There are plenty of CFOs these days who are mad as hell about some law, regulation, or accounting rule. And there are a few who have decided they aren’t going to take it any more.
One such executive is Alex Davern, CFO of $500 million National Instruments Corp., an Austin, Texas-based maker of test and measurement software. Last year, Davern became frustrated with the cost and time needed to comply with Section 404 of the Sarbanes-Oxley Act, on internal controls. Since then he has been on a campaign, working through the American Electronics Association (AEA), to overhaul a rule he believes is “bad for the country.”
Another fed-up CFO is Andy Thrower, of Spartanburg, South Carolina–based Contec Inc. For nearly a year, Thrower has lobbied the Financial Accounting Standards Board to change what he considers a flawed accounting standard — FAS 150 — concerning the accounting for mandatorily redeemable shares. Issued in May 2003, the standard means private companies like Contec would have to count such shares as liabilities and, according to Thrower, “mess up their balance sheets.”
Davern and Thrower are members of a tiny fraternity: activist CFOs. These executives usually limit their activity to influencing accounting and regulatory policy, but a few have chosen to enter the political sphere. Not surprisingly, they tend to work at companies “that see the benefits of using public policy to advance a corporate agenda,” says Grace Hinchman, senior vice president of Financial Executives International (FEI), citing CFOs Jim Schneider of Dell and Andy Bryant of Intel, who have been outspoken on the subject of expensing stock options. These companies, say Hinchman, “see the benefit of using the right C-level executive to deliver the most effective message.” With the CFO, she adds, “companies [can present] a much more granular view of the financial implication of the story.”
Typically, CFOs prefer collective activism, through trade organizations such as FEI or the American Institute of Certified Public Accountants, or industry groups such as the AEA. Others such as Davern — who now also sits on the Securities and Exchange Commission’s Advisory Committee on Smaller Public Companies — are going right to the source with their opinions. And while there is no single motivator, some finance chiefs regard it as almost a personal duty to speak out on behalf of their company or their profession. Says Andy Thrower, “After a quarter of a century in this profession, I just thought it was time to give something back.”
Driven by a Passion
Thrower began his campaign to change FAS 150 by working with the standards subcommittee of the Committee on Private Companies for the FEI (he now chairs the subcommittee). Subsequently, he joined the FASB Small Business Advisory Committee as well as the Financial Accounting Standards Advisory Council. And partly through his committees’ efforts, the effective date for the standard was deferred indefinitely.
Thrower’s activism was also driven by a passion for financial reporting and accounting theory. In a small company like Contec, he says, “you really don’t get to apply the theory” on a broad basis. Through his activism, he has been able to share his knowledge and experience with others. As for the time commitment, Thrower reckons he spends at least five hours a week just reading background materials for the committee work.