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Fast-food changes; SEC sweep in the Wild West; falling at the Gap; and more.
CFO Staff, CFO Magazine
November 1, 2000
Burger King Corp. is not having its way. Not only did the hamburger giant lose its CEO, Dennis Malamatinas, to Priceline.com in August, but now its CFO, Colin Heggie, has sped away from the drive-thru window to become EVP and finance chief at Fitness Holdings Worldwide, in San Francisco.
Burger King spokesperson Kim Miller says Heggie's departure stems from the fact that the five-year BK veteran was seeking "new challenges."
Nevertheless, the revolving executive door has taken its toll on the company, a unit of London-based Diageo Plc that operates 11,180 Burger King restaurants worldwide. The recent exits may have thrown a wrench into an initial public offering that the company was hoping to complete sometime next year.
Says Mark Kalinowski, restaurant analyst for Salomon Smith Barney, "Burger King faces some challenges before it can pull off the IPO." Kalinowski admits that the company not only needs more consistent marketing and better relations with its franchisees, but it should also put a halt to the high management turnover. "BK would definitely perform better with more stability in the office," he says.
Following Malamatinas's departure, Diageo called for stronger sales from the Miami-based company, which soon enlisted the help of former Guiness (also part of Diageo) executive Colin Storm, placing him in the interim-CEO position.
The search for a permanent CEO continues, however, and could further delay the IPO. But, says Burger King's Miller, "The new CEO needs to be able to handpick his CFO."
A Time to Be CFO
Trent Shute, 45, will be spicing up the CFO office at New Yorkbased mySeasons. Before joining the gardening resource E-commerce site, Shute served as VP, finance, and controller for Danisco-Cultor Ingredients. He replaces Robert H. Thomlinson Jr., who left to join Forbes.com.
Mel Robinson, 45, is checking in at Hotel Reservations Network Inc., headquartered in Dallas. Robinson succeeds the resigning Jack Rubin at the online provider of discount hotel accommodations. Before joining Hotel, Robinson was SVP at Travel Services International Inc.
A New CFO on the Horizon
Could Russell Gibson launch a thousand ships? Helen of Troy Ltd. seems to think so. The El Paso marketer of personal-care products chose Gibson as CFO, replacing Dona Fisher, who resigned to pursue other interests.
Send William F. Shea a bouquet for taking on the role of CFO in addition to that of treasurer at 1-800-Flowers.com. Shea takes over for John Smolak, who departed from the Westbury, N.Y.-based Internet gift retailer in August.
Seattle-based Nordstrom Inc. lost corporate CFO Michael A. Stein and divisional CFO Darren Jackson after the fourth generation of Nordstroms took over management of the public company from non-family CEOs.
Stein "is leaving ... so that [president] Blake Nordstrom can select his choice for that position," said a Nordstrom press release, which also announced the resignation of CEO John Whitacre.
Observers say Stein was hired to bring financial discipline to a retailer known for its extravagant customer service. "The previous generation of Nordstroms was wary of having managers just look at the numbers," says Robert Spector, author of The Nordstrom Way: The Inside Story of America's #1 Customer Service Company. "But you can take that idea for only so long." One analyst says Stein was "the lone source of adult supervision at a company that had a lack of control."
Darren Jackson, CFO of Nordstrom's full-line division, left following Pete Nordstrom's appointment to president of the division in September. Jackson, now SVP of finance and treasurer at Best Buy Co. in Minneapolis, wouldn't comment on Nordstrom directly, but said, "Ultimately, if [retailers] can't make money at the end of the day, that is a clue from the customer."
The bad guys better take cover. On September 25, the Securities and Exchange Commission filed 11 enforcement actions for fraud and related financial accounting and reporting abuses against six West Coast companies. While not all were tech firms, "this is an effort to send a message not just to Corporate America, but also to Silicon Valley, about the importance of complying with accounting principles and not playing fast and loose with the rules," says David Levine, senior adviser to the director of the SEC's Division of Enforcement.
Playing with the rules is what attracted attention to Seattle-based YourBankOnline, which the SEC says bought a software program for $10 million in cash and stock. SEC officials say the company had only $138 in cash at the time, and the company that sold the software bought it six months earlier for only $400,000.
"In many cases, we find that CFOs are right in the middle of this misconduct," says Robert Mitchell, at the SEC's San Francisco district office. Former CFOs named in the suits include Richard A. Gerhart of L.A.-based Sirena Apparel Group Inc., Donna M. Richardson of L.A.-based Craig Consumer Electronics, Inc., John Daws of Santa Clarabased Cylink Corp., and Michael L. Hiebert of Premier Laser Systems Inc., of Irvine. Both Gerhart and Richardson could face serious prison time if convicted, say officials.
Non-techs are finding trouble, too. Mitchell's office and the U.S. Attorney's Office filed civil and criminal actions in September against Jay P. Gilbertson, former CFO of HBO & Co., for fraud exposed during the merger that formed McKesson HBOC.
Charles Ream's ship has come in. Ream, 56, former SVP of M&A at Raytheon Systems Co., will serve as SVP and CFO at Newport News Shipbuilding Inc., in Newport News, Va. The spot at the nuclear-powered aircraft carrier and submarine maker has been vacant since December 1999.
Universal Orlando is pleased to present its latest attraction, new EVP and CFO Mike Short. Short joins the Orlando-based theme park from Seagram's Inc., where he served as VP, strategic planning, mergers and acquisitions. He replaces Gil Schneider, who has become an adviser to the CFO at Seagram's. Schneider once held the CFO position at Seagram's.
Every CFO'S Vantasy
All set to dive into the newly created COO spot at Foster City, Calif.-based Webvan Group Inc. is the company's CFO, Robert Swan. Swan, who has been with the Internet grocer since February, continues as CFO. Webvan is conducting an external search for his successor.
The CFO of Gap Inc.'s Old Navy division has joined the stream of high-level execs leaving the clothing retailer. Charles Ferer, who joined the company in August 1999, left in September, although a company spokesman wouldn't say exactly when. Asked why Ferer left, the company offered the boilerplate: "To pursue other interests."
There's a lot of that at Gap these days. Also pursuing other interests is Gap's former EVP for marketing, Jim Nevins.; SVP of real estate, Scott Olivet, who left after a realignment of the company's real estate operations; and Richard Crisman, EVP of marketing for Old Navy, who chose in September not to return from a medical leave.
Other interests aside, some of the departures may relate to a company announcement that same- store sales were down 8 percent in September. Coupled with its stock's nosedive, which hit 18.5 on October 12, down from 53 in February, conditions are ripe for a housecleaning. Is Gap CFO Heidi Kunz next?
"I don't think any of this bodes ill for Heidi," says Barbara Miller, an equity analyst with Goldman Sachs in New York. "I think that a lot of the challenges Gap has encountered have to do with merchandising and marketing. The CFO is involved in those to the extent that there are budgets involved, but if you dissect the challenges, it would be more marketing and the financial ramifications of those challenges."