The Boeing Co.’s new CFO, James A. Bell, is stepping into a bit of a maelstrom, at the center of which lies the $21.5 billion KC-767A tanker leasing deal with the U.S. Air Force.
The deal is currently in a state of official limbo while the Pentagon, the U.S. Attorney’s Office in Northern Virginia, and Boeing officials investigate a variety of issues—including the alleged “revolving door” in which senior government defense officials frequently land top jobs at major defense contractors immediately after retiring. It was this same deal that scuttled the illustrious career of Bell’s predecessor, Michael Sears, in November, after it was discovered by Boeing officials that he allegedly offered a job to a senior Air Force procurement official while she was still sitting across the table from Boeing in the leasing-deal negotiations.
As his first order of business, Bell, a 31-year Boeing veteran, needs to get that deal back on track, say observers, not only to put the episode in the past, but also because it is so crucial to Boeing’s financial health.
“The Air Force is going to be looking for some changes in that contract,” says Paul Nisbet, an aerospace analyst at JSA Research Inc., in Newport, R.I. “The 767 program is a deal that violated if not the word of the law, then the intent of the regulations that govern defense procurement.” Without the deal, the future of the 767 itself is in question (see “Boeing’s Finance Unit: Fuel for Scandal?“).
Bell is the right man for the job, says Nisbet, given his extensive experience at Boeing, and his accounting background and expertise. This stands in direct contrast to Sears’s operational and engineering background. “I think they went with the person in their organization who was most prepared for the position,” says Nisbet.
Fortunately for Bell, Nisbet believes that wrangling with the thorny ethical issues unleashed by the leasing deal will not fall to Bell, but to Harry Stonecipher, Boeing’s new CEO. Stonecipher replaced Phil Condit in December after he resigned in the wake of the Sears scandal. —Kris Frieswick
Oracle’s New Business Suite
Oracle Corp.’s Jeff Henley is going where few CFOs have been before—and analysts aren’t quite sure why.
In a surprise move in January, the software vendor announced that finance chief Henley was taking over as the company’s new chairman. In the process, the longtime Oracle CFO supplanted company founder Larry Ellison, who retained his job as chief executive officer.
While some analysts lauded the move to separate the two titles, corporate governance activists usually advocate placing a noncompany executive in the top board spot. What’s more, CFOs rarely move up to the chairman’s position. Henley, who has been the target of speculation about retirement rather than promotion, declined to comment to CFO.
Others had plenty to say. Stephen Mader, CEO of executive-search firm Christian and Timbers, has questions about Elison’s influence over Henley in his new role. “It’s kind of strange to take a 13-year subordinate relationship and turn it upside down,” he says, nothing that Ellison “has given up nothing in the sense of real control and authority.”
As of press time, Oracle had not named Henley’s successor. The company is also awaiting a ruling from the Department of Justice regarding its $7.3 billion hostile bid for rival PeopleSoft a connection between the bid and the changes in the company’s executive suite. It also remains to be seen how much if any power Henley will wield over Ellllison. Jeff Gould, CEO and research director at Peerstone Research, an independent research firm, sees little change, given Ellison’s 25 percent ownership in Oracle stock. “I don’t think there’s any doubt who’s in charge,” he says. —Craig Schneider
CFOs on the Move
Embattled Charter Communications Inc. named Michael Huseby as CFO to replace Kent Kalkwarf, who was fired in 2002 and subsequently indicted for his alleged role in an accounting fraud at the company. Huseby was CFO of AT&T Broadband…. James Beer has been named CFO of AMR Corp., replacing Jeffrey C. Campbell, who joined McKesson Corp. as CFO…. Krispy Kreme Doughnuts Inc. has finally found a new CFO after an eight-month search. Michael Phalen, the company’s new finance chief, was an executive director at CIBC World Markets.