The golden years will still be golden for some

While companies have been busy closing, freezing or even terminating defined benefit (DB) plans for employees, there is one group that still seems to have a guaranteed retirement package awaiting them: CEOs at Standard & Poor’s 500 companies. According to watchdog group The Corporate Library, at least half of the S&P 500 CEOs—some 258 chief executives—are in line to receive about $2.6 billion worth of DB retirement payouts. That’s an average of $10.1 million each—and the numbers may even be higher.

The information is based on reviews of proxy statements from 353 member companies of the S&P 500. In April, these companies—all with fiscal years ending December 31, 2006—had to comply with new Securities and Exchange Commission rules forcing more transparent disclosure on executive compensation. Those that operate on non-calendar fiscal years will reveal the detailed information in coming months, so the numbers of both CEOs and the amount they are eligible to receive will almost inevitably rise.

Much of this generous DB disbursement comes in the form of pension-like Supplementary Executive Retirement Plans. SERPS, which are entirely funded by the corporation and don’t include equity contributions, are less regulated than traditional pension plans. They also carry higher caps, so companies can lavish even more benefits on executives than otherwise allowed.

Topping the list of CEOs in line for big DB payouts are three who resigned in the past year: William W. McGuire of UnitedHealth Group Inc., who is eligible for a lump sum payment of $91.3 million even though he resigned under pressure over alleged stock option irregularities; AT&T Inc.’s Edward E. Whitacre, who accumulated a DB payout of about $84.7 million, while delivering solid returns for shareholders; and Henry A. McKinnell of Pfizer Inc.—who left after Pfizer’s shares fell 40% in five years while the company struggled to develop new drugs—is set with $77.1 million. It is “ironic” that compensation committees provide retirement income “primarily to those CEOs most likely to have amassed sufficient wealth during their lifetime to make any pension somewhat superfluous,” observes Corporate Library senior research associate Paul Hodgson.

But will this additional transparency force companies to pull back? As in the past, shareholders may show little concern about how much top executives are pocketing if companies—and their shares—are doing well. But already, experts report that executive DB payouts are increasingly under attack, particularly at troubled companies, and are slowly declining in number and size.

CEOs at small and mid-cap companies are also less likely to take home big DB packages. The Corporate Library reviewed 1,829 proxy statements filed in April and only 37.35% of mid-cap and 26.87% of small-cap companies offered their CEO a DB plan.

But reports Janet DenUyl, a worldwide partner at Mercer Human Resource Consulting, don’t expect SERPs and their kind to disappear any time soon. “Companies need incentives to recruit CEOs and they can’t always use equity,” she says.

Article found in Benefits, Retirement Plans

Business Objects places a bet on the synergy of structured and unstructured

While business intelligence (BI) providers have carefully been testing the premise that structured and unstructured information collection and analytics should be merged, none have taken the plunge—until now. That’s changed with the recent announcement by Business Objects that it plans to acquire Inxight Software Inc., a text mining software provider. Inxight offers software that allows companies to glean information from such unstructured text sources as e-mails, a variety of documents, notes fields and Web content, which according to some estimates makes up 80% of all organizational data. Using linguistic analysis and algorithms, Inxight’s software is able to detect patterns, trends and such identifiable items as people, places and things and tag and quantify those items for analysis. “This is the first time that a pure BI vendor has placed a bet on unstructured information—and particularly unstructured analytics,” notes Forrester Research analyst Matt Brown who follows BI software providers.

The acquisition marries Business Objects’ structured BI capabilities with Inxight’s unstructured data mining software and, observes Forrester’s Brown, essentially validates the proposition behind convergence of BI applications relying on both structured and unstructured data. With this new approach, a customer segmentation analysis for a marketing campaign in the future could combine structured BI data such as balances, transactions and demographics together with customer comments and complaints made via e-mail or voicemail. “It’s one thing being able to present a dashboard that shows a particular structured data report next to a set of search results around an event,” says Brown. “It’s another thing to be able to analyze those results. Inxight is really the leader around analytics.”

Aside from such traditional BI strongholds as financial analysis and marketing, the merger of structured and unstructured could lead to improved applications in the areas of fraud detection, risk management, quality improvement and other information intensive initiatives, remarks Brown. By automating manual discovery work, BI and text analytics should reduce the burdens of compliance and fraud detection. The combination is also expected to help discover and manage communications risk in highly regulated industries, such as healthcare or financial services, where organizations may need to intercept potentially dangerous communications before they leave the enterprise.

For this reason, Inxight has already done well in selling to such regulated sectors. Additionally, the company has developed a niche business around warranty claims analysis, remarks Brown. But while text analytic tools historically have had success in niche markets, they have not reached a mainstream audience. Brown points out that unstructured data software provides its greatest value when it can be plugged into a broader platform for doing analysis, and “Business Objects has a big captive audience of BI buyers, typically of power users, and has the potential of building a bigger market around these applications.”

So the potential—although as yet unrealized—is there. “The other thing that’s interesting is what sort of opportunities Inxight brings to Business Objects from their OEM [original equipment manufacturers] business,” adds Brown, who says that most of Inxight’s success has come from embedding its software in other enterprise search vendors’ products. Inxight gets embedded into other products like document management systems and content management systems, he notes. “All of that is good news for Business Objects.”

The deal between Business Objects, with $1.3 billion in revenues and dual headquarters in Paris and San Jose, Calif., and Inxight Software, a privately owned company based in Sunnyvale, Calif., with an estimated $25 million in sales, is expected to close in July.

People on the Move

Celestica Inc., the $8.8 billion provider of electronic manufacturing services, with headquarters in Toronto, appointed Paul Nicoletti CFO and executive vice president. Nicoletti, 39, has been serving as acting CFO since the retirement of Tony Puppi in March 2007. Nicoletti has assumed various roles of increasing responsibility and has been with the company since its inception. Prior to his role as acting CFO, he served as senior vice president of finance and, before that, as vice president of global financial operations.

United Components Inc. appointed Daniel J. Johnston CFO of the $1 billion supplier of automotive, trucking, marine, mining, construction, agricultural and industrial vehicle replacement products, based in Evansville, Ind. Johnston, 49, comes to UCI from Solae LLC where he most recently served as CFO and vice president. Prior to that, he spent over 10 years in senior financial and operational roles at United Industries Corp.

Circor International Inc. has announced that Kenneth W. Smith, CFO and senior vice president of the $591 million provider of valves and fluid control products, plans to retire at the end of the year. Smith, 56, has served as CFO of the Burlington, Mass.-based company since 2000. The company is now beginning a search for Smith’s replacement to ensure a smooth transition prior to his departure.

Neomagic Corp. named Steve Berry CFO of the $572 million company, which develops low-power solutions for multimedia-rich mobile telephones and other handheld devices. Berry, 47, replaces interim CFO H. Robert Newman. Berry comes to the Santa Clara, Calif.-based company from Sipex Corp. where he served as vice president of finance. Earlier, he was vice president of finance at Brecis Communications. Berry began his career as a public accountant at Ernst & Young LLP.

Silicon Storage Technology Inc. named James R. Boyd CFO of the $430 million designer, manufacturer and marketer of memory and non-memory products for high-volume applications, based in Sunnyvale, Calif. Boyd, 53, replaces acting CFO William R. Kinzie. Boyd comes to SST with more than 30 years experience, having served most recently as CFO of ESS Technology Inc. He has also served as CFO of Gatefield Corp., and he has held a variety of financial positions with Fortune 100 firms as well as start-ups.

Article found in Careers

Getting the government to pay its bills just got easier

While the government doesn’t like to be kept waiting for money that’s owed to it, it’s a very different story when it comes to paying what it owes. But now enterprise software provider Deltek Inc., based in Herndon, Va., has released Deltek Costpoint 6, which is designed to shorten the billing cycles for project-oriented government contractors, while meeting stringent government guidelines. “We’ve added literally hundreds of enhancements to Costpoint 6,” says Matt Fogo, Deltek’s senior vice president of product development. “These enhancements can be broken down into three categories: strengthened controls; compliance; and ease-of-use.”

Costpoint 6, which is a package application, provides 165 out-of-the-box Sarbanes-Oxley reports that help streamline compliance efforts. It offers a new audit trail module, which provides strong, effective controls to monitor and audit access to sensitive data. Costpoint 6 provides a full segregation of duties module to prevent innocent errors as well as deliberate fraud. And Deltek has added a number of screens such as quick requisition and quick project screens, which make the application simpler to use.

The application also offers new and enhanced billing, forecasting and cash management capabilities, including: wide area work flow (WAWF), which supports e-billing in compliance with Department of Defense (DoD) requirements to eliminate paper; billing enhancements such as accounting classification reference numbers (ACRN) and General Services Administration (GSA) schedule support; enhanced cash forecasting providing what-if cash forecasting scenarios; multi-currency consolidations; an integration console, which allows reports and processes to be shared, thus providing real-time integration with third-party applications; accrued leave journal entry, which automatically records the financial liability of employees’ accrued leave to capture leave costs and post them to the general ledger; and a master production scheduling module that helps manufacturers plan and align production processes with customer requirements.

“As we move increasingly towards a service-based world, project-based management software [like Costpoint 6] becomes much more relevant,” says Forrester analyst Ray Wang, who adds that most enterprise applications are designed for the world of widgets, not for the needs of knowledge-based professionals and managers.

While Deltek is a leading applications developer for government contractors, Fogo emphasizes Costpoint 6 is suitable to any project-oriented commercial organization. “We can automatically allocate any indirect rate scenarios in our system—those fringe costs, overheads, anything in support of your operation or project. We can allocate proportionately so that you have total cost ownership, hence visibility into what something really costs and what your real profitability is on a real-time basis.”

Deltek, with $228.3 million in revenues, is privately held; New Mountain Partners, a private-equity group, owns 74% of the company.

Article found in Tools

How sure are you about your outsourcer’s governance?

EquaTerra, an outsourcing consulting firm, which is based in Houston and London, has introduced Governance Healthcheck, a service designed to enable outsourcing buyers and their service providers to identify and fix governance problems. EquaTerra provides advisers and customized templates and scorecards that both clients and their outsourcing vendors work with.

Recent research has suggested that as much as 20% of the value of an outsourcing relationship can be lost because of ineffective governance, which would make the prevention and remedy of such problems somewhat key to outsourcing success.

Governance Healthchecks are performed biannually to ensure that corrective actions are being followed and assess the overall health of the outsourcing relationship. Governance Healthcheck’s objectives are to identify the root of the dissatisfaction, realign expectations, secure commitment to high-priority actions and create a process that tracks improvement. Says Stan Lepeak, managing director of research at EquaTerra: “The goal is to proactively identify the problems and address them before the deal is ruined.”