An Anatomy of a CFO’s Agony

How a make-the-numbers mandate, threats from his bosses, and accounting skullduggery nearly destroyed him.

Relentless, exhausting pressure to hit numbers. Knowing you’ll be fired, and likely ruined, if they’re missed. Resorting to accounting shenanigans to make ends meet. Feeling trapped by blackball threats.

The pain experienced from such circumstances generally stays out of sight, but it all came out in a recent interview with a one-time finance chief at a company that had just gone public. He spoke about his ordeal, though, only on condition of anonymity, for both himself and his former employer.

To be sure, some of the discomfort was self-inflicted. The CFO — let’s call him John Doe — ultimately pleaded guilty in federal court to accounting fraud. He also settled Securities and Exchange Commission fraud and insider trading charges, albeit without admitting or denying guilt.

In the interview Doe did not comment on those proceedings, other than to note that he “got in trouble.” But from his point of view, his actions were the result of extreme pressure from his superiors at the company, one of whom was convicted of fraud in a trial, while another pled guilty. (Although those events took place years ago, sentences still have not been handed down.)

For Doe, the emotions surrounding the matter are still raw. While he said he somehow emerged into a new career as a private-company CFO, he said too that thinking about the episode still upsets him. Yet he pressed on with the seemingly cathartic telling.

Doe had been controller of a company that owned several subsidiaries. When a plan was hatched to take one of them public, he was offered the CFO seat. He figured it was a fantastic opportunity.

Here is Doe’s version of what happened, in his own words (with minor edits for clarity and to preserve anonymity):

The parent company had been on an acquisition binge and had leveraged itself beyond its capacity to make its interest payments. The banks were screaming. The parent’s stock was not worth much, so going to the public markets to raise capital in the form of an equity deal for the parent wasn’t going to work. We spent a lot of money on people to come tell us what we already knew, which was that one particular subsidiary was a cash cow, that by spinning it off as a public company we could raise the capital we needed.

Our chairman had always been the type of guy to say, “Make the earnings target regardless.” It was up to the accountants, for some reason, to fill in the voids, where if problems with sales initiatives or manufacturing came up we’d have to go find a penny or two someplace, whether it be through depreciation or rolling in some reserves, or whatever.

The operating subsidiaries would give us numbers and the chairman would change them. So all of our forecasting and modeling was bull, because no one had agreed to those numbers.


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