CFO, The Magazine for Senior Financial Executives articles from February 2005

CFO, The Magazine for Senior Financial Executives archives from February 2005

Think noble, act local.(from the editor)(Editorial)
February 1, 2005... TRADITIONALLY, WHEN A CITY SUFFERED A FISCAL CRISIS, the pain was localized. The businesses and citizens that could leave did so. Somewhere else, a community prospered. But what if many cities falter at the same time? Such is the case today,...

Go deeper.(letters to the editor)(Letter to the Editor)
February 1, 2005... "ACROSS THE BOARD" (JANUARY) highlights the increasing level of interaction between CFOs and corporate boards, certainly a positive development. However, I encourage boards and audit committees interested in providing sound oversight of...

A little knowledge helps.(letters to the editor)(Letter to the Editor)
February 1, 2005... REGARDING YOUR ARTICLE ABOUT hiring practices ("Revenge of the Nerds' Bosses," Techwatch, September 2004), I fully agree that a multistep and thorough method is essential to hiring technical staff. However, I have two concerns. First, the...

Payback is a b....(newswatch)(settlement)(Brief Article)
February 1, 2005... Now it's the shareholders' turn to extract pain. In early January, 10 former directors of WorldCom Inc. (now MCI Inc.) agreed to pay a collective $18 million out of their own pockets to settle a $54 million class-action suit stemming from...

Accounting for disaster.(Tsunami Response)(Indian Ocean Earthquake and Tsunami, 2004)(corporate social responsibility)
February 1, 2005... THE WAVES OF DESTRUCTION THAT PUMMELED SOUTHEAST Asia the day after Christmas left American companies in a quandary: how best to help a region halfway around the world just days before year-end and with many of their employees out for the...

Overgrown evergreen.(Stock Options)
February 1, 2005... WHEN TIAA-CREF BEGAN ENCOURAGING companies whose stock it owned to drop dilutive evergreen provisions from their stock-option plans, it expected push-back. Instead, says Linda Scott, director of corporate governance for the financial-services...

A new loophole.(Taxes)(create jobs)
February 1, 2005... What's in a name? Not much, apparently, when it comes to the American Jobs Creation Act, which features a provision that may actually encourage layoffs. Signed into law in October 2004 by President Bush, the goal of the legislation was to...

Not making it in New York.(Stock Markets)(regulations)
February 1, 2005... SOME FOREIGN LISTERS ARE GETTING tired of trying to make it in New York. With new governance rules at the stock exchanges and Sarbox compliance looming on the horizon, foreign companies are joining the chorus of domestic complaints about the...

Legalizing ethics.(Boards Of Directors)
February 1, 2005... THE WALT DISNEY DRAMA is not the only one to unfold in the Delaware Chancery Court system lately. Last May, directors of telecommunications company Emerging Communications Inc. (ECM) were found to have breached their fiduciary duty in a...

Charles O. Rossotti.(10 Questions)(Interview)
February 1, 2005... AS COMMISSIONER OF THE INTERNAL Revenue Service from 1997 to 2002, Charles O. Rossotti had a thankless task: modernize a bloated, inefficient organization that employs 100,000 people and collects $2 trillion annually. Now Rossotti, 64, may have...

Thumbscrew, 2.0: software vendors unveil a new program designed to maximize revenues. Their revenues.(techwatch)(software industry)
February 1, 2005... SEEMS THOSE 17TH-CENTURY ITALIANS WERE WRONG: you can get blood from a stone. [paragraph] In a move that is guaranteed to raise the hackles of finance chiefs at cash-strapped companies, software vendors are attempting to wring more money out of...

Fool's gold: acquirers seeking synergies would do well to shrink their expectations.(new deals)
February 1, 2005... KMART AND SEARS WERE BEING CONSERVATIVE LAST November, they said, when they predicted a half-billion dollars of revenue and cost synergies within three years of their merger's completion. Last month Oracle was preparing a detailed synergy...

The long haul: as airlines struggle to survive, the role of finance in decision-making takes off.(Spotlight airlines)
February 1, 2005... THE NATION'S AIR-SERVICE NETWORK is still reeling from 9/11, economic doldrums, its own bloated capacity, waves of defensive fare-slashing, and expensive fuel. But along with the daunting challenges has come an opportunity for CFOs: to reshape...

Big city blues: what's wrong with cities, and why it matters to business.(Cover Story)
February 1, 2005... PITTSBURGH DOESN'T LOOK LIKE A CITY that almost didn't pay its bills last year. Its streets are clean. Crime rates are low. A gleaming new convention center and two stadiums rise along the banks of the Allegheny and the Ohio, two of the city's...

Controlling the flow: with revenues rising, companies must balance investment and cost control.(The 11th Annual Cost Management Survey)(Illustration)
February 1, 2005... The good news for cost-conscious companies is that revenues are rising. That's also the bad news. According to our 11th annual Cost Management Survey, a joint effort of CFO magazine and Stamford, Connecticut-based Archstone Consulting LLC,...

Looking for gaps: the latest generation of compliance software promises to do more to ease the burden of internal-controls assessment.(Special report: Sarbox software)
February 1, 2005... WHEN LAST WE LOOKED AT the Overtime Guarantee Act known as Sarbanes-Oxley (see "Sarboxing," February 2004), finance managers were busy tapping out distress signals from Documentation Hill. At the time, the compliance deadline for Section 404 of...

Finders keepers: the SEC is hearing new demands to make it easier for small companies to raise capital.(finance)
February 1, 2005... IT'S NO SECRET THAT SMALL BUSINESSES HAVE AN ESPECIALLY hard time raising capital. But risk-averse banks and investors don't deserve all, or perhaps even most, of the blame, according to some observers. The real culprit, they charge, is federal...

Keeping skin in the game: joining a bankrupt customer's creditors committee may preserve its viability--and your assets.(bankruptcy)
February 1, 2005... THE BANKRUPTCY OF PACIFIC GAS AND Electric Co. in April 2001 came as no surprise to David Adante. Two mouths earlier, the CFO of The Davey Tree Expert Co., in Kent, Ohio, which trims brush and trees along utility power lines, had warned...

Going home again.(Returning CFOs)
February 1, 2005... WHEN GENE S. GODICK JOINED VERTICALNET INC. IN the summer of 1998 as CFO, anything seemed possible for the company, at that time an operator of Web-based business communities. But after the roller-coaster ride of going public, watching the...

CFO internet address directory.(Brief Article)(Directory)
February 1, 2005... American Express www.americanexpress.com/Business ExtrAACard Ariba www.ariba.com/source Baker & McKenzie www.bakernet.com/tax/tp/cfo Capgemini www.capgemini.com Cisco www.cisco.com/powered by ...

Howard's end.(grapevine)(J. Timothy Howard)
February 1, 2005... LAST DECEMBER, THE Securities and Exchange Commission settled the debate over accounting practices at Fannie Mae, ordering a restatement that could reduce earnings since 2001 by $9 billion. Soon after, Fannie Mae announced the resignation of...

Jail time for Cosmo?(grapevine)(Brief Article)
February 1, 2005... Now that one of his former bosses faces up to 40 years in prison, ex-CUC International Inc. CFO Cosmo Corigliano could finally receive a criminal sentence of his own in one of the largest fraud cases in U.S. history. The long-running $14...

Bank of America.(CFOs On The Move)(resignations)(Brief Article)
February 1, 2005... James H. Hance Jr. has retired as vice chairman of Bank of America after nearly 18 years with the bank and its numerous predecessors.

Oracle Corp.(CFOs On The Move)(appointments)(Brief Article)
February 1, 2005... Kevin Parker has stepped down as co-president and finance chief at PeopleSoft Inc. as Oracle Corp. moves ahead with the acquisition of its former rival.

PG&E Corp.(CFOs On The Move)(appointments)(Brief Article)
February 1, 2005... Peter Darbee takes over the top job at PG&E Corp. He is succeeded as CFO by former SVP and controller Christopher Johns.

Cumberland Farms.(CFOs On The Move)(appointments)(Brief Article)
February 1, 2005... Stephen Winslow will head up finance at convenience-store chain Cumberland Farms. Winslow had been CFO at Hasbro's U.S. Toy Group.

Harley-Davidson Inc.(CFOs On The Move)(appointments)(Brief Article)
February 1, 2005... Harley-Davidson Inc. has promoted CFO James L. Ziemer to CEO.

In case of hyperventilation.(steps to overcome the situation)(Brief Article)
February 15, 2005... 1 Obtain a small paper bag. 2 Loosely cover your nose and mouth with the bag. 3 Breathe slowly in and out of the bag about 10 times. 4 Set the bag aside and breathe normally for a couple of minutes. 5 Repeat steps 3 and 4 until...

The benefits burden.(EDITOR'S LETTER)
February 15, 2005... AFTER SIMMERING FOR MORE THAN A DECADE, CONCERN OVER THE high cost of employee benefits now verges on a crisis. Because the costs associated with human resources threaten to erode corporate profits, now more than ever the finance department...

A delicate balance: one of the toughest jobs for CFOs is building a quality benefits package that won't collapse under its own weight.(STARTING OFF)
February 15, 2005... OVER THE YEARS, U.S. CORPORATIONS HAVE BUILT UP THE package of benefits they offer their employees. The added compensation represented by health care, retirement plans, and other perks has grown impressively. [paragraph] Today, however, those...

Health care.(THE BENEFITS BURDEN)(Brief Article)
February 15, 2005... Forget Sarbanes-Oxley. The biggest headache facing Corporate America is figuring out how to provide affordable health-care coverage to employees. The price of hospital stays, pharmaceuticals, and just about every other medical product or...

Belt-tightening: can coaxing employees to live healthy lives help keep the bottom line in shape?(HEALTH CARE: Wellness Programs)
February 15, 2005... CORPORATE WELLNESS PROGRAMS ARE HARDLY NEW. As far back as the 1920s, Japanese workers started their day with a round of calisthenics. But with the cost of health-care plans soaring, and increased recognition of the relationship between...

Attention shoppers: consumer-driven health plans are catching on quickly, but are they the answer to runaway medical costs?(HEALTH CARE: Consumer-driven Plans)
February 15, 2005... EMPLOYEES ARE LEERY OF THEM. PHYSICIANS DERIDE them. And critics say they pull cash out of a cash-starved system. None of this, however, is keeping employers from offering consumer-driven health plans (CDHPs) to workers. According to a survey...

I want a new drug plan: companies hoping to curb prescription-drug charges are looking at a host of new cost-control measures.(HEALTH CARE: Pharmacy)
February 15, 2005... WHEN THE COST TO PROVIDE PRESCRIPTION-DRUG coverage to employees at SPA International increased 8 percent during the company's fall 2004 insurance renewal, Wayne Grubbs was delighted. An odd response from SRA's corporate controller and...

Promises, promises: retiree health coverage is a sweetener fewer companies are willing to offer.(HEALTH CARE: Retiree Health)
February 15, 2005... JOHN DEVINE IS WELL KNOWN ON WALL STREET FOR HIS candor, and during last October's earnings conference call, the CFO of General Motors Corp. didn't disappoint. Yes, he acknowledged, retail incentives and rising operating costs continued to...

Retirement plans.(THE BENEFITS BURDEN)
February 15, 2005... So much for the golden years. With pensions severely underfunded and a debate raging over the health and future of Social Security, the three legged stool of U.S. retirement funding could be close to toppling. (The third leg, personal savings,...

Death to smoothing? A tough regulatory environment is another nail in the coffin for defined-benefit plans.(RETIREMENT PLANS: Pension Accounting)
February 15, 2005... LIKE SISYPHUS, WHO WAS CONDEMNED TO ROLL A ROCK up a hill each day only to watch it roll back down again, pension plan sponsors can't seem to make any progress. They poured record amounts of cash into their plans--an estimated $40 billion in...

Uncertain benefits: what finance executives say about cost control, choices, and concerns.(2005 CFO HUMAN-CAPITAL SURVEY)
February 15, 2005... Few CFOs today can avoid grappling with the rising cost of benefits. Mounting health- and retirement-plan costs present tough choices, but outsourcing and technology often create as many problems as solutions. We asked 295 senior finance...

Can congress help? Just 15% of companies with defined-benefit plans had sufficient assets to meet projected benefit obligations at the end of fiscal '03, says a survey by Watson Wyatt.(2005 CFO HUMAN-CAPITAL SURVEY)
February 15, 2005... A little help from Congress on pension funding requirements could certainly buffer the effects of accounting reform on companies, whatever the changes turn out to be. "The bells have been ringing pretty hard for three or four years now for...

Match game: companies are making strategic use of 401(k) matching contributions, but are they toying with their employees' retirement?(RETIREMENT PLANS: 401(k) Matching)
February 15, 2005... PENSIONS ARE DYING, STOCK OPTIONS ARE DEAD; bonuses and health-care plans are looking more anemic by the day. Of the portfolio of employee benefits, only the 401(k) remains robust. Companies have long recognized that when it comes to getting...

The Domino effect: ailing pension plans could overburden the PBGC and send premiums soaring.(RETIREMENT PLANS: PBGC)
February 15, 2005... UNITED AIR LINES IS TRYING TO LIGHTEN ITS LOAD. LAST November, the bankrupt carrier proposed terminating up to four of its pension plans that were collectively underfunded by $8.3 billion. But doing so would transfer a payload of up to $6.4...

IT/outsourcing.(THE BENEFITS BURDEN)
February 15, 2005... In many facets of business, automation is the goal. But for human resources, it's merely the means to an end and perhaps a new beginning. HR is often an administrative sinkhole, as staffers struggle against an overwhelming tide of paperwork and...

This time, it's strategic: technology has streamlined the human-resources department. Can it be pushed to do more?(IT/OUTSOURCING: HR Software)
February 15, 2005... IT'S TIME TO LOOK UNDER THE HUMAN-RESOURCES hood again. After an extensive technology overhaul in HR, employees now routinely use a number of self-service applications to complete tasks like enrolling in benefits programs, managing vacation...

Any storm in a portal? Portals have been a godsend to hr departments, but behind the scenes, They can create plenty of chaos.(IT/OUTSOURCING: HR Technology)
February 15, 2005... WHEN THE TECHNOLOGY DOWNTURN TOOK THE exuberance out of the software business, Mapics Inc., an Atlanta supplier of enterprise systems, decided to shed real estate rather than people. The company made such a commitment to telecommuting that...

Same caller, new message: farming out HR has yet to yield the promised savings. So why haven't CFOs hung up on outsourcers?(IT/OUTSOURCING: HR Outsourcing)
February 15, 2005... THE MOVE TO OUTSOURCE HUMAN RESOURCES CONTINues to accelerate, despite the fact that the jury is still out on the primary reason to outsource: cost savings. [paragraph] "If you went to [HR] conferences a few years ago, the message was, 'If you...

Perks.(THE BENEFITS BURDEN)(Brief Article)
February 15, 2005... Birthday cakes, bagel Fridays, occasional gift certificates. As companies cut back on big-ticket benefits, they have come to appreciate that little things can mean a lot. Today, more companies are offering perks as varied as backup day care,...

Extras! Extras! Voluntary benefits bring goodwill with a small price tag, but watch out for liabilities.(PERKS: Voluntary Benefits)
February 15, 2005... TWO YEARS AGO, CLARK ENGINEERS INC., A 120-EMPLOYEE firm based in Peoria, Illinois, scrapped its dental plan because the company could no longer afford its $60,000-per-year contribution. In an effort to cut the expense without depriving...

Adventures in babysitting: backup day care can cut absenteeism, decrease turnover, and save employees from the stress of lining up a last-minute caregiver.(child care services benefits)
February 15, 2005... IT'S EVERY WORKING PARENT'S SCHEDULING NIGHTMARE: a child-care arrangement evaporates during a busy workweek. Cathryn Mehrtens, U.S. director of business development at Latham & Watkins LLP, was stranded when her nanny's father died suddenly...

Carry that weight: small steps can go a long way toward easing the benefits burden.(PARTING NOTES)
February 15, 2005... Neither HMOs nor HSAs nor 401(k)s nor grand government programs are likely to fix the problem of rising health-care expenses and inadequate retirement plans. But companies that look for every little advantage will fair better than those that...