Friday, July 31, 2009
Wednesday, July 29, 2009
Thomas Bonney of CMF Associates wrote a piece for the deal.com examining the increasing reduction of barriers between the cfo and coo positions in many companies. Bonney wrote,
CFO and COO role shifts are most frequently on the rise at companies where there is a weakness in leadership at either position. The challenges of the current economic environment have exposed individuals who have reached the peak of their functional level competency and are unable to develop a broader skill set that extends across functions; these individuals are increasingly being terminated by boards and private equity firms in conjunction with overall talent upgrade initiatives to deal with tougher times.
Another driver behind the blending of the CFO and COO roles is businesses’ heightened need for rapid and accurate decision-making, despite an environment that fosters fewer reliable, relevant facts. External competitive and economic pressures are resulting in increased financial and operational ambiguity, while, at the same time, mandating better executive judgment calls. In the sub-$100 million revenue world of the middle market, this decision-making must cross functional lines, thus further blurring the line between CFO and COO responsibilities.
The article should be read by anyone interested in corporate management.
Monday, July 27, 2009
Former CitiGroup chairman Win Bischoff has just been appointed chairman of the U.K.’s Lloyds Banking Group. Bischoff who failed to show much foresight while chairman at Citi is now in a similar position. Does anyone ever learn from previous history?
Thursday, July 23, 2009
Wednesday, July 22, 2009
Monday, July 20, 2009
Friday, July 17, 2009
The Obama administrations appears to be close to getting its proposal through Congress for a non-binding say over executive compensation in public companies. According to a story by Del Jones, for USA Today,
The Obama administration offered legislation Thursday that would require publicly traded companies to give shareholders a non-binding vote on the compensation of CEOs and other highly paid executives and to vote on exit packages, known as golden parachutes, at the time of a merger or acquisition.
It would appear the Obama administration is working hard to go right down the middle on this issue. While top executives from key associations are adamantly opposed to even non-binding resolutions on executive pay their counterparts such as corporate governance advocates and a number of institutional investors would prefer far greater teeth in the new proposal. At least this is a minor beginning.
Tuesday, July 14, 2009
Jeffrey Peek, CIT’s CIT (NYSE) CEO since 2003 appears to have entered a status similar to many of the financial CEOs that were forced out during the financial crisis over the last year and a half, e.g., Stanley O’Neal of Merrill, Sir Fred Goodwin, Royal Bank of Scotland, Martin Sullivan, AIG … CIT has been in free fall of late and is looking to the government for help. It is unlikely Peek will remain as CEO after the company’s crisis manages to come under control. According to a story by Paul Tharp in the New York Post,
The White House is “in advanced talks” trying to extinguish a sudden financial wildfire that could swallow CIT Group, the financial firm that bankrolls the nation’s small businesses.
… The company, which reported more than $3 billion of losses in the past eight quarters, said it hired Skadden, Arps as an adviser. Skadden is known for its work in mergers and acquisitions and bankruptcies.
CIT warned yesterday in internal documents that it’s in danger of running out of cash unless it can get a second round of federal bailout help like that of Wall Street’s banks and other cash-strapped financial firms.
Peek can be expected after the crisis is handled to find himself a lightning rod for the company’s risky business decisions. Keep a close eye on how Peek handles the current crisis and how he is ultimately portrayed by institutional investors and the government. In a story by Ari Levy and Linda Shen of Bloomberg they examine the difficulties Peek and CIT are facing. The writers quote Sean Egan, president of Egan-Jones Ratings Co. in Haverford Pennsylvania,
“You could make a cogent argument that senior management didn’t have a good grasp of the financial storm that was on the horizon,” … “CIT has been through a number of near-death experiences. This time they cut it too close.”
The Bloomberg reporters go on to say,
… On Peek’s watch, the shares soared to a record $61.59 in February 2007 before plunging 98 percent as the company reported eight straight money-losing quarters. CIT’s debt rating was cut by Standard & Poor’s yesterday to seven levels below investment grade, as the ratings firm cited company requests to draw down on credit lines.
Moody’s also slashed its rating yesterday, to B3 from Ba2, or six levels below investment grade, because of “inadequate progress” toward improving liquidity. CIT, which lends to 950,000 businesses, warned that a collapse would put manufacturing and retail clients at risk.
It is only a matter of time for Peek.
Financial Times (update July 16)
New York Times (update July16)