Tag: CFOs

Ernst & Young Report: Most CFOs Aren’t Interested in Becoming CEOs

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

A surprising new report from Ernst & Young makes the bold claim that only 10 percent of CFOs actually want to become CEO. The report – entitled ‘DNA of the CFO’ – was based around a survey of 699 CFOs in Europe, Middle East, Africa and Asia and included in depth interviews with CFOs of leading companies such as Heineken, Dubai Aerospace Enterpriser.

The accepted wisdom is that in times of trouble, boards turn to CFOs to become CEOs. CFOs are seen as having a good handle on the numbers, attention to which is seen as the cure to the company’s problems.

While CFOs are generally seen as detail focused but not necessarily strategically focused, the survey shows that some 35 percent of all CFOs are intimately involved in the strategic side of the business. This is in addition to their day to day duties of keeping on top of the numbers.


While only 10 percent say that they want to be CEO, 73 percent say that they would like to remain in their role while taking on more strategic responsibility. This suggests that CFOs are put off by the unwelcome levels of scrutiny that CEOs face, which as CFOs they can largely avoid. And if CFOs can undertake much of the interesting strategic work which CEOs do but without the glare of publicity, that would appear to be a good bargain.

The survey also laid out CFOs’ professional failings, with a majority saying that their biggest lay in communication with external stakeholders, especially the media. Any financial journalist can attest that CFOs are difficult people to communicate with. They might possess the keys to the kingdom, in terms of the juiciest details about what’s actually going on in a company, but they are generally woeful at crafting a positive message. Those few that can are usually the ones who make it to the top.

Even so, the survey shows that not many CFOs actually want this. Rather what is revealed is that the CFO position is the destination itself, not the staging post to a role any higher. To that end, the report crafted a list of the competencies that finance professionals need to reach the role of CFO. These competencies are listed below, in order of priority.

• Extremely strong financial professionalism
• A strong commercial sensibility
• Deep understanding of the business
• Skill with people
• Ability to think strategically
• Excellent communication skills – the ability to translate complex issues in a simple, straightforward way
• Ability to manage conflict
• Inclination to solve rather than create problems
• International experience
• Language skills
• Experience of running major projects
• Business analytical skills
• Ability to manage stress and complexity under pressure
• Good health
• Operational experience
• Ability to adapt to change
• Experience of adversity
• Passion

Many of these are the normal, boilerplate nonsense that headhunters come up with: it is difficult to do any job if you are not in good health, or even if you lack passion for the job in hand. Others seem bland enough to apply to any high level job such as the ability to adapt to change. Others might seem mutually exclusive: experience running major projects can often conflict with the task of managing the finances around those projects.

International experience and excellent communication are also skills that can be acquired. More challenging, perhaps, is the need to be a problem solver and not a creator while at the same time being excellent with numbers. Financial results are obviously not a day at the beach. If you can master them and don’t feel the need to be an excellent communicator, then like 90 percent of the respondents, becoming CFO is the end itself, not a path to the other corner office.

Accounting News Roundup: FinReg Brings Plenty of Change; Some Number Crunching of Goldman’s Fine; ATF: Sin Taxes Rose 41% | 07.16.10

Law Remakes U.S. Financial Landscape [WSJ]
The Journal asked twelves experts about the bill, many of whom are not nearly as impressed as the Deal Professor. “Congress approved a rewrite of rules touching every corner of finance, from ATM cards to Wall Street traders, in the biggest expansion of government power over banking and markets since the Depression.

The bill, to be signed into law soon by President Barack Obama, marks a potential sea change for the financial-services industry. Financial titans such as J.P. Morgan Chase &Group Inc. and Bank of America Corp. may be forced to make changes in most parts of their business, from debit cards to the ability to invest in hedge funds.”

Apple May Offer IPhone Cases, Rebates to Address Flaw [Bloomberg]
Start forming the lines again, “Apple Inc., looking to avoid a recall of the iPhone 4, may give away rubber cases or offer an in-store fix to address a design flaw in the newest version of its top-selling product, according to analysts.

The company, which is holding a news conference at 1 p.m. New York time today, doesn’t plan to announce a recall, a person familiar with the matter said yesterday. Chief Executive Officer Steve Jobs may instead offer the giveaways or refunds to dissatisfied customers, some analysts said.”

Google CFO: Old Spice Is The Future [Tech Crunch]
Written on a horse: “You know you’ve got a viral marketing hit on your hands when the CFO of Google mentions it in an earnings call. Yes, I am talking about the Old Spice YouTube Tweetathon where the bare-chested Old Spice Man addresses people on Twitter via personalized commercials on YouTube.”

Goldman’s SEC Settlement by the Numbers: We Do the Math [ProPublica]
Effectively, it will be paid for by August 1.


AIG Says It Counted as Much as $2.3 Billion of Repos as Sales [Bloomberg BusinessWeek]
Somewhere a former Lehman CFO is screaming, “See, I told you everyone was doing it!”

“American International Group Inc., the bailed-out insurer, said it classified as much as $2.3 billion of repurchase agreements and $3.8 billion of securities- lending transactions as sales in calculating quarterly results.

In late 2008, ‘certain of AIG’s counterparties demanded significantly higher levels of collateral to enter into repurchase agreements, which resulted in sales rather than collateralized-financing’ treatment under accounting guidelines, the New York-based insurer said in an April 13 letter to the Securities and Exchange Commission released today. The accounting didn’t materially affect any ratios or metrics the company publicly disclosed, AIG said in the letter.”

‘Sin Tax’ Revenue Surges [TaxProf Blog]
“The Treasury Department’s Alcohol and Tobacco Trade and Tax Bureau has released its Fiscal Year 2009 Annual Report, detailing a 41% increase (to $20.6 billion) in the amount of “sin taxes” on alcohol, tobacco, firearms, and ammunition collected by the federal government. Most of the $6 billion revenue increase resulted from the higher tobacco taxes included in the Children’s Health Insurance Reauthorization Act of 2009. Firearms and ammunition excise tax collection rose 45%, the largest annual increase in the agency’s history.”

KV Pharma Names New CFO; Hunt for Auditor, Signs of an Internal Control System Begins

The AP reports that K-V Pharm named Tom McHugh as their new CFO today which is good news for KV but could be some serious bad news for Tom.

As you may recall, things haven’t been as good as you could ask for over at KV this year – directors, auditors and executives are all bolting for the door and someone has to make a run at this thing. One of those lucky ducks is Tom McHugh:

K-V Pharmaceutical Co. on Thursday named Chief Accounting Officer Thomas McHugh as its new chief financial officer, replacing Stephen Stamp after three months.

The company said McHugh becomes its CFO effective immediately. McHugh served as the company’s interim CFO from September 2009 until April 2010. He was named chief accounting officer in February.

So it sounds like Tommy probably knows the place well enough but he still gets to fix all this:

“Material weaknesses have been identified and included in management’s assessment in the areas of entity-level controls (control awareness, personnel, identification and addressing risks, monitoring of controls, remediation of deficiencies and communication of information), financial statement preparation and review procedures (manual journal entries, account reconciliations, spreadsheets, customer and supplier agreements, stock-based compensation, Medicaid rebates and income taxes) and the application of accounting principles (inventories, property and equipment, employee compensation, reserves for sales allowances and financing transactions).”

And find an auditor! Since KPMG quit, the hunt is on for a new one, so hopefully there’s someone in St. Louis willing to help them out because…the NYSE kinda, sorta took notice that the company didn’t file their 10-K on time and well, that’s a no-no. Just ask Koss.

So the good money is probably is riding against Tom but we’re rooting for you buddy. Turn this ship around!

K-V Pharma replaces CFO after 3 months [AP]

Accounting News Roundup: Americans’ Irrational Demands on Policy; Number of Women CFOs Same as ’09; Summer Camp Tax Credits? | 07.14.10

We Can’t Always Get What We Want: Why Governing Americans is So Hard [TaxVox]
Basically it’s because as a group, we’re children. We throw tantrums until we get what we want and stomp around the living room when we don’t.

“[O]ur demands on policymakers are so inconsistent and irrational that we make governing nearly impossible. We hate big deficits, but oppose the actual tax increases or spending cuts that we need to dam the flood of the red ink. We are furious that government passed an $800 billion stimulus last year, but feel lawmakers are not doing enough to get the economy going. We want government to “do something” about the gulf oil spill but reject government interference in private business.”

Women CFOs Holding Steady [CFO]
In the Fortune 500, there are 44 woman CFOs, the same number as last year.

“What are the prospects for women breaking the 10% barrier? At least some are hopeful the numbers will climb in coming years, albeit not dramatically. ‘Anecdotally, I am seeing a next generation of female finance leaders who can and want to rise to the CFO role,’ says Lorraine Hack, executive recruiter with Heidrick and Struggles. She adds, ‘I have seen a lot of companies becoming more cognizant of diversity, or the lack thereof, and making a conscious effort to recruit, retain, and grow such talent.’ “

U.S. Business Groups Air Policy Concerns [WSJ]
“Washington’s major business groups plan a united front Wednesday in their confrontation with the Obama administration over economic policy, calling on the White House to cut taxes and curb its regulatory agenda.

Business groups including the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Businesses will air a list of concerns about government policy at a “Jobs for America Summit” at the Chamber’s offices Wednesday.”


Wall Street Fix Seen Ineffectual by Four of Five in U.S. [Bloomberg]
“Almost four out of five Americans surveyed in a Bloomberg National Poll this month say they have just a little or no confidence that the measure being championed by congressional Democrats will prevent or significantly soften a future crisis. More than three-quarters say they don’t have much or any confidence the proposal will make their savings and financial assets more secure.

A plurality — 47 percent — says the bill will do more to protect the financial industry than consumers; 38 percent say consumers would benefit more.

‘Banks and the government are making out, not the ordinary person,’ says Lenore Critzer, a 70-year-old retiree and poll participant who lives in Nelson, Ohio, about 40 miles from Cleveland. ‘We’re going to have another crisis and worse.’ “

A tax credit for summer camp? IRS says it’s true [Kansas City Star]
Unfortunately, expenses for overnight camps do not qualify. So parents will have to squeeze the sex in during the day somehow.

Mysterious CFO Firing of the Day: Angeion Corp.

Anyone that is in St. Paul/Minneapolis (ideally Baker Tilly Virchow Krause employees) should get in touch with us because this reeks of bad behavior that we absolutely must know about:

Angeion Corporation has terminated the employment of its Chief Financial Officer, William J. Kullback, effective July 9, 2010. The termination of Mr. Kullback is not related to any issue with respect to the Company’s financial statements.


Yes, that’s all there is. We did poke around a little bit and found that Mr Kullback was formerly with Price Waterhouse which could lead to believe that he’s got a bit of a temper and/or was roofied but then again we’re just throwing that out there.

We rang up Angeion to see what’s what and left a message with CEO Rodney Young who is supposed to call us back. We’ll report back if we find out the scoop.

8-K [SEC Filing]

UPDATE: Mr Young got back to us and we had a very pleasant chat although he wouldn’t elaborate on the dismissal of Mr Kullback, so speculate away! Or if you’ve got actually knowledge that will do too.

Accounting News Roundup: Quasi-Exodus at H&R Block?; National Taxpayer Advocate Issues Report That Congress Won’t Read; SEC Might Want to Take a Closer Look at Amedisys | 07.08.10

H&R Block names Alan Bennett as CEO [AP]
This all came about since Russ Smyth resigned, made official by a two sentence 8-K filing, “On June 30, 2010, Russell P. Smyth provided H&R Block, Inc. (the “Company”) with notice of his resignation as President and Chief Executive Officer of the Company, and as a director of the Company. The effective date of Mr. Smyth’s resignation from these positions is August 29, 2010, unless the Board of Directors selects an earlier date.”

It seems like there’s a quasi-exodus in the C-Suite at HRB as General Counsned on Friday and the company is still on the hunt for a CFO after Becky Shulman left in April.

Yahoo CFO Aims to End Buy-High, Sell-Low Record on Deals [Bloomberg]
Tim Morse told Bloomberg that the company has been doing things completely bassackwards, “You’ve seen our track record on M&A with buying really high and selling pretty low,” Morse said in an interview. “We’ve got to be careful.”

Some examples of doing things exactly wrong include, “Yahoo, the second-biggest U.S. search engine, agreed to sell its HotJobs website for $225 million in February after paying about $436 million for it in 2002. In January, Yahoo sold Zimbra, an e-mail and collaboration unit, netting $100 million. Yahoo bought it in 2007 for $350 million.”

Auditors could face grillings from analysts [Accountancy Age]
“Steve Maslin, chair of the partnership oversight board at Grant Thornton, envisages an expanded audit role which may involve greater face-to-face time with stakeholders, including question and answer sessions at annual general meetings.

‘Many investors believe there is valuable information that gets discussed by the auditors with management and audit committees to which investors do not have access – and I think they are right,’ he said.”


Legg Mason CFO resigns [Baltimore Sun]
Get your resumé in now.

FEI Announces 2010 Hall of Fame Inductees [FEI Financial Reporting Blog]
Come on down! “FEI’s 2010 Hall of Fame inductees: Karl M. von der Heyden, former Vice Chairman of the Board of Directors and Chief Financial Officer of PepsiCo, Inc., and Ulyesse J. LeGrange, retired Senior Vice President and Chief Financial Officer of ExxonMobil Corporation’s U.S. Oil and Gas Operations.”

National Taxpayer Advocate Submits Mid-Year Report to Congress [IRS]
Nina Olson’s mid-year report to Congress has plenty to wade through so that means none of the members will likely read it. Fortunately the IRS narrowed the three biggies (Taxpayer Services, New Business and Tax-Exempt Organization Reporting Requirements, IRS Collection Practices) into a much more consumable version.

Open Letter to the [SEC]: Investigate Troubling Issues at Amedisys Missed by Wall Street Journal [White Collar Fraud]
In Sam Antar’s latest WTFU letter to the SEC, he details some issues at Amedisys which weren’t covered in the Journal‘s report from back in April. Since we are into the whole brevity thing, we won’t get into the number crunching here but things look fishy. Plus there’s this:

On September 3, 2009, Amedisys President and COO Larry Graham and Alice Ann Schwartz, its chief information officer, suddenly resigned from the company. Amedisys provided no reason for their resignations and simply said that the two execs “are leaving the company to pursue other interests.”

In my experience, sudden, unexpected executive departures are often a sign of problems beneath the surface. And while it could be entirely coincidental, the trends at Amedisys appear to be consistent with my experience.

But Sam doesn’t believe in coincidences.

A Couple of Suggestions for NPR’s New CFO

NPR has a new CFO and if you’re not a public radio junkie, you might not give a shit less. For those of you that can’t function without hearing the soothing voices brought to you courtesy of your very own tax dollars, then this is big news.

Deborah Cowan is joining NPR from Radio One where she was SVP of finance. She also did stints at IBM and Coopers & Lybrand (look it up, young people).

Not sure if Ms Cowan will be able to weigh in on editorial matters but we humbly suggest more of the following:

Oh and if you could encourage your boss to reverse a particular asinine policy, that’d be great. Good luck in the new gig.

Accounting News Roundup: Are “Tax-Aware” Juries the Solution to Deductible Punitive Damages?; Financial Fake Twitter Feeds; Deloitte’s Czech Problem | 07.02.10

Damages Control [NYT]
Because BP could end up paying a metric asston in punitive damages over the Deepwater Horizon whathaveyou, the Senate recently approved a repeal of punitive damages awarded in civil disputes being deductible for tax purposes.

The problem is that it probably won’t work, as Gregg Polsky and Dan Markel, two law professors at the University of North Carolina at Chapel Hill and Florida State University write in an op-ed in today’s Times:

“When plaintiffs and defendants reach a settlement before a trial, which happens in most cases, they aren’t required to specify which parts of the settlement are punitive and which are compensatory; therene number. That allows defendants to disguise the amounts that they would have paid as punitive damages as additional compensatory damages.

And because the measure maintains the deductible status of compensatory damages, nearly all punitive damages will remain, as a practical matter, deductible. This easy circumvention surely explains the meager revenue projections from the measure: $315 million over 10 years.”

The solution, according to Polsky and Markel is to make juries “tax aware” so that they may adjust their findings appropriately, “the prospect of tax-aware jurors would also raise the amounts of settlements before trial — when, again, most cases are actually resolved. This is because the amount of a settlement depends on the amount that a jury is expected to award after a trial. If tax-aware juries became the norm, plaintiffs would push for higher settlements, and thus both settling and non-settling defendants would bear the correct amount of punishment. Under the Senate’s approach, in contrast, only the very few non-settling defendants would bear that punishment.”

Five Fake Finance Twitter Feeds [FINS]
These are far better reasons to be on Twitter than Ashton Kutcher or Kim Kardashian.


Charities fail to communicate in annual reports: Deloitte [Accountancy Age]
Whatever they are communicating, it’s still more informative than a “Transparency Report.”

More cloud accounting benefits [AccMan]
“It is becoming increasingly obvious that clouding computing benefits as they apply to the accounting arena stretch way beyond the ability to save time, effort and cost. As I meet with more customers, I am discovering benefits that only customers can express.”

Apollo Said to Hire PricewaterhouseCoopers’s Donnelly as CFO [Bloomberg BusinessWeek]
“[Gene] Donnelly, who starts in his new role today after 29 years at New York-based consulting firm PricewaterhouseCoopers LLP, fills a vacancy left by the departure of Kenneth Vecchione in January, said the person, who asked not to be identified because the hiring wasn’t announced. Barry Giarraputo, the company’s chief accounting officer, had been serving as interim CFO.”

Deloitte answers fraud reports [The Prague Post]
Francine McKenna tweeted about this story yesterday, where Deloitte has been cited by one Czech newspaper as being investigated by Czech anti-corruption police.

“Deloitte has been put on the defensive since the June 28 report in the daily Lidové noviny (LN) that quoted unnamed sources alleging a slush fund used to bribe public officials and fraudulent accounting that gave clients better financial results. Deloitte says the results of an internal review highlighted ‘certain deficiencies in management reporting,’ but considers the results an internal matter and will not make any comments.”

Rough Year at KV Pharmaceutical Continues as Chairman, CFO Quit

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

There’s no shortage of drama at KV Pharmaceutical. Last week Chairman Terry Hatfield, Stephen Stamp, who was named CFO April 13, and board member John Sampson quit, citing “serious concerns” about newly elected board members and senior management.

The previous week, immediately following the company’s annual meeting, the newly elected board ousted interim President and CEO David Van Vilet, who had been in charge since December 2008.

The St. Louis-based company has not named a new CFO.


It also said it is looking for a CEO with extensive pharmaceutical experience. For now, Gregory Divis will be interim president and CEO, while continuing as president of Ther-Rx, the company’s branded pharmaceutical subsidiary.

In their resignation letters, Hatfield and Sampson said they had “serious concerns regarding the ability of the newly constituted board and senior management to provide the required independent oversight of KV’s business during this critical time in the company’s history.”

They noted that only three of the board’s seven nominees for board seats were elected at the annual meeting. The remaining elected members were candidates proposed by shareholders. Among those re-elected to the board was Marc Hermelin, son of the founder, who was ousted as CEO in 2008. Also re-elected was David Hermelin, the son of Marc Hermelin, and a former director of corporate strategy who retained his seat. David Hermelin was among the board’s nominees, Marc was not.

The year has been tumultuous. In February, KV agreed to a $25.8 million settlement with the United States Justice Department. Officials with the company’s subsidiary, Ethex Corp. pleaded guilty to two felony counts of criminal fraud for failing to report it was manufacturing oversized tablets that could be harmful to patients, (some had double the advertised dosage of medicine). In March the company fired 289 employees, or 42 percent of its staff, to lower operating costs.

However, the company’s board still found the cash to pay themselves a hefty raise. According to a recent SEC filing, the board was paid $116,000 in 2009, a $60,000 raise while the company was involved in massive layoffs.

Earlier this month KV closed the sale of the assets of Particle Dynamics for $24.6 million, plus up to an additional $5.5 million in potential earn-out payments over the next four years.

In a prepared statement the company said the board’s primary focus is two-fold: to continue to work with the Food and Drug Administration to reinstate KV to Good Manufacturing Practice compliance, and to continue to explore a variety of financial alternatives as a means to strengthen the company’s cash position.

The company could not be reached for comment.

Accounting News Roundup: More Execs Say Benefits Sarbanes-Oxley Outweigh Costs; New Jersey Millionaire Tax Fails; Has the SEC Learned Anything? | 06.22.10

As Congress Mulls SOX Exemption, Survey Suggests Acceptance [Compliance Week]
Just when Sarbanes-Oxley compliance was about to get torpedoed by the financial reform bill, a new study comes out that shows companies are starting to see benefits from the legislation, “In its 2010 Sarbanes-Oxley compliance survey, Protiviti says 70 percent of executives in at least their fourth year of working to comply with Sarbanes-Oxley say they believe the benefits outweigh the costs. That’s a big swing from the first year the firm asked the same question and heard only 39 percenbenefits greater than the costs.”


Showdown Over Strippers [WSJ]
Some people in the Show Me State are not interested in living up to that name, “Last month, the Republican-controlled legislature passed one of the nation’s toughest state laws aimed at strip clubs and other adult-entertainment venues. It would ban nude dancing and the serving of alcohol in adult cabarets, force strip clubs to close at midnight and forbid seminude dancers to touch patrons.”

The legislation is currently awaiting sign/veto from MO Governor Jay Nixon.

Opponents argue that the state’s very economic recovery is at stake, “Club owners and dancers say that the venues rarely attract crime, and that the new rules would be so strict that hundreds of jobs and millions of dollars in state revenue could be lost at a time when Missouri’s economy is struggling to recover from the recession.”

JP Morgan Names Doug Braunstein CFO in Shake-Up [AP]
“JPMorgan Chase said Tuesday it is shuffling the positions of three executives, including naming a new chief financial officer. The shake up is part of a program JPMorgan Chase has put in place to have executives work across multiple divisions to broaden their experience. Doug Braunstein is taking over as CFO. He was previously head of the bank’s investment banking division in the Americas. Braunstein, 49, replaces Michael Cavanagh, who had served as CFO since 2004. Cavanagh was named head of the bank’s treasury and securities services business.”

Tropical Storm May Pose Threat to BP Spill Cleanup [Bloomberg]
The first storm of the Atlantic hurricane season may enter the Gulf of Mexico as soon as next week, possibly disrupting BP Plc’s efforts to clean up the worst oil spill in U.S. history.

Thunderstorms in the Caribbean may strengthen into a tropical storm this week before heading into the Gulf between Mexico and Cuba, said Jim Rouiller, a senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania.

“The first named tropical storm of the 2010 season appears more likely to form over the northwestern Caribbean late this week and will go on to represent a formidable threat to the Gulf, along with heightening concerns about the oil slick,” Rouiller said in an e-mail yesterday.

Forecasters are predicting this year’s Atlantic hurricane season, which runs from June 1 to Nov. 30, may be among the most active on record and hamper the U.K. oil company’s efforts to plug the leaking well. AccuWeather Inc. forecast at least three storms will move through the region affected by the spill.

New Jersey Democrats fail to extend millionaires tax [Reuters]
Garden State millionaires rejoice!

SEC Crazy Talk [Portfolio/Gary Weiss]
Sam Antar recently turned over 37,000 documents to the Securities and Exchange Commission but not because the SEC was getting nostalgic for the Crazy Eddie days.

The SEC wanted documents, emails etc. from both Antar and Fraud Discovery Institute founder Barry Minkow on companies that have been covered by both men. The information relates mostly from information obtained from short-sellers. However, Gary Weiss writes that the SEC also asked for emails that the two exchanged with two reporters and from Antar’s ex-wife.

Gary thinks that this poking around by the Commission is all too familiar, “Well, I think what we may be seeing is a repeat of the [David] Einhorn fiasco, and then some,” referring to the SEC’s investigation into Einhorn’s criticism and short-selling of companies.

Einhorn was eventually vindicated and the companies – most notably Allied Capital – outed for their shady practices. Why the SEC is digging around the very people trying to help them isn’t quite clear but then again the SEC doesn’t have the greatest track record.