In order to appease everyone, the insurance company included a hold-harmless agreement — a provision that assumes the liabilities of the past. But the policy’s new plan exclusions meant that directors and officers still assumed greater risk for future liability. Adds Schleizer, “Had I not already been on the board, I probably would have not joined the company.” (Find out how D&O insurance has become more expensive and less inclusive than ever.)
4. CEO = Dingbat
For many CFOs, the key to finding the right job is finding the right boss. Jim Greer learned that lesson the hard way at a former employer, when he took a job where he knew the chief executive was “a little off-balance.”
Many of his peers might do the same today. Some finance chiefs look at their boss’s idiosyncrasies as part of the challenge, but tackling a CEO’s personality and behavior problems, warns Greer, are leadership issues for the board to deal with, not the CFO. “Life isn’t worth it,” he says of the experience. “Three years of your life, no matter what they pay you, is not worth putting up with a dingbat.”
Other CFOs may want an incompetent boss just so they can look better by comparison. But Larry Reinhold, who intends one day to be a CEO himself, looked for just the opposite. When he started interviewing again after leaving Critical Path, he had the opportunity to pursue a chief executive position — but he decided to spend more time in an operational CFO role, getting first-hand training under “a competent, proper CEO.” (Some CEOs believe a good first step is for a CFO to train her own successor.)
Many finance chiefs tap into the membership base at Financial Executives Institute and the Financial Executives Networking Group, which may include former employees of the company who are willing to provide an insider’s perspective. Getting a few opinions of the boss and the working environment can help guard against a bad situation.
After his experience with Critical Path, Reinhold played it even more carefully. He passed on several job opportunities where the chemistry wasn’t right or where the CEO seemed “inexperienced.”
Eventually Reinhold interviewed at Wilson Greatbatch Technologies, a maker of power sources for implantable medical devices — where he knew no one. Reinhold sought out people who knew the CEO personally, “and all corroborated that the man is of the absolute highest integrity.”
5. Premature Recognition
When it comes to sniffing out a finance department that’s using creative accounting to boost its numbers, even a CFO candidate has to make some assumptions along the way.
For example, says JVP’s Carus, suppose that receivables and revenue are listed with identical amounts. Those two line items could reflect an aggressive accounting practice in which revenue is recognized too early. But they could also signal that the company has delivery issues that are keeping customers from making timely payments. Or the company could be “selling into an industry that is going down the drain,” adds Carus — that is, the business may rely solely on a handful of struggling customers. (Think “dotcom.”)