The ART of Transferring Risk

Once upon a time, in the not-so-distant past, a finance chief could tell the difference between an insurance policy and a derivative contract.It was really a no-brainer. An insurance policy was a signed agreement under which your company paid a premium. In exchange, the company got to transfer so...

By David Katz • Aug. 21, 2003

Casting for Returns

Last year, Bill Einhorn finally had enough. With 2002 drawing to a close, the $1.1 billion pension fund that Einhorn administers for the Teamsters union in Philadelphia was set to post its third straight year of lackluster investment returns up a measly 2 percent in 2000, flat in 2001, and down 5...

By Randy Myers • Aug. 19, 2003

Heal Thyself

Quicker than you can say “managed care is dead,” controversial new programs called consumer-directed health plans (CDHPs) are catching on —cutting employer costs while transferring to employees more responsibility for purchasing their own medical care.In fact, little more than a year after a July...

By Joseph McCafferty • Aug. 13, 2003

Cash-Balance Plans Hang in the Balance

Could this be the death knell for cash-balance defined contribution pension plans?Late last week, a U.S. district court judge in the Southern District of Illinois ruled that IBM’s revamped pension plan violated age discrimination provisions of the Employee Retirement Income Security Act.Under IBM...

By Stephen Taub • Aug. 5, 2003

Survey: Raises Small in 2003, 2004

It looks like it’s going to be a buyer’s market for labor a lot longer than many economists had anticipated.Indeed, the Labor Department reported late last week that 44,000 jobs were cut in July, the sixth straight month that jobs were lost from the economy.In addition, the workforce declined by ...

By Stephen Taub • Aug. 5, 2003

Roads Less Traveled: Nontraditional CFOs

Three years ago, Morningstar founder, chairman, and CEO Joe Mansueto and human-resources head Martha Dustin Boudos spent five long months interviewing external candidates to fill the CFO slot at the Chicago-based investment research products firm. Replete with accounting expertise, each was techn...

By Alix Stuart • Aug. 1, 2003

Bo Knows Finance

Everyone needs their CFO. That’s the gist of a quirky Southwest Airlines radio ad, featuring “Bo the CFO,” who rushes to the aid of clueless employees around the country (using Southwest’s affordable, last-minute fares, of course).Bo hops a flight after Lois in Los Angeles calls to ask, “Are acco...

By Tim Reason • Aug. 1, 2003

Change Is the Name of the Game

The telecommunications, pharmaceutical, and airline industries all have undergone wrenching changes in recent years. Ma and the Baby Bells cut the cord in the 1980s, but deregulation continues to have significant ramifications. Pharmaceutical companies, which once sold drugs to the doctors that d...

By Lisa Yoon • Aug. 1, 2003

Merger of the Minds

When it comes to mergers and acquisitions, finance chiefs can never have too much information.Just ask Danny Gampe, CFO of assisted living service provider LivHome Inc. The company’s first acquisition in February, says Gampe, he owes in part to being inundated with useful information at the UCLA ...

By Craig Schneider • Aug. 1, 2003

Good, and Good for You

Executives at Fairchild Semiconductor declared last month that the company would “get the lead out” — literally. The high-tech manufacturer is converting all its product-package coatings to lead-free finishes. Such measures “foster a clean environment and provide superior customer service,” said ...

By Marie Leone • Aug. 1, 2003

Going with the Flow

“Not knowing the cost of production is like not knowing your way to work,” bristles Alan Dunn, a lead instructor at the Industrial Relations Center for the California Institute of Technology (Caltech). Dunn, a proponent of activity based costing, says that a heavy reliance on profit measures is b...

By Marie Leone • Aug. 1, 2003

Custom-Tailored SOX

Despite the 40,000 or so words that make up the Sarbanes-Oxley Act (SOX), the language of the 130-page law can be maddeningly spare.Take Sec. 404, “Management Assessment of Internal Controls.” Corporations will spend more to comply with Sec. 404 that with any other section of SOX, according to Pa...

By David Katz • Aug. 1, 2003

Lasting Advice

The chief influence on Clayton Daley’s career was his dad. During evening walks as a teenager, Daley Jr. got an earful about the tribulations of the business world. His father’s frustration with the snack-food distributor he worked for — namely, its willingness to hire and fire so frequently that...

By Alix Stuart • Aug. 1, 2003

Ways and Means of Relieving Underfunded Pensions

On the heels of another report about underfunded pension funds, good news from Washington would be welcome — even at the expense of a little name-calling.First, the report. Among companies that sponsor traditional defined benefit plans, deferred costs — defined as costs not yet reflected in the i...

By Stephen Taub • July 21, 2003

Employers Look to Trim Fat

As any CFO knows, healthcare costs these days are pretty much detrimental to a company’s financial health. And as many employees know, companies have been asking workers to shoulder increasingly more of the bills. But lately, some employers are looking to workforce downsizing as a way to trim eve...

By Lisa Yoon • July 17, 2003

Command and Controllers

Ah, the delicious irony of it all.In the early Nineties, with the arrival of powerful financial and enterprise software, CFOs began shucking their roles as numbers cop. During that period, enlightened boards of directors began insisting that finance chiefs focus less on closing the books, less on...

By Marie Leone • July 14, 2003

What Employers Are Looking For

Ivy leaguers of the world, take note.A recent survey by Society of Human Resource Managers asked 286 randomly selected human resource professionals to rate the influence of a number of attributes in deciding who gets hired for jobs. The results seem to turn the adage “it’s not what you know, it’s...

By Ronald Fink • July 1, 2003

Pigging Out?

Think Social Security sets up intergenerational conflict? Try deferred compensation for top corporate managers. At financially strapped Delta Air Lines, in fact, a much-publicized dispute over the funding of special retirement plans for highly paid executives pits the company’s retired CFO agains...

By Ronald Fink • July 1, 2003

Write On

Glenn Schaeffer, president and CFO of Mandalay Resort Group, came to corporate finance only after testing his fiction-writing skills in the MFA program at the University of Iowa’s Writer’s Workshop in 1976. But in a class with such budding stars as T.C. Boyle, Allan Gurganus, Rita Dove, and Jane ...

By Alix Stuart and Ronald Fink • July 1, 2003

You’ve Got a Great Employer

In 1914, The Ford Motor Co. made an announcement that shook the industrial world. Henry Ford, inventor of the Model T and the company’s eponymous chairman, was going to start paying Ford factory workers the unheard of sum of $5 dollars a day. That daily rate was more than double the minimum wage ...

By Lisa Yoon • July 1, 2003

Expensing Options: Better Now Than Later

If you can’t beat ’em, expense ’em.That’s probably good advice for the anti-options-expensing set. In the days of FAS 123, when stock-options expensing was optional, companies and accounting experts engaged in vociferous debates over whether to expense or not to expense. But with the Financial Ac...

By Lisa Yoon • June 27, 2003

Eleven Commandments for Smart Negotiating

When the economy is strong, job seekers feel not only that they can negotiate, but that it would be foolish not to. When the economy is weak, however, many candidates wrongly feel that they have to accept what’s offered or risk losing the offer. Whatever the economic climate, what matters is how ...

By Lee Berton • June 25, 2003

Exec Comp Formulas Rejiggered

A number of companies — including General Electric, Delta Air Lines, and Verizon Communications — have started removing pension effects from executive compensation formulas. The reason? To ensure that executive bonuses don’t suffer because of a decline in plan returns, according to an article in ...

By Jennifer Caplan • June 19, 2003

Precious Resources

“People are our most important asset.” How many times have you heard that? More important, how many times, upon hearing it, have you nodded politely and then changed the subject to something more, ah, important?Human resources receives far more lip service than respect, but it may be about to get...

By Peter Krass • June 15, 2003

The Nascar Parallel

Looking for the perfect Father’s Day present? Dale Earnhardt Inc., the racing team founded by the late Nascar champion, has an idea: the Dale Earnhardt Tribute Concert at the Daytona International Speedway. The Web site is offering two-for-one tickets in honor of the old man.Whether or not you ta...

By Lisa Yoon • June 13, 2003