The Economy

Academia, and Other Assorted Nuts

College CFOs love their jobs, but apparently, many want to leave. Also: Kozlowski pays a hefty price, and FASB, IASB agree to try to agree.
John GoffSeptember 20, 2002

Disclaimer: While the entries in GW/BW are based on actual news items, some of the people, persons, and events in this article are fictional. Other stuff I just made up.

Please, no lawsuits.

1. College CFOs

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According to a recent survey of CFOs of four-year colleges and universities by Education Management Network, more than one-third of college finance chiefs are thinking of changing jobs. Of the 578 respondents, 35 percent are either looking for a new job now (17 percent) or plan to do so within a year (18 percent).

So why is this on the Good Week side of the ledger? Because the study also showed that vast majority of university finance chiefs really like their jobs. The average salary of all survey respondents was $127,484, with 24 percent earning between $150,000 and $250,000; 40 percent earn between $100,000 and $150,000; and 35 percent earn under $100,000. The average age of the survey group was 57. Nine out of ten of the respondents indicated they were “somewhat close” or “reasonably close” to paying off their student loans.

Incidentally, the pleasures of university life are not lost on private-sector finance chiefs. One recruitment expert says, post Enron, he’s observed an “increased number” of corporate CFOs moving to the non-profit world.

Those who do go back to school sometimes find themselves unprepared for the challenges of university administration, however. Says the executive placement specialist: “There’s much more sharing of information, a lot of committee deliberation, plus a fair number of sorority panty raids. You have to learn to delegate.”

2. Philip Oreste

Software maker BroadVision reported that Philip Oreste will replace Fran Barton as CFO. In case you’re keeping a journal: Oreste is the third CFO at BroadVision in 15 months.

Barton resigned to “pursue other interests” and will assist the company in a consulting role during the transition.

Oreste has more than 13 years of experience in finance and management, and has held executive positions at Intershop Inc. and Pacific Bell Internet.

An executive at BroadVision told GW/BW the company’s management hired Orestes because of his “wide range of finance skills and the lilting, almost lyrical quality of his name.”

BAD WEEK

1. Future Retirees

Future retirees will probably pay much more of their health care benefits — if not all — according to a study released this week by Watson Wyatt Worldwide.

Under plan provisions already adopted by many businesses, employers will pick up less than 10 percent of total retiree medical expenses by the year 2031, according to the study. Today, large employers typically pay more than 50 percent of total retiree medical expenses, the consulting firm estimates.

“The net result of skyrocketing medical costs and public policy has been to render retiree health benefits economically irrational,” says Sylvester J. Schieber, Ph.D., vice president and director of research at Watson Wyatt.”

In fact, 22 percent of the employers studied have already eliminated retiree medical plans for new hires altogether. Another 17 percent will require new hires to pay the full premium for coverage.

According to a recent informal poll conducted by GW/BW — we were in slacks — employers say there are a number of reasons why they’re limiting the health benefits of their elderly former workers. Respondents cited growing retiree populations, cost management concerns, and a general disinterest in anybody who can’t do anything for them.

Some employers are also limiting what their retiree medical policies cover. Experts say few companies cover well-care for retirees these days, and several large corporations have recently adopted policies capping coverage of exploratory surgery and out-patient therapy. Also, any procedure that involves a little teeny camera is right out.

2. FASB, IASB

On Wednesday, members of the Financial Accounting Standards Board and the International Accounting Standards Board met at FASB’s Connecticut office. At the meeting, the two standards-setting groups agreed to try to agree on agreeing.

Nearing the one-year anniversary of the collapse of Enron Corp., the heads of both boards have asked their staffs to look at 15 different accounting treatments and decide which organization has the better policy for handling those treatments. In addition, a joint task force of the two boards are reportedly looking into which is clearer: “What’s for pudding?” or “What’s for dessert?”

The boards will then make a formal decision on how to proceed following public comment.

The goal: to agree, by 2005, to hold another meeting in Connecticut, which is awfully nice in the summertime. In addition, the two groups issued a press release stating they were currently examining the accounting repercussions of KKRs’ leveraged buyout of RJR Nabisco and Chrysler’s acquisition of Plymouth.

3. L. Dennis Kozlowski

On Tuesday, current Tyco management issued an 8-K filing revealing that the company’s old management loaned former CEO Kozlowski nearly $33 million. Apparently, the loans were never repaid.

According to the 8-K, Kozlowski improperly borrowed nearly $30 million in non-qualifying relocation loans to purchase land and construct a home in Boca Raton, Fla. The filing also indicates that Kozlowski improperly borrowed about $7 million in non-qualifying relocation loans to purchase a cooperative apartment in New York City in 2000.

The most memorable paragraph of the more than 100-page document released by Tyco, however, detailed expenditures the company reimbursed to Kozlowski in the New York City apartment that he was given by the company. They included a shower curtain for $6,000; a dog umbrella stand for $15,000; a sewing basket for $6,300; a traveling toilette box for $17,100; a gilt metal wastebasket for $2,200; coat hangers for $2,900; two sets of sheets for $5,960; a notebook for $1,650; and a pincushion for $445.

As one board member told GW/BW: “This demonstrates an egregious lack of good judgment. The truth is, all of these items could have been purchased at Odd Lots — or any one of those Lot-type stores — for a lot less than what Dennis paid. Probably half.”