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Throwing In the Towel

Outback's CFO is mad as hell, and he won't take it anymore; a rogue trader's new job; and CFOs on the move.
CFO Staff, CFO Magazine
June 1, 2005

He's mad as hell, and he's not going to take it anymore.

While many CFOs are feeling frustrated these days, few have expressed it as publicly as Robert Merritt, CFO of Outback Steakhouse Inc., the $3.3 billion restaurant chain. At the end of the company's first-quarter earnings call, Merritt announced that he would be retiring effective May 27, blaming the "increasingly negative regulatory environment" and the "recent lunacy over lease accounting" in a startlingly candid statement. Outback, with nearly 900 steakhouse locations and seven other restaurant concepts, was recently 1 of some 150 companies to restate financials because of a change in the rules for lease accounting.

Merritt, just 53 years old, says he has been thinking about retiring for more than a year. "I used to enjoy coming to work every day, working with restaurant operators to improve results," he says. "Now I find myself coming to work to sit in meetings and talk about compliance." In his statement, the CFO also decried "the growing presumption that all businesspeople are dishonest."

The departure is a big loss for Outback, which installed a new chief executive and a new chief operating officer in March. "Mr. Merritt is regarded as among the strongest CFOs in the industry," wrote Banc of America Securities analyst Andrew Barish in a recent research note. "Finding a similar caliber replacement will not be easy."

Equity analyst Hil Davis, who covers the restaurant industry for SunTrust Robinson Humphrey, says Merritt is not alone in his dissatisfaction. "A lot of CFOs have told me that they don't feel like they are strategic thinkers anymore," he says. "They're not making strategic capital-allocation decisions, they're really just trying to follow the rules."

Merritt, who had worked at Outback since 1989, says his announcement was greeted with an outpouring of support from his peers. "I have gotten so many E-mails and voice mails from finance people and others saying how much they agree with me and that it's about time somebody said something," he says.

Since announcing his retirement, Merritt has discussed multiple board seats with contacts and is considering a few other opportunities. "None of them includes being the CFO of a public company," he says. —Kate O'Sullivan


Bend It Like Leeson

The man who single-handedly brought down Barings Bank has a new job: managing a professional soccer team.

Nick Leeson, the derivatives trader who broke Barings in 1995 by losing $1.4 billion on the Singapore stock exchange, will now try his hand at running the business operations of Galway United Football Club, a first-division soccer club in western Ireland.

According to John Fallon, chairman of Galway United, the team's board of directors believes that Leeson can help the club develop. "The Board's confidence in Nick Leeson delivering on [a series of commercial initiatives] is the reason he has been appointed to this position," said Fallon in a statement released by the team. As the commercial manager of the club, Leeson will likely oversee merchandise and ticket sales, broadcasting rights, and the financial side of players' contracts.

"Life has moved on for everyone since the happenings of 10 years ago," said Fallon. "The primary concern here is the future strong development of Galway United FC."

The 38-year-old Leeson said in a statement that he looks forward to the new role, and that he has moved on from his past. Let's hope so: in the 10 years since Barings collapsed, Leeson has served 4 years in a Singapore jail, survived colon cancer, written a book (Rogue Trader), divorced, and remarried. Surely he's learned something about risk management by now. —Laura DeMars


CFOs on the Move

Microsoft has hired a new CFO from outside the software industry, naming Chris Liddell to the top finance job. Liddell replaces longtime CFO John Connors, who joined a venture-capital firm in January.... Cardinal Health continues to revamp its executive suite, adding Jeffrey Henderson as CFO last month. Henderson was formerly president of Eli Lilly Canada and had been corporate controller at the company....J. Pedro Reinhard will hand over CFO duties at Dow Chemical after 35 years with the company when he turns 60 this year. Alcan finance head Geoffrey Merszei will join Dow to replace him.... El Paso Electric has elevated Scott Wilson to the top finance job from his current position as controller.




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