VideoFor the third time in less than a week, a company has hired a chief financial officer to become its new chief executive officer.
On Wednesday StorageNetworks Inc., a provider of storage-management software and services, named chief financial officer Paul Flanagan as the company's new chief executive officer and president, replacing co-founder Peter Bell, who resigned.
On Tuesday Argosy Gaming Co. tapped president Richard Glasier to succeed James B. Perry as CEO when Perry retires on May 2. Glasier joined Argosy last July after serving as CFO of Royal Caribbean Cruises Ltd.
And over the weekend, BHP Billiton, the world's largest diversified resources company, announced that its former chief financial officer, Chip Goodyear, will take over as chief executive officer.
Observers say the hiring of finance types as chief executives may be more trend than coincidence. With rock-solid accounting now a high priority for many companies—and a lightening rod for shareholders and regulators—financial expertise has become a much-sought-after skill in corporate boardrooms. Indeed, some boards appear to be specifically seeking out experienced finance executives to help lead their companies in the post-Sarbanes-Oxley world.
Flanagan, for instance, had served as StorageNetworks's CFO since March 1999. He was also named chief operating officer in April.
Flanagan will have his hands full at the company, however. In the press release announcing the CFO's promotion, the company's management also reported that it would be eliminating about 50 percent of StorageNetworks's workforce. That would bring the number of employees at the data-storage specialist down to 110.
Whether those job cuts help get the company back on track remains to be seen. According to CFO PeerMetrix, StorageNetworks's SG&A spend is equal to about 36 percent of the company's revenue—much better than the industry median of 45 percent.
Improvement in StorageNetworks's CMI (cost management index) score, however, has dropped a whopping 66 percent in the past four quarters.
"I look forward to the challenges inherent with these new responsibilities and to doing my best to help build value for our shareholders, employees, and customers," said Flanagan.
Scott Dussault, vice president of finance, will take over as CFO at the company. "Scott's public-accounting background and the experience he has gained in his tenure here make him extremely qualified to take over the role of CFO," added Flanagan.
Shareholders Sue Former Motorola CFO
On Wednesday four more investor groups filed lawsuits against former Motorola chief financial officer Carl Koenemann. The suits allege he misrepresented the nature of a contract with Telsim, a Turkish cellular phone system operator.
This brings to seven the number of shareholder suits that have been brought against Koenemann, who retired in April.
Specifically, the suits claim the former finance chief failed to disclose that the deal required Motorola to provide Telsim with $1.7 billion in vendor financing to purchase Motorola products, or that serious problems had developed in the companies' relationship.
According to the law firm Glancy & Binkow, the nature of the Telsim deal was revealed in Motorola's March 29, 2001, proxy statement. The firm alleges that Motorola's subsequent quarterly Securities and Exchange Commission filing revealed that $728 million of the Telsim loan was past due.
"As a result of these false and misleading statements, the price of Motorola common stock was artificially inflated," another law firm, Schiffrin & Barroway, asserted in a press release.
SEC Names Niemeier Acting Chairman of Oversight Board
The SEC named Charles D. Niemeier as acting chairman of the new Public Company Accounting Oversight Board (PCAOB).
Niemeier was tapped one day before the PCAOB is scheduled to hold its first public meeting. The board is scheduled to be fully operational by April.
Established by provisions in the Sarbanes-Oxley Act of 2002, the PCAOB oversees the audits of the financial statements of public companies through registration, standard setting, inspection, and disciplinary programs.
Niemeier will serve as acting chairman until the commission selects a permanent replacement for William Webster, who resigned from the board late last year.
"We are delighted that Charley Niemeier has agreed to be the acting chair of this important board," said SEC chairman Harvey Pitt in a statement. "The Commission looks forward to working with Charley and all of the board members as they develop the board's programs and begin operations."
The statement must have been somewhat difficult for Pitt to compose. The SEC chairman tendered his resignation in November due to controversy surrounding the PCAOB. Apparently Pitt knew that Webster, his handpicked candidate to head up the board, had previously served on the audit committee of a company being investigated by the commission. Reportedly, Pitt did not relay that information to the White House.
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