CFOs seem a little more inclined to stick around

While CFO turnover over the past few years has been trending upward at publicly held companies, actual turnover declined in the first quarter of 2007 against the same three-months the year before, according to a study by Liberum Research. Unlike the first quarter of 2006, when the number of CFO changes jumped 38% to 630 from 457 in the first three months of 2005, the number of CFOs leaving their posts between January and the end of March in 2007 declined 22%, to 489. The report notes that this slowdown in CFO turnover, along with all C-level turnover, marks the second straight quarter of year-over-year declines for both CFOs and C-level in general, although there was a slight increase in turnover from the fourth quarter of 2006.

Despite the slowdown, notes Liberum, the overall level of turnover among CFOs remains high. While the disenchantment in the years following passage of Sarbanes-Oxley and other government regulatory burdens is well known, Liberum also attributes the continuing high numbers in turnover to growing competition, both domestically and internationally, and increasing complexity of business. “We attribute much of the rise in CFO turnover to the burdensome aspects of Sarbanes-Oxley,” says Richard Jancovitz, senior vice president and director of research at Liberum Research. “The regulatory aspects of the job made it more difficult for them to take a strategic approach and emphasized the bean counter aspect of the role, especially at some of the midsize and smaller companies. But now I believe that the pendulum is swinging back so that CFOs are able once again to take a more strategic approach.” Still, an entrepreneurial strain among CFOs has been driving some to hedge funds and private equity groups, where there is almost no regulation and lots of opportunities to turn strategies into profits.

While Liberum expects the overall level of change at the finance helm to remain high, there are signs that turnover is moderating: In March 2007, only 148 CFOs left their positions, as opposed to 341 who left in the first two months of the quarter. Out of the 148, 51 were hired from outside of the company, rather than being promoted from within.

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Restatements break through to a new record

Nearly one out of 10 U.S. public companies—1,420 in all—filed a restatement in 2006, up 13% from the record number of restatements set in 2005, according to a study by Glass Lewis & Co. In fact, over the past four years, the study recorded that 2,931 companies, or about 23% of the nation’s public companies, filed at least one restatement and 683 companies restated two or more times.

And those restatements hurt too: The median stock return of companies that filed restatements was negative 6%, or 20% less than the Russell 3000 stock index returned in 2006, the study showed. Restatements by companies listed on the over-the-counter markets soared by 76%, Glass Lewis noted, while restatements by companies listed on the national stock exchanges declined by 20%.

However, not all the news is bad. Two factors seem to protect companies from the pain of restatement: first, an audit by one of the Big Four audit firms, and second, (and this may be hard for companies to swallow) the Sarbanes-Oxley Act’s Section 404. The Glass Lewis study showed a 32% decline in restatements by companies that were audited by one of the Big Four firms. Ernst & Young had the lowest restatement rate among auditors, at 6.9%. Large companies that had passed their 404 audits also experienced a decline in restatements—down 14% in 2006.

Direct SarbOx spending plateaus, but companies are finding investment in GRC pays off

Executives may have spent a lot of energy groaning about the burdens of Sarbanes-Oxley, but a growing number are beginning to recognize some rewards for their companies’ efforts. Forty-two percent of respondents in an AMR Research survey of 200 companies, 68% of which had revenues in excess of $1 billion, admitted that employing best practices in governance, risk management and compliance have resulted in better and more streamlined business processes. Among the long-term benefits cited: better quality transactions, resulting in fewer errors; better quality processes; a more secure environment; and better visibility into operations.

Not surprisingly, even though spending on SarbOx compliance in 2007 is expected to match 2006 spending at about $6 billion, companies are choosing to increase other areas of governance and risk management spending. Respondents to the AMR survey reported they expected 2007 GRC investment to jump 8.5% to $30 billion.

Technology-related SarbOx spending is actually down about 5% from 2006, the first such dip in tech-related Sarbanes-Oxley spending. Spending on internal staff rose 6.5%, due mainly to the fact that, middle market (capitalization) and foreign companies will have to meet Sarbanes-Oxley compliance milestones in 2007. Spending on external services continues to drop, down 9% year over year, in line with the trend on external services spending. AMR believes, however, that some of the advisory services have simply transitioned to risk management initiatives.

So where is that money going? AMR believes that some of the spending may be flowing into other GRC areas. For instance, the tab for risk management in 2007 is expected to reach $1.9 billion, and AMR expects spending in this category to accelerate further in 2008 when AMR is predicting it to top $2 billion.

People on the Move

Nielsen Co. has appointed Brian J. West CFO of the $4.1 billion global information and company, which is based in New York and Haarlem, Netherlands. West, 37, succeeds Rob Ruijter who is returning to the Netherlands but will remain with the company. Prior to joining Nielsen, West held various finance roles at General Electric Co., including the CFO of NBC’s TV stations division, CFO of GE Engine Services and most recently CFO of GE Aviation.

Motorola Inc. named Thomas J. Meredith acting CFO of the $42.9 billion communications company, which is based in Schaumburg, Ill. Meredith, 56, succeeds David Devonshire, 61, who retired April 1. Meredith is a general partner of Meritage Capital L.P. as well as CEO of MFI Capital. From 1992 to 2000, Meredith served as senior vice president and CFO of Dell Inc. Then, from 2000 to 2001, he was managing director of Dell Ventures and senior vice president of business development and strategy of Dell.

PETCO Animal Supplies Inc. named Michael E. Foss executive vice president and CFO of the $2 billion San Diego animal products company. Prior to joining PETCO, Foss, 49, was CFO and executive vice president at Circuit City Stores Inc. Earlier, he was CFO and executive vice president of corporate business development at TeleTech Holdings Inc.

Brookfield Properties Inc. appointed Bryan Davis senior vice president and CFO of the $823 million commercial real estate company, with headquarters in New York City. Davis, succeeds Craig Laurie, who is moving into a new role at Brookfield Asset Management. Davis spent eight years at Brookfield Asset Management where he was most recently a managing partner and senior vice president of finance. Earlier, Davis also worked in the restructuring and advisory services group at Deloitte & Touche L.L.P. in Toronto, Canada.

CMGI Inc. appointed Steven G. Crane CFO of the $1.1 billion supply-chain management services and solutions, based in Waltham, Mass. Crane, 50, succeeds acting CFO David Riley, who has been named executive vice president of corporate development. Prior to joining CMGI, Crane served as president of FT Interactive Data Corp., a division of Interactive Data Corp.

Covad Communications Group Inc. has appointed Justin Spencer acting CFO of the $474 million provider of integrated voice and data communications, which is based in San Jose, Calif. Spencer, 35, replaces Chris Dunn, 35, who left to pursue other interests. Prior to his arrival at Covad in 2002, Spencer held key strategy and product management positions at Hewlett-Packard Co.

Hub Group Inc. named Terri A. Pizzuto executive vice president, CFO and treasurer of the $1.6 billion light freight transportation management company, which is based in Downers Grove, Ill. Pizzuto, 48, replaces Thomas M. White, who is resigning in order to pursue other opportunities. Before joining the company in 2002, Pizzuto was a partner in the Assurance and Business Advisory Group at Arthur Andersen LLP.

IMAX Corp. has named Joseph Sparacio executive vice president of finance and CFO of the $145 million motion picture technology company, which has headquarters in Mississauga, Ontario. Sparacio, who will be based in the New York office, succeeds acting CFO Edward MacNeil, who will continue in an unidentified financial role in the Toronto office. Sparacio spent eight years with Ernst & Young LLP at the beginning of his career, and between 1990 and 1994 he served in positions of increasing responsibility for Loews Theater Management Corp. He left Loews in June 2002 to become senior vice president and CFO of iN Demand LLC.

Kaiser Aluminum Corp. named Lynton Roswell chief accounting officer of the $1.3 billion producer of fabricated aluminum products for aerospace, automotive and custom industrial applications, with headquarters based in Foothill Ranch, Calif. Roswell, 32, replaces Daniel D. Maddox, who had been vice president and controller, and whose employment agreement expired in March 2007.  Roswell joined Kaiser in October 2006 from GeoLogistics Corp., where he was assistant corporate controller. Prior to GeoLogistics, he was an audit senior manager with Ernst & Young LLP.

Quaker Chemical Corp. has appointed Mark A. Featherstone vice president, CFO and treasurer of the $460 million provider of process chemicals. Featherstone, 44, replaces Neal Murphy, who has left to pursue a role with Sunoco Logistics Partners L.P. Featherstone joined Quaker Chemical Corp. in 2001 as the global controller and in 2005 assumed the role of vice president. He has also held various positions in financial management with Coty Inc. and Scott Paper Co.

Saks Inc. has announced the departure of Michael G. Archbold, the current executive vice president, CFO and chief administrative officer of $2.7 billion Saks Fifth Avenue Enterprises. Saks is terminating the position. Archbold, has accepted the position of executive vice president, COO and CFO at Vitamin Shoppe Industries Inc., a vitamin retailer with $436 million in sales.

UST Inc. has announced that Robert T. D’Alessandro the company’s CFO has retired. While the $1.9 billion company begins their search for D’Alessandro’s successor, chief accounting officer James D. Patracuolla will step in as acting CFO. D’Alessandro, was appointed senior vice president and CFO in January 2000. He has served various roles throughout the company’s accounting and finance since joining UST in 1981.

Article found in People on the Move

The financial value chain goes mobile

BasWare, a Finland-based provider of financial automation process solutions, has introduced BasWare Mobile Client, a mobile application, which delivers remote control over the financial value chain. BasWare Mobile Client gives key executives access to its P2P solutions via smart phones and mobile devices such as the NokiaNseries and Blackberry 7000 and 8000 devices and allows users to handle and approve purchase requisitions. “C-level people are typically the ones in organizations who are approving larger invoices and larger purchase orders. However, these people are also the ones who are traveling and are hard to get. BasWare’s Mobile Client allows them to get approvals in their mobile devices,” says Jani Kaskinen, BasWare’s vice president of sales and marketing. BasWare Mobile Client provides mobile access to BasWare Invoice Automation, which provides line-by-line access to invoice history and posting row data to ensure that any outstanding invoices are accurately reviewed, approved or rejected, and BasWare Purchase Management, which enables users to view items in the approval workflow level, including cost allocation and requisition history, thus allowing instant feedback on decisions. Previously, BasWare had a solution that relied on accessing e-mail through the Web. But adds Kaskinen: “We found that the typical executive gets more e-mail via his mobile device than he does through the Web."

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TradeCard puts trading suppliers under the microscope

TradeCard Inc., a provider of global trade solutions for financial and physical supply chain automation, has released new solutions enhancements that insert logistics tracking capabilities across TradeCard’s Web-based global tracking platform. The new features and logistic tracking capabilities provide trading partners with work-in-progress visibility. TradeCard has also added an events-management enhancement to its work-in-process visibility suite, enabling greater visibility into the actual movement of goods and allowing companies to gauge the coordination between its many overseas suppliers and the flow to the factory floor. Other enhancements include extended supply chain dashboards and supplier scorecards, allowing companies to become more strategic with their suppliers. In providing a window into the supply chain, these enhancements allow companies to slice and dice the data and grade supplier performance and maintain control of transactions by implementing advanced postponement and acceleration strategies that preserve margins and provide tighter inventory control.

Article found in Tools