Some want to trade profits for nonprofits

When it comes to retirement, many finance executives are walking away from the corporate world years earlier than their father’s generation. In just the last month, three fiftysomething CFOs have announced their retirements. Google Inc.’s George Reyes, 53, is leaving at the end of the year; Kraft Foods Inc.’s James Dollive, 56, is departing Sept. 30; and Nationwide Mutual Insurance Co.’s Robert A. Rosholt, 56, is leaving next year.

“Retire” is the operative word. None of the three said they were “stepping down” or “resigning” or “moving to explore other opportunities.” They were, they made clear, “retiring”—or, as Webster defines the word—withdrawing from business. That doesn’t mean that one or more won’t come out of the shadows to take another crack at a challenging job in the business world, but headhunters and consultants expect many options-rich executives to slide into quieter and, perhaps, more socially fulfilling lives.

“I’ve seen examples of executives at fairly senior levels take the opportunity to switch gears and find other opportunities that may be more rewarding,” says Allen A. Geller, managing director at executive search firm Raines International Inc. “The market has been good up to this point, making them wealthy,” he notes. (Reyes, for example, will retire with options valued at more than $23.5 million.) “At the same time, regulations are increasing and adding to their headaches,” Geller notes. “So they think, ‘Why not find something more fulfilling?’”

Some are doing just that. Take Mathew McKenna, for example. The 57-year-old senior vice president of finance for PepsiCo Inc. announced Aug. 29 that he would retire at the end of the year—and move from the very profitable PepsiCo Inc. to the nonprofit Keep America Beautiful, the country’s largest volunteer-based organization dedicated to improving the environment. Although he can retire under PepsiCo’s deferred compensation program, McKenna says he wants to remain in a leadership role. So, he enthuses, he “jumped” at the chance to be president and CEO of the nonprofit. “I hope my experiences in stewarding PepsiCo’s financial growth will aid Keep America Beautiful efforts in using its broad-based community alliances to achieve sustainable community improvements.”

Article found in Retirement Plans, Compensation, Retirement & Benefits

News of their death may have been premature

After years on the endangered species list, defined benefit (DB) plans have halted what many considered their slide toward extinction, according to two new surveys by benefits consultant Watson Wyatt Worldwide.

One survey showed that the percentage of Fortune 1,000 plan sponsors that froze DB plans in 2007 dropped to 4% from 7% in 2006—on par with the 4% that were frozen in 2005. A second study of 300 organizations with pension plan assets of more than $100 million found that 59% have made a formal decision to keep their plans open to current participants and new employees.

Based on the historical focus of the first study and the forward-looking assessment of the second, it appears that DB plan freezes may have peaked last year, according to Alan Glickstein, senior retirement partner at Watson Wyatt. “We are not ready to declare them extinct,” he says. “If they are kept on a Sierra Fund watch and defended properly, they should remain a part of the retirement landscape.”

That’s good news for upcoming generations of retirees who fear that their defined contribution (DC) plans may not outlive them—even though workers shouldn’t expect to see many new pure DB plans created, cautions Glickstein. “It’s fair to say that if there is growth in retirement plans in general, but DB options will be the exception.”

Future growth likely lies in hybrid plans—including pension equity, cash balance and other yet-to-be designed plans, he says. In fact, Glickstein notes that high-tech companies have recently started discussing the potential for retirement programs that could include some DB option. After all, stock options, which for so long have been used as an incentive to lure talent away from competitors, may fall out of favor as they become more costly to corporations as a result of FAS 123. “We’ve already seen some indication of an uptick in interest in hybrids, even though the rules don’t kick in until 2008 and we still don’t even have all the rules,” he says.

Article found in Retirement Plans, Benefits

People On The Move

Google Inc., the $10.6 billion Internet search giant based in Mountain View, Calif., has announced the retirement of CFO George Reyes. Reyes, 53, will remain with the company until a replacement has been named to ensure a smooth transition. During his five-year tenure at Google, Reyes assisted in the regulatory demands of Sarbanes-Oxley implementation and the challenges of scaling a global finance organization. He joined Google from ONI Systems Corp. where he served as acting CFO. Prior to ONI, he spent 13 years with Sun Microsystems Inc., holding various finance positions including controller and treasurer.

Gap Inc. has announced that current senior vice president of corporate finance Sabrina Simmons will assume the position of acting CFO, following the resignation of CFO Byron Pollitt. Simmons has also been appointed to the newly created position of executive vice president of the $15.9 billion specialty retailer, with headquarters in San Francisco. Simmons, 44, began her career with Gap six years ago as vice president and treasurer. 

Equity Residential Properties Trust, the $1.9 billion real estate investment trust, with headquarters in Chicago, appointed John G. Lennox as acting CFO. Lennox, 53, replaces Donna Brandin, who resigned to pursue other professional and personal interests. Lennox has spent over 23 years with Equity Residential, serving as controller, senior vice president of finance and administration and, most recently, as senior vice president of financial planning and analysis.

Coldwater Creek Inc., the $1 billion upscale multi-channel retailer, based in Sandpoint, Idaho, named Timothy O. Martin CFO. Martin, 38, succeeds Melvin Dick, who had previously announced his retirement. Martin came to Coldwater in August 2006 as vice president of finance. Before joining the company he held numerous senior finance positions with Amgen Inc., including chief accounting officer and vice president of finance and global commercial operations. He also spent time at Gap Inc. where he assumed senior-level finance positions.

Flowers Foods Inc. named R. Steve Kinsey senior vice president and CFO of the $1.9 billion wholesale bakeries, with headquarters in Thomasville, Ga. Kinsey, 46, replaces Jimmy M. Woodward who has retired for family reasons. Woodward will continue with the company in an advisory capacity. Kinsey joined Flowers Foods in 1989 as a tax associate and in 1994 was promoted to tax manager. In 1998, Kinsey was named director of tax and became controller in 2002.

Skyworks Solutions Inc. named Donald W. Palette vice president and CFO of the $773 million wireless chipmaker, based in Woburn, Mass. Palette, 50, replaces Allan Kline, who has moved to an advisory role with Skyworks. Previously, Palette held numerous financial executive management positions with Simplex Corp., Bell & Howell and Publication Systems Co. Most recently, he served as senior vice president of finance and controller of Axcelis Technologies Inc.

The Timberland Co., a $1.6 billion footwear, apparel and accessories company, with headquarters in Stratham, N.H., named John Crimmins CFO. Crimmins, 50, has served as acting CFO since March 2007. Crimmins came to Timberland in 2002 and has served in the capacity of vice president, chief accounting officer and corporate controller.

Sunrise Senior Living Inc. has appointed Richard J. Nadeau CFO of the $1.8 billion senior living services, based in McLean, Va. Nadeau, 52, replaces Julie A. Pangelinan, who served as acting CFO and will continue to serve as chief accounting officer. Nadeau has most recently served as a consultant to Sunrise. Earlier, he was CFO of Mills Corp. From March 2005 to March 2006, Nadeau was CFO of Colt Defense LLC and from 2002 to 2005 a partner at KPMG LLC. Earlier, he spent 25 years with Arthur Andersen LLP, rising to the positions of national practice director and audit partner.

CoreSource Inc. has named Clare Smith CFO of the $126 million subsidiary of Trustmark Mutual Holding Co., based in Lake Forest Ill. Smith, 43, succeeds Karla Mansfield who left to pursue personal interests. Smith has held various positions of increasing responsibility at KPMG Peat Marwick, Zurich Kemper Life Insurance and Kemper Insurance Companies and most recently serving as vice president of Financial Planning and analysis for Bankers Life and Casualty.

Data quality, not quantity, counts

With finance organizations increasingly focusing on the quality and not the quantity of data, data cleansing has become a prime focus of business intelligence (BI) software providers. Now, BI software leader Cognos Inc., based in Ottowa, Ont., has announced an expansion of its nine-year partnership with Redwood City, Calif.-based Informatica Corp., a leading developer of data cleansing software. Cognos has raised Informatica to the level of a strategic partner and will resell Informatica data quality products and services. “Data quality is becoming top of mind for CFOs because of increased scrutiny on the [financial reporting] numbers,” says Harriet Fryman, associate vice president of marketing at Cognos. She adds that the spotlight on quality is also a consequence of the maturing business performance management market. “The first hurdle [for finance executives] was data access and getting the tools to interact with the data,” Fryman says. “But to make strategic decisions, business executives need to know that the data is right.”

Data quality is becoming a hot topic for a number of reasons, says Gartner Inc. analyst Ted Friedman, pointing to the recent acquisition by French BI vendor Business Objects of small German data cleansing software provider Fuzzy! Informatik. He notes that companies are increasingly treating data as a strategic asset, recognizing that that’s not only about security of data, privacy of data or storage of data, but the quality of data. “I cannot think of a better example of the old cliché, ‘garbage in/garbage out,’ than BI,” says Friedman. “So vendors like Cognos who sell BI tools and applications are being pushed by their customers to deliver more in terms of assuring the quality of data going into that BI.”

He also points to the partnership between Cognos and Informatica as a competitive response on the part of Cognos to Business Objects’ acquisition last year of First Logic, another data quality software provider. Says Friedman: “BO has used its data quality capabilities as a thorn in Cognos’ side.” He adds that Informatica’s technology is “domain agnostic.” That means it’s not optimized for any particular type of data—customer data, product data, financial data. “It can play across the domains.” Friedman says.

As a result of the partnership, Cognos will be able to give the office of finance greater visibility into the data quality problems they may have. Cognos also will provide a scorecard that gives real visibility into key data metrics, such as consistency, integrity, duplication, accuracy, conformity and completeness of data. The finance executives will be able to drill down further to understand where poor data quality needs to be addressed. Finally, the software lets executives define how they want to fix and standardize the data. “The software has rules to ensure your data warehouse has quality data,” says Fryman.

Article found in Tools, Technology, Financial Information Technology, Tools & Technology

You want to be healthy but at what price?

While few would argue with employers’ desires to contain healthcare costs and get the greatest value for their dollars, just how to achieve those results is a matter of debate. And given recent evidence showing that across-the-board increases in prescription drug co-payments can actually lead to a decrease in employees using essential medication, it is becoming clear that some efforts to hold down healthcare costs paradoxically have the effect of leading to a sicker—and, in the long term, costlier—workforce. Now Hewitt Associates has launched a tool designed to help employers assess and quantify the cost impact of implementing a value-based healthcare design, beginning with prescription drugs. Hewitt’s Value-Based Design Model allows companies to analyze the compliance effects and financial impact of cutting employee cost-sharing for some healthcare services while increasing cost-sharing in other services. By using an employer’s data of drug utilization and costs, the tool allows them to make clinically desirable plan design changes without increasing company costs.

In collaboration with value-based healthcare experts A. Mark Fendrick of the University of Michigan and Michael E. Chernew of Harvard Medical School, Hewitt is developing a clinically oriented actuarial model that lets employers quantify the cost impact of implementing a value-based healthcare program. “There’s a range of services that we know are very important for patients with certain diseases,” explains Chernew, who notes that the common response of employers to rising healthcare costs is to shift the expense to employees.

“What we’ve been doing with Hewitt is developing a model to explore the financial consequences of a more clinically sophisticated design package, which would favor certain high value [health] products and perhaps even target them to patients for whom they are important, thereby allowing the employer to achieve different cost targets while still maintaining quality of care,” says Chernew. The Hewitt tool would allow them to be more selective in how employers set their benefit design package. “It’s taking the dollars that an employer has and allocating them in the right places—places that have the greatest value,” says Sara Teppema, a lead development actuary at Hewitt. Moreover, she adds, value-based design needs to be looked at in terms of the client’s overall healthcare strategy and total health-risk management strategy: “What [is the company] doing to incent healthy behavior, wellness, lifestyle changes?”

Currently the model focuses on the pharmaceutical aspect of design change because as Teppema notes: “The data is easy to compile and use in the model as compared to the medical data.” Hewitt has loaded the model with several of its clients and it has been surprised by the response of employers. “When we told employers how much it was going to cost them to decrease the cost of co-payments for diabetics, we thought that they would have to find the money for that somewhere else in the medical plan design so that it would be cost-neutral,” says Teppema. “What we found was that clients were willing to invest this or said that they would find the money from somewhere else.”

Article found in Tools, Technology, Healthcare, Benefits, Retirement & Benefits