Straight Talk Key to CFOs’ Success

Withholding information puts reputations and stock prices at risk.

Even as the financial crisis makes effective shareholder communications a matter of life and death for some companies, straight talk is in short supply. “CEOs and CFOs can’t just be cheerleaders saying everything is going well. The investor community is too sharp and has too much information for that,” says Chris McClean, an analyst with Forrester Research. “Investors want to hear that executives understand their business, what’s going on in the market, and how they are positioning the company for sustainable success.”

Indeed, poor communications accounts for five of the 10 most common executive errors, according to a recent Thomson Reuters study. The study—which reflects client feedback, news stories and discussions with clients—blames CFOs for:

• Failing, out of ignorance, to promote a corporation’s strengths.
• Ignoring, out of fear, legitimate inquiries from aggressive hedge funds and activists.
• Jeopardizing credibility by tailoring their message to just one group of investors.
• Jeopardizing their company’s stock by providing minority shareholders with less than timely access to management.  
• Mishandling corporate earnings guidance.

Providing quarterly guidance is tricky, says Arzu J. Cevik, director of Thomson Reuters Strategic Research and co-author of the study, because “it may attract short-term investors and thus increase volatility in a stock,” she says. However, “guidance may provide more transparency, liquidity and stability in one’s stock and deter accounting-relating fraud.”

The temptation is to provide investors with low earnings estimates, even though the CFOs believe their companies will exceed those levels. But the study warns that under-estimating and over-delivering consistently runs the risk of investors and analysts raising their own earnings estimates to compensate, as well as puts a CFO’s credibility and reputation on the line.

Some prefer not to issue quarterly guidance in order to avoid the volatility that comes from speculation on whether the company will meet or exceed expectations. However, the study points out that a sudden halt to issuing guidance also might cause instability if retail or institutional investors interpret this as a sign of problems.

Keeping Track of Finance Executives

Heidi Manes, Robert Kuhn, Sean Wirtjes, John Howe, Kurt Harrington

Heidi Manes takes on the role of interim CFO at Levi Strauss & Co., the $4.3 billion apparel manufacturer and retailer based in San Francisco. Manes, 36, succeeds Hans Ploos van Amstel, 43, who resigned to pursue other opportunities. Manes has been vice president, controller and principal accounting officer since February 2006. She served as assistant controller from May 2004, as controller of Levi Strauss North America from July 2003 to May 2004 and as assistant controller of Levi Strauss North America from August 2002 to July 2003. Previously, Manes was a senior manager at KPMG LLP.

Robert Kuhn moves up to executive vice president and CFO at the AptarGroup Inc., the $1.9 billion maker of pump dispensers for personal care products based in Crystal Lake, Ill. Kuhn, 46, replaces Stephen J. Hagge, 56, who resigned as CFO but will remain executive vice president, COO and secretary. Kuhn joined the company in 1987 and has served as vice president of financial reporting since 2000 and controller of the beauty and home segment since 2006.

Sean M. Wirtjes moves up to vice president and treasurer at Varian Inc., the $920.6 million maker of scientific instruments and equipment based in Palo Alto, Calif. Wirtjes, 37, replaces G. Edward McClammy, 58, who will continue to serve as senior vice president and CFO. Wirtjes joined the company as controller in 2004 and added vice president to his title in 2006. Replacing Wirtjes as controller is Robert W. Dean, 42, who joins the company after 17 years with Applied Materials, a semiconductor equipment company, where he held various accounting and finance positions.

John R. Howe moves up to executive vice president and CFO at The Cato Corp., the $846.4 million specialty retailer of women’s apparel based in Charlotte, N.C. Howe, 46, replaces Thomas W. Stoltz, 47, who resigned in April to become CFO at a privately-held sports apparel online retailer. Howe joined the company in 1986 as a field auditor and has since served in many financial roles, most recently as assistant controller from August 1999 to June 2007 and as senior vice president and controller from June 2007 until his promotion.

Kurt R. Harrington has added the title of chief accounting officer to executive vice president, CFO and treasurer at Friedman, Billings, Ramsey Group Inc., the $687 million real estate investment trust (REIT) based in Arlington, Va. Harrington, 55, takes over from Robert J. Kiernan, 43, who will continue to serve as senior vice president, controller and chief accounting officer at subsidiary FBR Capital Markets, which provides investment banking, institutional brokerage and fee-based asset management services to corporations, institutions, and wealthy individuals..

Wallstreet and Reval Team to Hedge Your Risks

Clients can expect best-of-breed solutions for complex hedges.

Wall Street Systems and Reval are partnering to provide corporations with a broader range of automated hedge accounting systems to meet ever increasing regulatory requirements. While some large companies already use the Wallstreet line of treasury, trading and settlement systems in conjunction with Reval's financial risk management products, this new arrangement will provide our clients with a choice of solutions for hedge accounting, says Joergen Jensen, Wallstreet's director of corporation solutions.

“This lets us concentrate on what we do best while giving some of our most demanding clients the best-of-breed solutions they want,” says Jensen. That way users won’t have to mess around with clumsy external workarounds, he says.

Wallstreet will still provide high-performance solutions for hedge accounting but will partner for more complex requirements. This collaboration will help clients meet the growing demand of FAS 133, FAS 157 and IAS 39 accounting standards, he says.

“It didn't make sense to try to catch up with Reval,” says Jensen. “We were struggling to find the same caliber of experts for what would just be a part of our system.”

Reval's Web-based products, including HedgeRx, are delivered via software-as-a-service (SaaS)..