunity. Park will remain with the company until the completion of a third party review or until June 30, whichever is earlier. Duoyuan said it is in the process of selecting an international search firm to assist in appointing a successor. The company’s American depositary shares slid 7.3% to $3.70 in after-hours trading.
Duoyuan Global Water CFO To Resign [Dow Jones]
Warren Buffett’s Berkshire Hathaway Inc. (BRKA, BRKB) took an accounting charge to reflect the declines of three stocks in its investment portfolio after regulators asked about the company’s policy for writing down investment losses. But Berkshire Chief Financial Officer Marc Hamburg complained that the current stock prices don’t reflect the worth of the shares, and predicted in a letter to the U.S. Securities and Exchange Commission that “each security’s market price will grow to at least the intrinsic value that existed” when Berkshire made the investments. [Dow Jones]
Asked about their current use of cloud-computing services, a majority of senior finance executives either have no plans to pursue it in the short term, or are doing so very tentatively. Nearly a third admit that they aren’t even sure what “cloud computing” really means. Yet, when asked how cloud computing might affect their company’s approach to IT longer term, almost half say they believe it will enable a significant restructuring of their entire IT strategy. [CFO]
It boils down to this: if something has less than eight appendages, it’s cool;
greater than eight or more is to be avoided.
“Our business is really pretty simple,” Sloan, 50, said in an interview last week at the bank’s San Francisco headquarters. “When you look at the deal and its structure looks like an octopus or a spider, just don’t do it. That kept us out of a lot of things.”
As the National Football League and the players union continue contract talks, Walt Disney Co. Chief Financial Officer Jay Rasulo was pressed Tuesday to answer questions about how a potential strike or lockout would impact sports juggernaut ESPN. Rasulo expressed confidence that Disney’s lucrative sports network, which has the rights to “Monday Night Football,” could weather the loss of games, telling the audience at Credit Suisse’s Global Media and Communications Convergence Conference that “we’re not that concerned.” [LAT]
We’re not very good at math or statistics so perhaps our numbers are off a bit, but how do 89% of CFOs expect their firms to grow in the second quarter of 2011 while 85% also do not expect to add any new full-time accounting and finance professionals? It doesn’t take a mathlete to figure out what that means for those of you lucky enough to work for these CFOs, so you better get to slacking off now before they come down to your cube and kindly inform you you’ll need to go ahead and come in on Saturday.
Most (85 percent) chief financial officers (CFOs) interviewed for the Robert Half Financial Hiring Index said they expect to make no changes to their current staffing levels during the second quarter of 2011. Seven percent anticipate adding full-time accounting and finance professionals, while another 7 percent plan personnel reductions. The net 0 percent projection is down two points from the first-quarter 2011 forecast.
As businesses navigate the current economy, they remain optimistic about the outlook for their own companies. Eighty-nine percent of CFOs expressed confidence in their firms’ growth potential in the second quarter, up one point from the first-quarter survey.
Looking to relocate? Try the Pacific or Mid-Atlantic regions. Twelve percent of CFOs plan to add full-time accounting and finance professionals and 5 percent foresee cutbacks, a net 7 percent increase.
“Many Pacific-region companies, particularly those in the manufacturing and technology sectors, are rebuilding their teams to meet renewed demand for their products and services,” said Max Messmer, chairman and CEO of Robert Half International. “In particular, firms are looking for skilled financial analysts to help them control costs and prepare for potential growth.”
In the end, a net 0 hiring projection is a lot better than previous recent surveys which were in the negative however we’d be remiss if we did not point out that the last time the survey showed a net 0 projection was for 3rd quarter 2008. And we all know how that particular period of time went.
What does this mean? New grads who are still waiting around for jobs can keep waiting, and more seasoned professionals who have been out of work for quite some time should probably just give up. Thanks for the great news, RH!
WTF WFT CFO Andrew Becnel needs a hug:
Weatherford International Ltd. Chief Financial Officer Andrew Becnel called a $500 million accounting error disclosed by the oilfield-service company late Tuesday an “embarrassment,” the damage of which is “impossible to quantify.”
But you know who’s taking this whole snafu in stride? CEO Bernard Duroc-Danner that’s who! BDD told investors on a conference call today that nothing is fucked and that this will all be yesterday’s news in no time:
Chief Executive Bernard Duroc-Danner said there is no risk of a U.S. government investigation or of any tax penalties or fines related to what he characterized as a mistake in calculating the tax rates on dividends moved from one subsidiary to another.
Geez. Give the SEC some credit wouldja? Just because they missed a few things here and there doesn’t mean they won’t ask any questions about your material weaknesses.
This was sent to me by my 69-year-old landlord who is spending his winter in Florida and we humbly present it to you now for your reading pleasure during this lovely busy season.
At the end of the tax year, the IRS office sent an inspector to audit the books of a local hospital. While the IRS agent was checking the books he turned to the CFO of the hospital and said, “I notice you buy a lot of bandages. What do you do with the end of the roll when there’s too little left to be of any use?”
“Good question,” noted the CFO. “We save them up and send them back to the bandage company and every now and then they send us a free box of bandages.”
“Oh,” replied the auditor, somewhat disappointed that his unusual question had a practical answer. But on he went, in his obnoxious way. “What about all these plaster purchases? What do you do with what’s left over after setting a cast on a patient?”
“Ah, yes,” replied the CFO, realizing that the inspector was trying to trap him with an unanswerable question. “We save it and send it back to the manufacturer, and every now and then they send us a free package of plaster.”
“I see,” replied the auditor, thinking hard about how he could fluster the know-it-all CFO. “Well,” he went on, “What do you do with all the leftover foreskins from the circumcisions you perform?”
“Here, too, we do not waste,” answered the CFO. “What we do is save all the little foreskins and send them to the IRS office, and about once a year they send us a complete dick.”
Last week, we told you about Wells Fargo’s announcement that their CFO gave himself an early birthday gift by throwing a retirement party for himself. As previously mentioned, Howard Atkins’s departure was a little mysterio and no one had any theories (crackpot or otherwise) on the Atkins’s march in. That all changed yesterday when Christopher Whalen, an analyst at Institutional Risk Analytics issued a report that stated that he, for one, wasn’t buying the “personal issues” story put out by the bank:
“The departure of Atkins, we are led to believe, was not merely the result of personal issues, but reflects an ongoing internal dispute within [Wells Fargo’s] executive suite regarding the bank’s disclosure,” he writes.
Whalen then goes on to argue that Wells Fargo’s “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law. We further understand that some officials of [Wells Fargo], increasingly uncomfortable with the bank’s aggressive public disclosure regime, have reached out to regulators because of concerns regarding accounting issues.”
The Stagecoach Gang, for their part, is sticking to their story citing the “personal reasons” and their spokesman dismissed Whalen’s report with “pfffft” and a wave of the hand, saying, “I haven’t heard anything like that. It’s speculation. I’m not going to comment on it.”
Wells Fargo CFO Exit Tied to Disclosure: Analyst [The Street]
Howard Atkins turns 60 this week but is calling it quits, citing “personal reasons”:
Wells Fargo & Company announced today that Timothy J. Sloan, the company’s current chief administrative officer and a senior executive vice president, has been named its new chief financial officer, effectively immediately. He succeeds Howard I. Atkins, who turns 60 this week and is retiring as CFO and senior EVP for personal reasons. Atkins’ retirement is unrelated to the company’s financial condition or financial reporting.
The retirement is effective in August but Atkins is taking “an unpaid leave of absence he will begin immediately,” according to reports. Maybe this is typical and we’re sure he’s not starving but that still kinda sucks, especially since we don’t see any cake – neither day of birth nor of the retirement variety – in his future. Theories about motives are welcome, especially from any Klynveldians on the audit team or others familiar with the sitch.
Frankly, it’s bad for business:
“The political turmoil in North Africa, especially Egypt, is of course hurting our business,” said Vasant Prabhu, vice chairman and chief financial officer of the hotelier during a post-earnings conference call Thursday. He noted Starwood has 16 hotels across North Africa that generated between $10 million to $12 million in fees last year.
“We expect that our fees will be hit in North Africa,” he added. “It is too early to tell how we will be impacted, but this is clearly a risk that needs to be closely monitored.”
Is “bridezilla” appropriate here?
The controversial chief financial officer (CFO) of Nkomazi municipality in Mpumalanga, Sheila Mabaso, allegedly submitted a sick note laying her off for three months – only to hold her wedding during that period. Mabaso might be charged with dishonesty after the Mpumalanga municipality discovered that the sick note booking her off for September, October and November was “actually meant for her to prepare for the wedding”. Though Sowetan could not establish who Mabaso got married to, it can reveal that she got married to a pastor from the North West and that the wedding took place in Nelspruit on September 25 last year. Mabaso apparently flew to Malaysia for the honeymoon but allegedly told the municipality she was going to see a specialist doctor.
We’ve never known a CFO to be “controversial” to the point that it goes into print so we Googled “controversial CFO” and it came up with less than 100 items (although Erin Callan did sneak in there). Although, if you read further, one would discover that Ms Mabaso is nothing if not a little sassy:
[She] told Ziwaphi, a local fortnightly newspaper, that getting married while sick was none of anybody’s business. “It’s true that I was sick for three months and I have a doctor’s note to prove it. If I got married in that period, it’s none of their business. Who said a person can’t get married when they are sick?” Mabaso was quoted as saying.
Question: Who says “no” to Apple when offered a job? Answer: Blackstone Group CFO Laurence Tosi.
And what does one do when you commit an act of such allegiance? You tell the boss, natch:
Apple Inc. approached Blackstone Group LP Chief Financial Officer Laurence Tosi to become its finance chief, three people with knowledge of the matter said.
Tosi told Blackstone CEO Stephen Schwarzman that he plans to stay, rather than join Apple, said two of the people, who asked not to be identified because the talks were private.
The ‘Berg reports that because Apple has cash burning a hole in their pocket, they may be looking for a CFO who has acquisition experience and in case you haven’t heard, that’s sorta what Blackstone does. Apple gave the classic “non-denial denial” telling Bloomberg that they are “not conducting a CFO search,” and Pete “loves the company and is extremely happy in his role.”
But that doesn’t make him Laurence Tosi, does it?
Patrick Pichette admits that, despite some less than ideal position on censorship, the GOOG still has a mad crush on those 1.2 billion searchers and their right to know who won the Nobel Peace Prize:
Pichette told The (London) Times that it was not the end. “China has 1.2 billion people. For Google to say, ‘We’re going to live on our mission, but not serve 1.2 billion people’ — it just doesn’t work. China wants Google.”
He spoke of the “great firewall of China,” where censors filter the information that China’s internet users can view.
He said: “[If] you were in China last week, two weeks ago, and you typed in Nobel Peace Prize — there were no results. Think of Google’s brand now. You’re Chinese, you know that’s not true, that the Nobel Peace Prize has not disappeared from the face of the earth. There lies the issue of brand. There lies the issue of our mission.”
We’re a few days late to this story so save the indignation, it’s still worth mentioning.
Sister Marie E. Thornton (aka Sister Susie) was doing the Lord’s work as the CFO at Iona College in New Rochelle, NY and it appears that she was embezzling around $80k a year for nearly 10 years to fund a wee bit of a gambling problem. She surrendered to authorities last week over said embezzlement of ‘more than $850,000,’ according to Talk of the Sound, a New Rochelle blog, that quotes a DOJ press release.
The school fired Sister Suz last year, along with another employee, in relation to the embezzlement and the DOJ got around to charging her last week.
The story got picked up by several outlets, including Fox News who reported that Sister Suz had been blowing the money on trips to Atlantic City:
As chief financial officer at Iona College in New Rochelle, N.Y. from 1999 to 2009, Sister Marie Thornton, 62, bet her six-figure income and school money away during frequent trips to Atlantic City, federal prosecutors said.
Thornton was arrested Thursday and pleaded not guilty in federal court in Manhattan. She was released without posting bail. Sources confirmed to MyFoxNY that a former Iona basketball coach has said that Sister Marie definitely had a gambling problem.
Now why the former coach, Jeff Ruland (who was fired from his job, according to the Post), felt obligated to dish on the gambling issue is not clear, although it does provide a motive for Sister Susie’s (alleged!) stealing, which would have probably come out of the investigation. Odd revenge theories aside, the good news is that Sister Suz had seen the error of her ways and has been “cloistered at the Sisters for St. Joseph Order, near Philadelphia,” according to the Fox News report.
However, that is a lot closer to AC, so maybe we’re jumping the gun on repentance.
BREAKING: Sister Susie Arrested, U.S. Attorney Charges Former Iona College VP of Finance in $1.2 Million Embezzlement [Talk of the Sound]
Nun Accused of Embezzling $850,000 From College, Then Gambling It Away in Atlantic City [Fox News]
Nun charged with embezzling $1.2M from Iona [NYP]
Receiving news that you might be expected to earn less money would upset the most mild-mannered of Americans.
But if you’re the King of All Media and you hear through the grapevine that your company’s Chief Financial Officer says this: “At the time of the [Sirius and XM Radio ] merger we were in many long-term contracts. As they come up for renewal, we’ll have the opportunity to get more favorable economic terms there.”
You might react with the following:
“I am not taking a f—ing paycut,” Stern said. “Why would I have to take a paycut? … Who is this guy to say this in public?”
“I know what I have done in this company,” he said. “I am more important than Oprah, in this company anyway. Oprah’s out getting the Kennedy Center honor and I’ve got the CFO announcing to Wall Street that I have to take a paycut.”
“Nevermind getting respect from the industry,” Stern continued, “I want respect from the company.”
Which you might follow up with this:
“I am calling my agent today that want more f—ing money. I don’t want it perceived that I took a paycut,” Stern railed, disclosing that Frear got a raise in 2008, putting his annual salary at $3.3 million. “Where’s your paycut, David?”
To be fair – if you tell someone who makes 3% of what you’re pulling in to take a paycut, it may be time to get some perspective.
Remember? She was thisclose to living on franks and beans.
And now she’s even closer to the mystery meat reality because she has been laid off by the nonprofit for whom she worked:
Velma Hart, the chief financial officer for Am Vets, a veteran services organization based in Maryland, said Monday in an interview with CNBC that she was laid off as part of the nonprofit’s effort to cut expenses.
“I want to focus on the positive and be optimistic,” said Hart, who lives in Upper Marlboro, Md. “And assume that somehow things will work out, that there’s an opportunity out there with Velma’s name on it that’s right around the corner.”
A positive outlook, we like this gal. We’re sure you’ll be back to the corner office in no time. One word of advice though when you’re in the hot dog aisle – Hebrew National is not kosher, not matter what the package says.
Yet the majority of these CFOs don’t believe that the federal government’s financial policy has had any effect on their business.
So does that mean CFOs are indifferent about which party is in actually in power but more generally speaking, Republicans give them the warm fuzzies while Dems give them the heebie jeebies?
Despite the fact that more than 70 percent of chief financial officers (CFOs) at Deloitte’s annual CFO Vision conference earlier this month believe current government financial policy has either had no effect or negatively impacted their business, the tide is turning toward a more positive outlook. A majority (59 percent) of the same group of CFOs expect the recent Congressional midterm elections to have a positive impact on their industry.
Maybe we’re a little slow (especially this week) but Sandy Cockrell (he introduced us to the “bathtub recovery“) attempts to clarify:
“CFOs are confident that they can pull the levers within their own companies to do their jobs, but they are most worried about external issues involving economic recovery and regulations,” said Sanford Cockrell III, national managing partner of Deloitte’s U.S. CFO Program. “The biggest risk they see is a prolonged, stagnant recovery. Industries are also concerned about too much government intervention. If the employment picture does not also improve and if general pessimism continues to rise, we would expect pessimism to start having a larger impact on companies’ earnings and investment expectations.”
Okay so 70% of the CFOs polled “believe current government financial policy has either had no effect or negatively impacted their business,” yet they still fear government intervention? And if what Cockrell is saying rings true with the majority of CFOs polled, the second John Boehner holds the gavel as the new Speaker of the House, the employment picture may slowly begin turn around? Do we have that right? Really, finance chiefs of America? That’s what you’re pinning your hopes on?
Are they all confused or did Deloitte just throw together a poorly designed poll? We’re stumped but if you’ve got the time and energy, we’ll entertain some theories.
Chris Liddell is thinking about the future!
“I’m not worried about today, I’m worried about the three months and the six months and the nine months” from now, GM Chief Financial Officer Chris Liddell said in an interview this morning on CNBC.
Liddell also had some frank talk about how GM can never go back to the bad, old days, when he said GM was a financing company with a car company “attached,” and the auto maker used its pension plan as a “piggy bank.” GM needs to have a “fortress” balance sheet to support its business plan, Liddell said.
So the intention is there but old habits die hard, amiright? Francine McKenna thinks so and makes a prediction:
My prediction: GM needs another accounting restatement before the 2012 election. This time it shouldn’t be retail investors who end up with the short end of this stick.
Any takers? November 6, 2012 is the over/under. We’ll take the overs (post-election day) and if we lose, we’ll take FM to dinner at the restaurant of her choosing.
“Since joining Fannie Mae in 2008, David has worked diligently and successfully to help Fannie Mae respond to the housing finance crisis while developing strategies to enhance the finance function and prepare our company for the future. We will miss David’s intellect, energy, and good humor.”
~ Fannie Mae CEO Michael Williams in an email to employees announcing the resignation of CFO David Johnson.
The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.
If financial executives could get one thing off their plates, it would be administrative tasks, according to a recent survey by Robert Half Management Resources.
More than one-third (38 percent) of chief financial officers (CFOs) interviewed said that if they could eliminate one responsibility, it would be basic clerical and administrative work.
“Today’s less extends to all levels of the organization,” Paul McDonald, senior executive director of Robert Half Management Resources, said of the survey results.
“At small and mid-size companies, in particular, this often means financial executives have had to take on tasks once handled by others,” McDonald said. “The demands of the current economic environment make it even more essential for senior-level managers to use their time wisely.”
CFOs were asked, “If there was one responsibility you could hand off from your job, what would it be?”
• Basic clerical/administrative – 38%
• Accounting-related – 19%
• Human resources-related – 14%
• Managing – 7%
• Operations-related – 3%
• Interactions with vendors – 1%
• Nothing – 8%
• Other – 10%
The survey was developed by Robert Half Management Resources, a provider of senior-level accounting and finance professionals on a project and interim basis. It was conducted by an independent research firm and includes responses from 795 CFOs from a stratified random sample of U.S. companies with 20 or more employees.
Robert Half Management Resources offers executives six tips for maximizing their time:
1. Set realistic expectations – High standards are a must, but setting impractical goals can cause frustration and waste valuable time. When initiating a project, consider what you would like to achieve if resources and time were unlimited. Then determine what can reasonably be accomplished considering available resources and other priorities.
2. Don’t procrastinate – It’s tempting to postpone less challenging assignments for more exciting initiatives, but it can backfire if projects start to stack up. Procrastination strains working relationships and creates unnecessary stress as everyone strives to catch up.
3. Delegate – Distribute more routine tasks to other staff members. Look for opportunities that allow your top performers to gain visibility and build their expertise and decision-making skills.
4. Keep meetings on track – Distribute a detailed agenda prior to the discussion so everyone is prepared. Meetings should begin and end on time. If information can be easily covered in e-mail or phone, a meeting might not be warranted.
5. Bring in help – If you and your team are overloaded, consider bringing in outside support during peak activity periods or for large-scale initiatives that are finite in nature.
6. Recharge – Financial executives are accustomed to long hours and demanding work, but that doesn’t mean they should sacrifice breaks and vacation. Scheduling time for even a short respite can restore energy and a sense of control.
About Robert Half Management Resources:
Robert Half Management Resources is a provider of senior-level accounting and finance professionals to supplement companies’ project and interim staffing needs. The company has more than 145 locations worldwide and offers online job search services at www.roberthalfmr.com. Follow Robert Half Management Resources at twitter.com/roberthalfmr for workplace news.
Less than two weeks ago, we shared with you the latest results from Grant Thornton’s National CFO Survey.
What we learned is what we already knew, which is that the job market sucks and will continue sucking if we are to believe the 516 CFOs surveyed from October 5th to October 15th:
In a national survey of U.S. Chief Financial Officers (CFOs) and senior comptrollers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, only 29% plan to increase hiring in the next six months, while 21% plan to decrease hiring.
Not so good, huh? Well fortunately for all of you looking for a job out there, the GT methodology is severely flawed for two reasons: 1) It included the extra-super-tragic days of October 5th and October 15th when CFOs were feeling especially negative and 2) They survey far too many CFOs.
Had they performed their survey on October 6th through the 14th like FEI and Baruch College and kept cut their population by roughly half (FEI/Baruch interviewed 249 CFOs), they would have discovered that things aren’t really that bad at all:
While CFOs this quarter continue to forecast high unemployment nationwide (on average predicting at least nine percent through October 2011), hiring prospects at their own companies paint a rosier picture. More than half (56%) plan to hire additional employees within the next six months, and overall they anticipate a four percent increase in hiring over the next six months.
So obviously Grant Thornton just needs to tweak their methodology a bit and then we’ll all be on the same page.
Until that happens, feel free to get some of your hapless friends together and start asking CFOs for their broad-based economic outlook. It appears that as long as you have a shell of a methodology and manage to get at least 250 responses, it’s perfectly acceptable to share the findings with everyone and claim that things are turning around.
FYI for any budding CFOs out there:
Having liquidity is key to any business and it is important to build it before any crisis, said Ford Motor Co.’s (F) chief financial officer Thursday.
“We have to assume that when you really need liquidity, it won’t be there,” said Lewis Booth, speaking at Treasury & Risk’s 15th annual Alexander Hamilton Awards ceremony in New York City.
After those insightful comments, Booth gushed about how the company that Hank built was doing.
“We expect our automotive cash to be about equal to our debt by year-end 2010, earlier than expected,” Booth said, adding “this has been a magic year.”
Just a CFO walking the talk (almost anyway).
When you’re a folksy billionaire octogenarian, you can afford to have others do your dirty work. In the case of the Warren Buffet, he has Charlie Munger hate on accountants for anything and everything under the sun.
Similarly, when the SEC comes calling, the Sage of Omaha can ring up Berkshire CFO Marc Hamburg. On the one hand, you might expect WB to shoot the breeze with the SEC employees since they likely share a fondness for a certain film genre.
However, when the conversation turns to business, the old man probably claims that he has an interview on tax cuts, a bridge match with WHGIII or a lunch date with Z-Knowles. This allows him to turn the SEC scamps over to Hamburg who plays a little bit of a bad cop to the Buffet’s chatty, dirty Grandpa. The CFO then lets the SEC know, in no uncertain terms, that they’re barking up the wrong tree:
In an April letter, the SEC asked Berkshire why it was not recording write-downs on shares with $1.86 billion in unrealized losses, all of which had been in that position for at least a year.
Given the duration of those losses, the SEC said they appeared to be more than temporary and as such should have been written down.
In a detailed response, Berkshire Chief Financial Officer Marc Hamburg said most of the losses with more than 12 months’ duration as of December 31 were concentrated in Kraft and U.S. Bancorp, shares it had acquired in 2006 and 2007.
Hamburg said that as of December 31, Berkshire determined both companies had enough earnings potential that their share prices would eventually exceed the original cost of the stock. It also has the “ability and intent” to hold the shares until they recovered, he said.
“We believe it is reasonably possible that the market prices of Kraft Foods and U.S. Bancorp will recover to our cost within the next one to two years assuming that there are no material adverse events affecting these companies or the industries in which they operate,” Hamburg said.
And if this doesn’t work, they’ll just schedule Munger for another speech.
Yesterday we shared with you the unfortunate tale of Walgreen CFO Wade Miquelon picking up his second DUI in just over a year. While Mr. Miquelon is obviously responsible for his own actions, this whole mess could have been avoided if WAG would just splurge a tad and get him 24/7 car service. Sure you might catch some shit from Footnoted but isn’t that better than people getting hurt?
Anyhoo, most of the coverage on this story is in and around Chicago but naturally, analysts that cover the company were asked about the whole ordeal and frankly, since jumping behind the wheel after a few highballs doesn’t seem to have any effect on Wade’s professional capacity, it’s really NBD:
Dereck Leckow with Barrington Research […] sees no reason for investors to be concerned.
“Certainly, it’s rather embarrassing, but he’s not been found guilty of anything at this point,” said Leckow.
“At this point in time, it’s not something to be concerned about,” he concluded. Leckow has an “Outperform” rating on Walgreen shares and a $46 price target.
The risk for investors, if anything serious were to result from the latest charge, is that Miquelon is regarded as key to restructuring that’s been going on at Walgreen.
“Wade has been very valuable for the company’s cost-reduction efforts,” observes Scott Mushkin of Jefferies & Co. “If there were any problem that would take him away from his responsibilities at Walgreen, that would be a negative,” said Mushkin.
As we noted yesterday, WAG isn’t commenting on this “personal matter” but some people are wondering aloud about Wade’s decision-making ability:
Companies have to disclose “events that occurred during the past 10 years and that are material to an evaluation of the ability or integrity” of an officer. This includes whether the person “was convicted in a criminal proceeding … (excluding traffic violations and other minor offenses),” according to the Securities and Exchange Commission.
So the question becomes when does such an issue stops being a “personal matter” and starts becoming a “material” one. And what does it say about a person who makes such repeated mistakes, risking himself and others in the process? Can shareholders trust him with running the finances of their company?
The answer is, it depends.
“Some companies might have disclosed the second arrest right away; some might have said something somewhere,” said Edward Best, a partner at law firm Mayer Brown. “Other companies could reasonably have concluded, ‘Hey, the guy still showed up Monday morning.’ He’s still able to fly to New York to meet with rating agencies, investors and bankers. It’s not a material issue.”
One thing is for certain – Miquelon is losing his license for three years effective November 10th, so Walgreen has a couple of weeks to arrange for that car service.
Walgreen: Street Unperturbed By CFO DUI Arrest [Barron’s]
Walgreen CFO Arrested on Drunk Driving Charges … Again [Daily Finance]
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]
At this rate, Wade Miquelon is going to be at Billy Joel territory in no time:
Walgreen Co. Chief Financial Officer Wade Miquelon was arrested on suspicion of drunken driving last month, his second such arrest in a little more than a year, according to Kenilworth and Glencoe police.
Miquelon stonewalled officers when they requested a breathalyzer test which goes over well approximately 100% of the time. As for the past incident:
In Sept. 2009, he was stopped at 12:51 a.m. at Green Bay Road and Glencoe Drive and charged with speeding, improper lane usage, DUI and having alcohol in his system. In May, he accepted a one-year supervision for the latter offense, according to a Cook County District Court clerk.
“We’re aware of it,” said Walgreen’s spokesman Michael Polzin. “It’s a personal matter, and we don’t comment on personal matters.”
Are they also be aware that it’s relatively inexpensive to hire a full-time driver for a senior executive when you have profits of $2 billion? Just so, you know, no one gets killed.
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]
This past summer we learned that Tyco was still throwing epic parties, despite the best efforts of rank and file accountant Jeff Weist, who couldn’t fathom how scantily-clad mermaids, pirates, wenches, a tattoo artist, fire breather, among other things were legitimate business expenses.
Jeff claimed in a lawsuit that he was fired, more or less, for his integrity and trying to keep Tyco out of trouble, again.
Fast-forward to present day and Christopher Coughlin is retiring as Tyco’s CFO. Rather than promote someone from the inside, presumably letting the good times continue (tone at the top is everything, yo know), the company has appointed Eastman Kodak CFO Frank Sklarsky to take over effective December 1.
Now, if you’re a Tyco employee that happens to be on a regular on these legendary ragers, you’ve got to be concerned. Years of debauchery in exotic locales could be coming to an abrupt halt (right before the holidays!) if the transition doesn’t go right.
However, there is a ray of hope, “Coughlin, 58, who has been Tyco chief financial officer since 2005, will advise the company on some projects until his retirement in 2011.”
So it appears that Chris will have to explain “how we do things at Tyco” to Frank before he hangs it up. Judging by how things have gone at Kodak for the last few years, Sklarsky is probably thrilled to be out of there and maybe willing to play ball the Tyco way. Think of the mermaids, Frank.
Tyco Int’l hires CFO away from Kodak [Reuters]
The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.
A strong moral compass can give high-potential managers a leg up the career ladder, according to the results of a recent survey.
One-third of chief financial officers (CFOs) interviewed said that, other than technical or functional expertise, integrity is what they look for most when grooming future leaders. Interpersonal and communication skills also ranked high, cited by 28 percent of respondents.
The survey was developed by Robert Half Management Resources, a provider of senior-level accounting and finance professionals on a project and interim basis. The survey was conducted by an independent research firm and includes responses from more than 1,400 CFOs from a stratified random sample of U.S. companies with 20 or more employees.
CFOs were asked, “Other than technical or functional expertise, which one of the following traits do you look for most when grooming future leaders at your organization?”
• Integrity – 33%
• Interpersonal/communication skills – 28%
• Initiative – 15%
• Ability to motivate others – 12%
• Business savvy – 10%
• Other/don’t know – 2%
“History has shown time and time again the importance of ethics in business – even a single lapse in judgment by one employee can significantly affect a company’s reputation and its bottom line,” said Paul McDonald, senior executive director of Robert Half Management Resources. “Leaders who are principled and forthright inspire this same behavior in their teams, creating a culture in which integrity is a core value.”
McDonald pointed out that communication skills also are requisite as executives take on greater responsibility.
“Especially during difficult periods, managers must be able to promote open, two-way communication with their teams,” McDonald said. “Executives in companies that have moved successfully through the downturn understand the importance of listening intently to feedback from employees and are always on the lookout for this skill in potential leaders.”
This is especially troublesome for the House that Dave Thomas partially built because eating more produce isn’t an option for most Americans.
Higher costs for commodities like beef and bacon will take a bite out of margins at Wendy’s/Arby’s Group (WEN.N) in the second half of 2010, an executive for the No. 3 U.S. fast-food chain said on Tuesday.
“Beef and bacon are two commodities that have been troublesome to us in this current environment,” Steve Hare, Wendy’s/Arby’s chief financial officer, said at an investor conference.
Michael Burke need not worry. David Paterson will be unemployed soon enough.
Albany International (NYSE: AIN) announced on Sept. 23 that it terminated CFO Michael Burke without cause. Burke was also senior vice president at the manufacturing company headquartered in Menands, New York.
Albany International’s board of directors tapped John Cozzolino to serve as acting CFO. Cozzolino is a vice president overseeing strategic planning.
The moves are effective immediately. Albany International would not say why Burke was fired.
“There were absolutely no ethical, legal, accounting or personal issues involved,” said Susan Siegel, a company spokeswoman.
Just a board of directors channeling a little bit of Steinbrenner.
Albany Int’l Corp. CFO terminated [The Business Review]
In case you haven’t been paying attention for the past, say, 5-10 years:
Time Warner Inc. (TWX) Chief Financial Officer John Martin said Thursday that the television advertising market is “really strong,” while the print advertising market is “okay–but not really robust.”
Not to worry though, there are no signs that things are getting worse.
Meanwhile, he said the company’s publishing arm, Time Inc.–which he called “the most secularly challenged part of our company”–faces difficult comparisons in the second half of this year, though he added that he didn’t see any slowdown ahead.
The magazine business was pummeled by the recent economic downturn at a time when it was already declining due to the rise of digital media.
Two years working for Roger Goodell must have been pure hell, compared to reporting to Lloyd.
Chief Financial Officer Anthony Noto is leaving the NFL after two years to return to Goldman Sachs.
Tony will be slumming it in IBD as the co-head of the Global Media Group. The NFL is cool with it though; they understand that not everyone is cut out for the big leagues. The good news is they’ve still got a Team Jehovah alum heading up the Finance Department:
The league said Monday that Eric Grubman will oversee the finance group at least until the end of collective bargaining negotiations with the NFL Players Association. Grubman is executive vice president of business operations and led the league’s finance operations when he joined the NFL in 2004.
Many of you soldiering in public accounting have aspirations of one day achieving the pinnacle of many a numbers junkie’s career – Chief Financial Officer. You may think that becoming a CFO will mean hobnobbing with other C-suiters, first-class flights and access to exclusive swing joints but in all likelihood, it will consist of long hours, political maneuvering and maybe burning a few bridges.
While there are many paths to ascending to such a heralded position, one has to wonder if the skill set obtained in public accounting will really prepare you for all the demands and headaches that will inevitably come with a CFO position.
Because so many accounting grads get their start in public accounting, one of obtaining the CPA credential. There’s no question that obtaining your CPA is a must for anyone that intends on spending a significant portion of their career in public accounting and little debate about the advantage of having those three letters on your résumé when you start looking outside public.
Tthe timing of that move may determine what kind of path you have ahead of you in order to land that coveted CFO gig. If you manage to stick out life in public until partner or in some cases the director or senior manager level the path is more clear. You may jump right into it immediately or you assume a position that reports to the current CFO and be groomed to assume the big chair at the appropriate time.
But what if you’re just starting your career and you’re fed up with public already? Or what if you’ve gotten laid off and you took a job in private. Are your dreams crushed at this point? What’s a wannabe CFO to do?
Speaking with John Kogan, CEO of Proformative, an online resource for finance, accounting and treasury professionals, obtaining the Certified Management Accountant credential is something that often gets overlooked.
“It’s the Rodney Dangerfield of finance certifications,” John told GC, “it doesn’t get enough respect.” The argument for today’s CFOs to have a CPA are being made and statistics have shown that more and more CFOs are, in fact, CPAs. The most recent data we can find shows that in 2009, 45% of Fortune 1000 CFOs were CPAs, up from 29% in 2003.
However, the viewpoint of “Warren Miller” in the comments of Francine McKenna’s guest post at FEI Blog on the subject, is that accountants usually make terrible CFOs:
[A]ccountants tend to make lousy CFOs because (a) they see everything as an accounting problem, (b) their ignorance of finance AND of human nature (where incentives are concerned) can be breathtaking, (c) they look backwards, and (d) they are conflict-avoiders. If accountants wanted to deal with the ambiguity of the future, they’d have never become bean-counters.
In addition, most accountants LOVE “rules.” They avoid conflict by hiding behind rules. They are go-along/get-along people. I’m fond of saying this: “If accountants had been running our country in 1776, we’d still be working for the King.”
So if the gamut of accountants are ignorant about finance matters, does the CMA provide a bridge to closing that knowledge gap? John Kogan thinks so, “The CMA designation wants to be the ‘CPA’ for finance professionals,” he said, “but it’s so far from being that.”
When you look at the two sections of the CMA exam on the Institute of Management Accountant’s website, you certainly get the impression that the CMA could be the “CPA for finance professionals” based on the curriculum:
PART I – Financial Planning, Performance and Control
• Planning, budgeting, and forecasting
• Performance management
• Cost management
• Internal controls
• Professional ethics
PART II – Financial Decision Making
• Financial statement analysis
• Corporate finance
• Decision analysis and risk management
• Investment decisions
• Professional ethics
So why isn’t the CMA a more coveted credential? John Kogan claims it’s due to poor marketing on the IMA’s part, “The CMA [credential] has similar requirements, not identical but similar, and they don’t enjoy the reputation of the CPA,” John said. “The CMA is getting its butt kicked because it doesn’t market itself well.”
You can easily make the argument that the AICPA has the distinct advantage of partnering with the Big 4 – firms that’s primary purpose is to serve as CPAs – on marketing and promotional efforts while the IMA has no apparent equivalent.
That being said, our recent conversation with IMA Chair Sandra Richtermeyer shed some light on the careers that are available for accountants moving into a financial role that the CMA designation complements well. She was of the notion that the CMA is simply not about cost accounting and John Kogan agrees, “I think anyone who knows anything about [the CMA] knows that the [designation] is broader than that, it’s just that very few people know what the heck it’s about,” he said. “Without a doubt, the skills that the IMA are teaching and certifying are corporate finance skills.”
If you consider yourself to be on the path to CFO Rockstar, maybe you have the CPA locked up but what’s next? Having the CPA credential may make you an attractive candidate on paper but it’s won’t guarantee success with the wide range of knowledge that CFOs need. So, while it may not hold a candle to the CPA in terms of prestige, the skills and knowledge that fall under the CMA are essential for any successful CFO.
You figure someone has to determine whether or not the Hunt Family should vote to lock the players out next year.
The Kansas City Chiefs have hired Dan Crumb as their chief financial officer, the team reported Friday.
Plus, dude is a CPA so we like the move. The real question is, are the Chefs for real?
Crumb has a bachelor’s in finance from the University of New Orleans and an MBA from Tulane University. He is a certified public accountant and a member of the American Institution of Certified Public Accountants.
The Chiefs did not have a CFO before Crumb’s appointment. Crumb’s hiring comes two days after the Chiefs announced that Denny Thum had stepped down as president and that Chairman Clark Hunt had taken the title of CEO.
“Dan has a proven track record of success as a financial officer, and his leadership and experience make him a key addition to our business operations,” Hunt said in a release.
Kansas City Chiefs add a new CFO to executive roster [Kansas City Business Journal]
The demand for fossil fuels remains high; can you believe it?
Halliburton Co. (HAL) remains bullish on the recovery of its oil services business, which was hit hard last year by the economic downturn, Chief Financial Officer Mark McCollum said Thursday.
“We continue to be very bullish about the recovery itself,” McCollum said in a webcast presentation to investors. The company is seeing increases in the pricing of contracts in North America, where activity in the third quarter “remains high.” The North American market “continues to do very well,” he said.
You people with poor attitudes really aren’t helping matters.
That, or Robert Marcus needs a little training in positive spin:
The environment for cable television subscribers is “very, very weak,” according to Time Warner Cable Inc. (TWC) Chief Financial Officer Robert Marcus, and the company may actually see the total number of subscribers to its television, Internet and telephone services shrink during the current quarter.
The statement, made Wednesday at a Bank of America Merrill Lynch conference in California, caused Time Warner Cable stock to lose as much as 5.3% in Wednesday afternoon trading immediately after Marcus delivered his opening remarks.
Marcus said August saw the “usual uptick in subscriber performance,” as children went back to college, but unemployment, high vacancy rates in housing and “really anemic new home formation” are “resulting in some pretty weak subscriber numbers.”
CFOs and CIOs have very different priorities when it comes to IT spending, and that dichotomy is not likely to change any time soon, even as IT budgets are starting to once again increase.
After being slashed to almost nil during the height of the crisis for many corporations across sector and size, IT budgets are beginning to rise.
But CFOs are keeping a keen eye on where that money is going and still expect a relatively swift return on investment (ROI) in order to consider anything beyond maintenance and upgrades.
They want to clearly see that ROI—whether it be through qualitative measures, like better compliance or improved risk management, or through quantitative measures like reductions in days sales outstanding (DSO) or decreased cost-per-check.
As Craig Himmelberger at SAP said in a recent interview I did for Global Finance magazine: “People don’t want to rip and replace systems that are still functioning well, so a lot of the investments we see now are incremental.”
This IT budget allocation is likely to continue for the near future, at any rate, regardless of what CIOs may want. However, there does have to be a balance. At some point when liquidity risk fears begin to subside, CFOs will once again be more open to their CIOs’ suggestions for IT spending.
And what CIOs want to see is more spend on innovation, as Ellen Pearlman noted in her blog on CIOZone.com last month.
She quoted CXO Art Sedighi as saying: “In the current time and environment, the biggest challenge is [to] convince upper management to open up their wallets again after almost 3 years. The IT staff has been pulling things together with nothing short of band-aids since 2008, and things are about [to] fall apart. All management sees is the fact that spending was down, and they survived.”
Pearlman points out that while most execs believe that IT innovation is important, companies have consistently slashed spend on innovation over the past decade. In an AT Kearney study, executives cited IT innovation spend of 30 percent in 1999, compared with just 14 percent by 2009.
In the study, 45 percent of IT budget went to improving operations and 41 percent went to business enablement/process improvement. Most respondents felt that 24 percent of the IT budget should be directed towards innovation.
The current budget split certainly meshes with the continued corporate focus on driving down costs across the working capital chain. Indeed, it may be quite some time before CIOs get their dream IT allocation.
A recent study, “Why Do CFOs Become Involved in Material Accounting Manipulations,” by researchers at the University of Pittsburgh and the University of Washington attempts to answer just this question. Their finding? Pressure from the companies’ CEOs, more than the possibility of financial gain, tends to drive the actions of crooked CFOs.
Of course, the researchers couldn’t actually divine the motivations that drove the CFOs who manipulated numbers. Instead, they reviewed a group of firms subject to SEC enforcement, analyzing the role of the CFOs, as well as the costs they incurred and any benefits they gained from their actions.
They found – not surprisingly – that the CFOs involved faced stiff penalties for their actions. More than half of the CFOs (54 percent) employed by the nearly 300 firms in the sample that were charged by the SEC for accounting manipulation were prohibited from serving as an officer, director or accountant with a public company in the future. About 48 percent of CFOs were fined as a result of their wrongdoing, with a median fine of $50,000. A small number – about 4 percent – also faced criminal charges. Clearly, monkeying with the numbers can be quite costly for CFOs.
On the other hand, the CFOs that engaged shady number crunching didn’t have significantly higher equity incentives than CFOs in the control sample. That means the CFOs involved in misstatements took on a lot of risk, yet couldn’t expect to come out much further ahead financially than their counterparts at law-abiding firms.
Conversely, the CEOs of firms in trouble exhibited both greater power and equity incentive than CEOs of control firms. For instance, these CEOs were more likely to be company founders and to serve as chair of their boards than the heads of the other firms. “This evidence is also consistent with the pressured CFO explanation; that material accounting manipulations are more likely in the presence of powerful CEOs,” the researchers write.
What’s more, CFO turnover jumped during the three years before the misstatements occurred. That suggests that at least some CFOs either left or lost their jobs because they refused to participate in the manipulation.
The SEC also seems to have taken note of the larger role that CEOs, rather than CFOs, typically played in the schemes. When the researchers examined 188 companies in which both the CFO and CEO were charged with manipulating numbers, they found that the SEC had charged 18 percent of CFOs with orchestrating the schemes. When it came to CEOs, however, 32 percent were charged – almost double the CFO number.
Moreover, when the SEC charged just the CFO with wrongdoing, 30 percent of them benefited financially. That’s a lot, but it’s significantly less than the 46 percent of CEOs who were charged and also gained financially.
Given these findings, are there changes that could reduce accounting shenanigans? To be sure, the research doesn’t mean that CFOs who cook the books can simply blame their actions on their bosses; clearly they could have acted differently, as difficult as doing so might have been. The findings do suggest, however, that one step to reducing the opportunity for wrongdoing would be to provide CFOs with greater independence from their CEOs. One way to accomplish this would be to expect greater participation from corporate boards or audit committees when it comes to hiring and evaluating their firms’ chief financial officers.
Confidential to BA: Everyone is sick of the defense contractor who cried “the jumbo jet is ready!”
Boeing Co is confident it can deliver the first 787 Dreamliner in the middle of the first quarter of 2011, the chief financial officer of the world’s largest aerospace and defense company said on Tuesday.
Speaking at a conference hosted by Morgan Stanley, James Bell reiterated the updated delivery target for the long-delayed carbon-composite commercial aircraft.
Last week, the company announced another Dreamliner delay — this one related to a a delay in the availability of a Rolls-Royce Plc(RR.L) engine needed for the final phases of flight testing. The plane is already more than two years behind schedule.
Boeing CFO repeats 787 deliver target [Reuters]
Moves are underway around the world to define and mandate reporting on the sustainability of companies’ operations. Using the aftermath of the crisis as a cover, securities regulators, industry bodies such as FASB and IASB and investor groups are looking at how companies can usefully report on the sustainability – environmental, operational and financial – of their businesses.
The latest move comes from Singapore where the stock exchange SGX has issued a policy paper on whether or nor to mandate sustainability reporting for all companies listed on the exchange. The policy paper calls for expressions from the public prior to a deadline of October 29. SGX does not say whether or not it will introduce mandatory sustainability reporting, but it hints that it might.
“Investors who lead world opinion expect listed companies to be accountable for their financial results, how they achieve the results, and what impact they have on the communities within which they operate. SGX encourages more listed companies to commit to sustainability practices and reporting,” it says in the preamble to the policy document.
The move comes a few weeks after the creation of the International Integrated Reporting Committee (IIRC), a working group of companies, investors and industry bodies to find ways to improve corporate reporting.
The scope of the IIRC is wider than sustainability, but sustainability is nevertheless likely to form a major part of any upheaval in the reporting process. Indeed, no less a body than the G20 has said that it wants changes to the global system of reporting so that all company reports follow the same global standard. Such an overhaul is likely to be very protracted. But in the meantime, it looks as if sustainability reports will form part of the eventual package. CFOs who are still behind the curve had better start planning now.
However, we came across a little mistake that could worry voters that Drew doesn’t really pay attention to the little things that matter. Like people’s names.
You’d think that if Cuomo was going to traipse all over town throwing allegations at people, he’d at least know what those people’s names are.
Case in point, the first line of the response from former CFO (and current consumer banking CEO) Joe Price had to go to the trouble of pointing out that his name is not, in fact, “Joseph,” it is “Joe.”
Talk about a low blow, Cuomo. You think you can run Albany and just get people’s names wrong? They’ve threatened to shut down the whole government for less than that.
Hey, Cuomo, The Name’s Joe, Not Joseph [Charlotte Business Journal]
Thomas Dooley, CFO of Viacom, received a total compensation package of more than $26 million in 2009. John Killian of Verizon Communications made a lot less–a mere $9.6 million. And Ian G.H. Ashken of Jarden Corp. got $9.5 million.
Those fellas are the three highest paid executives included among the 25 most richly compensated CFOs in the Big Apple, according to a list just published by Crain’s New York Business, drawing on data from compensation research firm Equilar.
Indeed if you’ve been wondering how CFOs in big New York-based companies have fared during these tough times, the answer seems to be: pretty darn well. The lowest paid on the list, Laurence Tosi of the Blackstone Group, made a mere $4.6 million. Second to last Adena Friedman of Nasdeq OMX Group: $4.8 million.
The biggest jaw dropper, however, is Dooley, who received $10 million in non-equity compensation and $10 million in stock awards. That, in fact, is somewhat of an anomaly among the group members. Generally the CFOs received a hefty sum in either non-equity compensation or stock and option awards, not in both. (An exception is Colm Kelleher of Morgan Stanley, who made $9.4 million but got zip in both non-equity compensation and stock/option awards. He did, however, get a $64 million bonus).
Also noteworthy: About nine of the executives received these breathtaking compensation packages even though the company had a net loss from 2008 to 2009. Gregory Hughes of SL Green Realty Corp., for example, made $6.1 million, while the company had a loss of 84.9 percent. Pierre Legault got $4.9 million even as the corporation had an 82.8 percent loss.
Of course, this pay isn’t typical of the compensation at most companies. “These CFOs are going to get paid more than your typical CFO, simply because they’re in a large metropolitan area and a large company,” says Aaron Boyd, head of research at Equilar. According to Boyd, a recent report on CFO compensation among the S&P 500 found median pay to be around $2.5 million.
Hey I’ll take it.
“At least part of it is focused on the March 2008 capital raise where they went out and did a preferred deal. Erin Callan made some very positive bullish statements about Lehman. About how the nature of its finances would mean that it did not need more capital and three months later Lehman Brothers needed more capital and then came the decline of the firm.”
~ The Fox Business Correspondent/Ace Reporter insists that an announcement is “imminent.” That’s what the rumor mill says anyway.
Following up from our brief mention yesterday, senior level CPAs have turned much more pessimistic about the economy. And somewhat surprisingly, they are partly concerned about deflation.
Just 21 percent of CPAs serving as C-suite executives said they are optimistic about the US economy, way down from 40 percent who were optimistic in May and the lowest level since April 2009, according to the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School’s latest Quarterly Economic Outlook Survey. What’s more, pessimists outnumbered optimists by a two-to-one margin.
Even more worrisome, 78 percent believe US business conditions will not return to pre-recession levels until 2012 or later.
This sentiment seems to parallel a number of recent economic and corporate reports.
Altogether, 40 percent were pessimistic about the economy, up from 25 percent in the last quarter.
“Our survey signals the nascent economic recovery that buoyed expectations last quarter is stalling,” said AICPA Vice President for Business, Industry and Government Carol Scott, in a press release accompanying the survey’s findings.
What are these numbers crunchers worried about? Unemployment and a tight credit market, to name two.
The survey found that CPAs are much less concerned about inflation these days. This is not surprising, given the economy’s lackluster pace, the high unemployment rate and the inability of companies to raise prices.
Interestingly, 20 percent are now concerned their organizations will be impacted by deflation in the next six months.
This is further proof that deflationary fears are not just coming from a fringe group of radical thinkers, but are now entering the mainstream.
One silver lining from the survey: Nearly one-quarter of the survey participants are upbeat about the prospects for their own organizations. Still 55 percent of survey respondents do not anticipate their organizations’ employment levels returning to pre-recession levels in the next year, compared with seven percent who anticipate staffing levels returning to normal in the next year.
Salaries of financial executives and their staff continued to outpace national averages in 2009, and raises were also larger than other white-collar professionals. But the pay of lower level finance professionals outpaced those of CFOs and other senior-level types.
Average annual salaries for financial professionals increased by 2.5 percent in 2009 and were 13 percent above the national average, according to the Association for Financial Professionals’ 2010 compensation survey.
But like other workers, CFOs, treasurers and their staff also enjoyed smaller salary growth than what they had been used to. The average salary increase for financial professionals in 2009 was a full percentage point below the average increase reported in 2008. Salaries went up 3.4 percent in 2008 and 4.5 percent in 2007.
But in previous surveys, executives and management-level financial professionals earned the largest salary increases, but that wasn’t the case in 2009. Instead, staff-level financial professionals experienced the highest salary growth, with a 2.7 percent increase on average compared with 2.5 percent for executives and management.
On a more granular level, budget analysts averaged the highest base salary increase within staff professionals, with a 3.4 percent increase. Treasurers saw the highest average increase of all senior executives, with a 3.2 percent boost, and assistant cash managers received the highest average salary increase within the middle management tier, with a 3.8 percent increase, also the highest increase of all positions.
With high losses at banks and the prospect of regulatory changes impacting Wall Street as well as great technological innovation in 2009, financial professionals in the Western half of the US earned the most, although those in the East had earned the most in prior years. Financial executives at technology companies earned the most in 2009.
The latest AFP compensation survey also found that the economy had almost no impact on bonuses of financial professionals. In 2009, 71 percent of organization awarded incentive-based compensation bonuses to financial professionals, down four percentage points from 2008. Incentive pay in 2009 was stable at about 14 percent of base salary.
If you live or work in New York City you know how the subway can be both a blessing (when it runs on time) and a curse (when it doesn’t) or for reasons that on Wednesday became clear: fare hikes.
If you don’t live in New York you can appreciate why the agency responsible for public transit, the Metropolitan Transportation Authority, is having such a difficult time making ends meet. At the top of the list is compensation and benefits costs, which account for two-thirds of the MTA’s $12 billion operating budget for 2011.
The MTA says its health care costs are going up about 9 percent annually-which is actually in line with national increases. The challenge for a public agency of course is that it is locked into contracts with its heavily unionized workforce. Making changes is not easy.
The plan the MTA put forward Wednesday was to enter in what it called “net zero” contracts with its unions-contracts in which any raise would be “paid” for by givebacks in productivity, changes in work rules or increased contributions to health care benefits. The unions took exception to this proposal but no one doubts that the compensation structure of government employees needs to come in-line with their private sector counterparts. Andrew Cuomo, the Democratic nominee for governor, has made reforming this imbalance part of his platform.
Debt service aside (and the MTA’s debt service totals $1.8 billion this year, growing to $2.5 billion by 2014), the MTA, like so many government entities throughout the country, has long term health care challenges ahead. Its health care retirement obligation totals $1.4 billion growing to $1.7 billion by 2014. While the MTA continues to pay enough into its retiree health care fund to pay for its current retirees’ health care, the authority, citing this year’s cash-flow problems, will not pay $57 million this year into a fund for future obligations.
The Great Recession has helped bring the issue of government post-retirement obligations to light. As government revenues shrink and obligations grow, taxpayers sense an inherent injustice between their own grim retirement prospects and the assurances given to public sector workers. Subway service cuts and fare hikes are only meaningful if they address the long-term problems rather than enable government to deal with short term crisis.
Cuomo is banking on this public displeasure, as is the MTA. Next year the MTA’s contract with its largest union is up for renewal. The transit authority will be able to test whether it has public support for changing the way the state entity does business with unions. Bringing government into the 21st century by reducing health care and other post-retirement obligations will be good for taxpayers and for businesses, including those with heavily unionized workforces.
Last year, 13 percent of chief financial officers changed jobs. Although this was down from 18 percent the prior year, Deloitte’s CFO Programs predicts CFO turnover will rise again this year.
The ramifications of turnover are huge. Tom Bonney, founder and managing director of CMF Associates, which offers temporary CEO, COO and controllership services, estimates that when a CFO leaves, efficiency in the finance department is automatically cut in half and exposure to risk i CFO joins the company, the ramp up period is longer than other key executive roles, due to the CFO’s broad array of responsibilities.
A recent report from Deloitte CFO Services highlights practices that successful CFOs have used to get off on the right start in their new positions based in large part on interviews with more than 20 CFOs from varied companies with nearly $170 billion in combined revenues, most with more than $2 billion in revenues.
Step one: Get to know the business. Learn what works and needs to be changed. Use your team as a resource in the process. The ability to be a good listener, as well as a clear communicator is crucial as CFOs establish relationships and plan for the long term. Listening to your team will not only help you plan your business goals, but reveal your company’s culture, and establish you as a trusted leader.
Step two: Create a 180-day agenda. Most CFOs surveyed by Deloitte felt they had six months to establish their roles. This includes creating an agenda with their CEOs and peer executives, as well as recruiting and renewing talent to build an ideal team. Then clearly communicate your agenda to your team and begin establishing a long term vision.
Step three: Make an impact on the business. If the first 180 days are about getting to know the company, choosing what to do and getting the right team in place, the next 12 months are about execution and ratcheting up the contribution of finance to the business. Making this difference requires deploying resources and capabilities effectively to achieve key initiatives. To do this, align talent with top priorities, delegate with confidence, adopt effective practices, and encourage transparency and accountability throughout your team.
Be mindful about how you allocate your time. Focus on where you can get results, sooner rather than later. “You need to get quick wins,” says Ajit Kambil, Deloitte’s global research director.
You also need to gain a quick understanding of the trends and metrics of your company, especially as it relates to the industry you are serving. “This knowledge, along with the ability to communicate with the management team, will foster success for the executive and assist in reaching corporate goals,” says Thomas Galvan, CFO of Rising Medical Solutions, a medical-financial solutions firm.
Think strategically. If you move up from controller to CFO, instead of worrying about GAAP and FASB, you may be asked to participate in strategic decisions. “The critical relationships are now not so much between the income statement and balance sheet, but between the CFO and a CEO – as well as the board of directors,” explains Todd Ordal, president of consulting firm Applied Strategy. “The political skills required can be significant.”
Culture also counts. For example, in a small organization, it can be critical for a CFO to be hands-on, but in a larger organization, it can be critical for the CFO to delegate. Do your homework and don’t assume anything.
Ultimately, the Deloitte study found the critical issues fell into three buckets: time, talent and relationships. Says Kambil: “If you don’t get them right, you diminish the opportunity to succeed.”
In the CFO survey du jour, San Francisco CPA firm Armanino McKenna LLP (“the 37th largest CPA firm in the nation”) says that, as far at the Bay area is concerned, CFOs are looking to hire more accounting staff in the second half of 2010.
More than 40% of those surveyed in the San Fran neck of the woods are planning on it and they aren’t looking for newbies. No, they’re looking for the slightly grizzled, slightly jaded types that are wasting away in their current cube farm. “[T]he most desired new hire is the mid-range accountant, such as an analyst, staff or senior accountant,” sayeth the press release.
As for the rest of the country, things are probably still up in the air but we’ve got to start somewhere.
So if you’re sick of your current city and really want a new job, hoof it out west. If you’re lucky, maybe Adrienne will let you crash at her place. Just try to keep the CPA exam questions to a minimum.
The need for a chief executive to work with boards and communicate with Wall Street has never been greater, and CFOs have experience in both those areas–making them excellent candidates for the top spot in an organization.
Companies are increasingly recognizing the value of this internal asset and promoting their CFOs to CEO, according to executive search firm Russell Reynolds’ Chief Financial Officer Moves North America, Q1 2010.
Currently there are some 50 CEOs in the Fortune 500 who were previously CFOs for the same company. Their numbers recently increased, at least on an interim basis, as Marcel Smits, the CFO at Sara Lee, was promoted to the CEO slot.
CFOs have been promoted to CEO typically in organizations that are heavy on logistics or analytics, says Christopher Langhoff, who specializes in financial officer assignments for Russell Reynolds. He offers the example of Clarence Otis, Jr. at food services firm Darden–which owns and operates restaurants such as the Olive Garden and Red Lobster.
Otis started with the company in 1995 as vice president and treasurer and progressed to CFO. He was appointed CEO in 2004. Similarly, David West joined the Hershey Company in 2001 as vice president of business planning and development and worked his way up to CFO, where he served from 2005-2007. He was promoted to CEO in 2007.
It’s rare, however, to see a move from CFO to CEO in the tech industry, says Langhoff.
The ascension of CFO to CEO is not likely to slow down any time soon. “We have more and more clients that are coming to us asking for a world class CFO that will likely be ready to be CEO in two to three years,” says Langhoff. “That’s a tall order. We looked back and many times prior to the appointment of a CEO, the person had served, on average 16 years at the company.”
The first quarter also showed a continued, robust turnover of CFOs in the middle market. “The lifespan of a CFO can be shorter than an NFL career,” says Langhoff. As for the rest of the year, Langhoff predicts more turnover. Over the past four months, Russell Reynolds reported a dramatic increase in search activity in the United States, Europe and Asia that spans industries.
The spike has been most pronounced within the financial services sector. Companies like Bank of America, Morgan Stanley, Neuberger Berman, Kellogg, PepsiCo, Walt Disney, Dow Chemical and CVS/Caremark all named new CFOs.
Says Langhoff: “When Sox was in full gear there was a need for a CFO who was a CPA. Now, companies are looking for a strategic CFO, a business partner. There could be a big shift.”
“I couldn’t tell you, Mike, that there is a company in the world that does not have a threat of a criminal investigation at some point in time. I mean, every company in the entire world has that. All I can tell you is that we are not aware of any criminal investigation of Goldman Sachs.”
~ Goldman Sachs CFO David Viniar, responding to CLSA analyst Mike Mayo, who really, really, really, really wants to know if there is a threat of a criminal investigation into Goldman Sachs.