Edmund L. Jenkins, chairman of the Financial Accounting Standards Board, will retire next summer, ending a tenure marked by rulings that profoundly altered the way companies account for and report their financial status.
Under Jenkins, FASB issued FAS 133, which requires companies to mark derivative investment values to market. Before FAS 133, says Jenkins, derivative values “were recognized only after they were settled. For many companies, that was too late.” FAS 133 “forced management to focus on the risks they take.”
Perhaps the most striking rulings during Jenkins’s reign were FAS 141, which ended pooling, and FAS 142, which eliminated amortization of goodwill and certain intangibles. These rulings, insists Jenkins, “make a significant difference in the kind of information offered to investors and the transparency of that information.” Some CFOs say FASB departed from its conceptual role and issued rulings that were too complex. “If they provide a framework, they will be excellent documents,” says Bristol-Myers Squibb Co. CFO Frederick Schiff. “If we see pages and pages of subsequent technical interpretations, these will not be successful standards.”
Jenkins also raised FASB’s political savvy a few notches. Before him, “the perception was FASB was aloof from the political process altogether,” says Manley H. Johnson, chairman of the Financial Accounting Foundation. “It was considered a green-eyeshade organization sitting in an ivory tower.” The likable Jenkins established a ubiquitous presence on Capitol Hill, improving relations with Congress and boosting FASB’s ability to overcome opposition from lobbyists.
Managers at Kendall-Jackson Wine Estates, based in Santa Rosa, Calif., are lifting their glasses to retiring CFO Alfred Rossow Jr. In the meantime, the winery has appointed John Bridendall, EVP, finance and administration, as interim finance chief. Rossow, who joined Kendall-Jackson in September 1999, will act as consultant to the company until year’s end.
Houston-based Enron Corp. gave CFO Andrew Fastow a “leave of absence” on October 24. The SEC is investigating the company’s messy financial statements to determine if two Fastow-run partnerships created “conflicts of interest.” Jeff McMahon, former CEO of Enron’s Industrial Markets group, replaces Fastow.
You’re a good man, Charlie Brown! At least that’s what folks in the corporate office of Office Depot Inc. think. Brown, formerly controller and SVP of finance, has been chosen as the office supplier’s EVP and CFO. The post had been vacant at the Delray Beach, Fla.-based company since October.
Alan Bennett is looking forward to keeping Hartford-based Aetna Inc. in tip-top shape. The health-care provider recently named him SVP and permanent CFO. Bennett had been serving as acting head of finance since April 2001, after the February resignation of predecessor Alan Weber.
The Financial Accounting Standards Council, which advises FASB on pertinent board issues, has a new chairman. Richard Swift, previously chairman, president, and CFO of Foster Wheeler Ltd., was appointed to the position by the Financial Accounting Foundation, which oversees FASB’s member selection.
A Whole New World
Collectors Universe Inc. managed to find an original CFO in Michael Lewis. Lewis succeeds Gary N. Patten, who resigned from the Newport Beach, Calif.- based provider of products and services to the collector’s market.
In the world of finance, Mark Donachie is a real pro. That’s why Las Vegasbased PurchasePro.com has named him CFO, succeeding interim CFO Richard Clemmer. Donachie was VP of finance for SBC Communications’s Sterling Commerce unit.
Paul Tate has hunkered down as the new CFO of Denver-based Frontier Airlines Inc. CEO Sam Addoms previously fulfilled the CFO duties. Tate was formerly EVP and CFO of Colgan Air.
Smithfield Foods Inc. has gone hog wild over its placement of Daniel Stevens in the CFO role. Stevens assumes the duties of C. Larry Pope, who became president and COO of the Smithfield, Va.-based hog producer and meatpacker.
Management Shuffle: America Next in Line
Michael Kelly, who was recently replaced by Wayne Pace as CFO of AOL Time Warner Inc., has quite a way with people. Reports say he phoned up and dressed down two Merrill Lynch & Co. analysts who downgraded the company after a dismal third-quarter earnings release. Then he failed to return phone calls from those same analysts, the reports contend. Kelly denies the allegations.
The modus operandi, say some analysts, is typical of Kelly, who has reportedly incited the ire of divisional heads at AOL Time Warner with his recent aggressive cost cutting. His new job, as COO of the America Online division, takes him out of the rarefied air of the corporate office, but makes him number two man in a division that many call the company’s growth engine. While some say the move is a lateral one at best, others say it’s a vote of confidence.
If the company was unhappy with Kelly’s performance, asks James Goss, media and entertainment analyst at Barrington Research Associates Inc., “why put him in charge of the largest operating unit? It’s clear they felt he had the attributes, experience, and brains to bring to the table.”
But some think that Kelly’s role as hatchet man at corporate made it tough for him to remain CFO once the work was done. “If [cost cutting] was done in a way that was more harsh than the way someone else might do it,” says one analyst, “that would complicate issues. Kelly accomplished his task. There’s less of that hard job to do, and he was the best one to do it, so now he’s moving on to another role.”