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More on the Melodrama at Universal Health

Company dumps CFO in favor of its auditor; flap reportedly hinged on who was responsible for certification numbers. Plus: pay gap between men and w...
Lisa YoonFebruary 19, 2003

As reported Tuesday, hospital operator Universal Health Services Inc. ousted CFO Kirk Gorman and replaced him with controller Steve Filton.

The company maintained that the integrity of its financial statements was not a problem. But investors appeared alarmed, sending the stock price plunging 21 percent the day after the announcement.

According to Universal Health’s management, Gorman was replaced because of a disagreement between Gorman and the company’s auditors, KPMG, over who should take command of reviewing the company’s finances. Interim CFO Filton emphasized in an interview with Reuters that it was not an issue of Gorman’s financial decisions, but rather what he believed his job encompassed.

“Kirk was saying, ‘I’m the CFO, I’m responsible, but you need to know that as part of that responsibility, I rely on a number of different sources, and one of them is KPMG,”‘ Filton told Reuters. “I think there was some push-back from KPMG … as he was pushing some of his role off on them, they were pushing back,” he added.

As the disagreement worsened, Universal Health reportedly feared KPMG would refuse to sign off on the company’s results if Gorman had remained CFO, Filton said. So they ousted Gorman.

Gorman, one of the most communicative CFOs in health care, was well regarded on Wall Street. Apparently, analysts at Merrill Lynch and UBS Warburg are eyeing the company with caution until more information about the departure comes to light. One Merrill Lynch analyst, for example, wrote in a research that the investment bank plans to wait and see “until several relatively clean quarters are posted.”

Referring to that note, Filton told Reuters, “If people need a couple of clean quarters going forward, they will get a couple of clean quarters.”

Salary Gap Between Men and Women Narrows
The bad news: according to new figures from the Bureau of Labor Statistics, full-time female workers earned 77.5 percent of what their male counterparts earned last year.

The good news: that’s the smallest earnings gap between the sexes on record. It’s also an improvement from last year, when the gap was 76 percent in 2001. By comparison, the gap was only 77.1 percent in 1993.

The median full-time female worker got a 5 percent raise in her weekly pay last year, while the median pay for men rose only 1.3 percent. The wage gain by women may be attributed to the fact that millions of women work in government and health care, according to the New York Times. Those are two sectors where jobs — and pay — increased.

Another reason for the narrowing gap could be the recent rise in the number of women who belong to unions, says the newspaper. Things may be improving for women in the U.S., but American women still lag behind other women in the world, the Times noted. Women earn approximately 90 percent of what men do in Australia, Denmark, and Spain, according to the Organization for Economic Cooperation and Development.