As they attempt to rise from the ashes of their recent fraud debacles, several companies are lining up squeaky-clean new board members in hopes of regaining investors’ trust.
For example, Dennis Beresford, former Financial Accounting Standards Board chief, and former U.S. Attorney General Nicholas Katzenbach are helping MCI emerge from bankruptcy. Tyco International Ltd. is hoping some military discipline will help: the troubled conglomerate named Dennis Blair, retired commander-in-chief of the U.S. Pacific Command, to the board in March. Then there is Adelphia Communications Corp., which recently added former Securities and Exchange Commission member Philip Lochner Jr. to its team of directors. And Computer Associates International Inc.’s board boasts ex-SEC accountant Walter Schuetze.
“Formerly troubled companies are clearly searching for ways to wipe the slate clean and start over with investors,” says Beth Young, senior research associate at The Corporate Library, an independent research firm. When a person with flawless credentials chooses to accept a board position, she says, it indicates to the public that the company has cleaned any skeletons out of its closet. “These are people who you would expect to do really impeccable due diligence,” adds Young.
And these new directors are not simply for show; they bring experience and healthy skepticism to boards that were clearly missing those elements in recent years. Beresford, who sits on two other boards, says more companies are realizing they need serious financial know-how on their boards. “With the new reporting requirements, they want to make sure they get it right and aren’t criticized,” he says.
Yet even those with sterling reputations aren’t immune from highly publicized controversies, as Tyco recently learned. It named former New York State Comptroller and Democratic gubernatorial nominee H. Carl McCall to the board in March. Lately McCall’s been dealing with fallout at the New York Stock Exchange, where he chairs the compensation committee that has taken heat for chairman Dick Grasso’s controversial $140 million pay package. (Since CFO magazine went to press, McCall has resigned from the NYSE board.) —Kate O’Sullivan
Safety in Numbers
Never a company to do things on a small scale, Microsoft Corp. recently finished putting together a roster of nine new CFOs–one for each of its seven newly formed business units and two at the corporate level. Uber-CFO John Connors explained in a speech that the multiple roles were created as part of an effort to “really scale up the level of financial leadership.”
For a company that has traditionally emphasized product development and marketing over financial management, the move acknowledges that Microsoft is no longer an upstart. Rob Helm, director of research at Directions on Microsoft, an independent research firm based in Kirkland, Wash., says the reorganization will bring more financial accountability to Microsoft. “Breaking the company into these seven businesses and publishing the results puts a certain amount of pressure on those managers.”
Seven of the new executives are Microsoft veterans, including Bruce Jaffe, corporate vice president of MSN and now CFO of the Internet-services provider. The two outside hires boast significant experience: Alain Peracca, now CFO of the Windows Client division, comes from Hewlett-Packard, and Ken Mueller joins the Business Solutions group after a stint at Apple Computer.
At the corporate level, Microsoft named insiders Alain Crozier to CFO of its Sales, Marketing & Services Group, and Eileen Johnston to CFO of the Operations & Technology Group.
The new CFOs will handle budgeting, performance tracking, and even acquisitions activity for their respective areas, which begs the question: What will Connors do? Likely he’ll have his hands full managing his finance chiefs. “It’s gotten beyond what one person can do,” says Helm. —K.O’S.
CFOs on the Move
Tom Arndorfer has been named VP and CFO of Nike USA. He was formerly controller of the global footwear unit of Nike Inc…. Linda Huber was appointed CFO of U.S. Trust Corp. The former managing director of Freeman & Co. succeeds Evelyn Dilsaver, who is now SVP of marketing, asset-management products and services, at Charles Schwab & Co…. Boston Beer Co., distributor of Samuel Adams beer, has tapped William Urich as CFO. The former CFO of Acirca, an organic food and beverage company, succeeds Richard Lindsay, who resigned in March.