Managing the Risk Manager

CFOs should look very closely at their corporate insurance buyers — and at how hard-nosed they are when it comes to negotiating cheaper, better-quality coverage — if the evidence heard at last week’s yearly conclave of risk managers is any indication.Risk managers like to portray themselves as sk...

By David Katz • April 28, 2005

The Ultimate Calling Plan

While SBC’s $16 billion acquisition of AT&T guarantees that 2005 will be a landmark year in telecom history, the more momentous development may prove to be the broad acceptance of Internet-based phone service. M&A activity has reached the point where no deal is truly shocking, even one th...

By Russ Banham • April 27, 2005

Two Sentenced in Enron Barge Deal

Two former Merrill Lynch & Co. executives involved in a sham transaction with Enron Corp. were sentenced Thursday, according to published reports.Daniel Bayly, who was head of investment banking, received 30 months in prison plus six months of supervised release, according to Bloomberg. James...

By Dave Cook and Stephen Taub • April 22, 2005

Outback CFO Resigns; Fires Parting Shot

Outback Steakhouse Inc. chief financial officer Robert Merritt announced his retirement during an earnings call on Thursday, blaming his departure on “recent lunacy over lease accounting, according to the Associated Press.Merritt pointed out that more than 150 companies have recently restated the...

By Stephen Taub • April 22, 2005

Coke Probes Completed by SEC, DoJ

The Coca-Cola Co. announced that it has reached a settlement with the Securities and Exchange Commission relating to its failure to disclose certain end-of-quarter sales practices used to meet earnings expectations at its Japanese unit.Separately, the Atlanta-based soft-drink giant announced that...

By Stephen Taub • April 19, 2005

Enron Broadband Trial Begins

Jury selection begins today for five former employees of Enron Broadband Services (EBS). Two of them are former finance executives, and another was a finance executive earlier in his career; none of the names are likely to be familiar.While Kenneth Lay, Jeffrey Skilling, and former Enron Corp. ch...

By Stephen Taub and Dave Cook • April 18, 2005

Stronger Challenges to Plurality Rule

Shareholders seem to think that nominated directors should receive a majority of votes cast in order to get the job.In this proxy season’s first two such resolutions — both of them nonbinding — 38 percent of Caterpillar shareholders and 48 percent of Gannett shareholders voted for those measures....

By Stephen Taub • April 18, 2005

Raytheon Offers Up CFO to SEC

Raytheon Co. announced that it placed chief financial officer Edward S. Plinef and an unnamed non-executive on leave as part of a proposed settlement with the Securities and Exchange Commission. Raytheon named vice president and controller Biggs C. Porter as acting CFO.The defense contractor, whi...

By Stephen Taub • April 18, 2005

Big Buyback Ends Kerr-McGee Proxy Fight

Kerr-McGee Corp. announced that it will buy back $4 billion of stock as part of an agreement to end a proxy fight with Carl Icahn and activist hedge fund JANA Partners LLC. The company also agreed to cut its dividend and sell some “shorter-life properties” in the Gulf of Mexico, the United States...

By Stephen Taub • April 15, 2005

Good Week/Bad Week: What’s the Frequency, Kenneth?

Disclaimer: While the entries in GW/BW are based on actual news items, some of the people, quotes, and hat sizes in this article are fictional. Other stuff I just plain made up.Please, no lawsuits.GOOD WEEK:1. Kenneth LayIn a filing Wednesday, attorneys for the Enron founder argued against the su...

By John Goff • April 15, 2005

What’s Next for Section 404?

Will Section 404 be scaled back?Two of the most powerful securities regulators seemed to hint as much at yesterday’s Securities and Exchange Commission roundtable, which discussed the demands of that Sarbanes-Oxley provision calling for companies to document their internal controls over financial...

By Stephen Taub • April 14, 2005

Finite Insurance: Beyond the Scandals

Not very long ago, the use of finite insurance looked much better than it looks today.For years before the current scandals at American International Group Inc., the arrangements were touted as a sleek way for a corporation to control its risk funding and shed liabilities from its balance sheet. ...

By David Katz • April 14, 2005

Greenberg Shifts $2.2B of Shares to Wife

Former American International Group Inc. chairman and chief executive officer Maurice “Hank” Greenberg transferred ownership of 41.4 million shares of the insurance company to his wife, Corinne P. Greenberg, according to a regulatory filing.The transfer, made four days before Greenberg’s ouster a...

By Stephen Taub • April 13, 2005

Specialists Charged with Illegal Trading

Federal authorities indicted 15 New York Stock Exchange specialists for using their inside positions to illegally earn about $20 million for themselves, reported the Associated Press.U.S. Attorney David Kelley asserted at a press conference that the 15 specialists at five firms cheated the market...

By Stephen Taub • April 13, 2005

SEC’s Goldschmid Revives Proxy Access

Harvey Goldschmid, one of the SEC’s two Democratic commissioners, seems determined that the Securities and Exchange Commission pass some form of proxy access rule before he steps down later this year.During a speech yesterday to the Council of Institutional Investors, according to Dow Jones, Gold...

By Stephen Taub • April 12, 2005

Spitzer on AIG: We Call It ”Fraud”

New York Attorney General Eliot Spitzer has turned up the heat on American International Group and its former chairman Maurice “Hank” Greenberg.Speaking on the Sunday television show “This Week,” Spitzer accused the executive who had built the largest insurance company of committing fraud. “That ...

By Stephen Taub • April 11, 2005

Insurance Broker Reaches $51M Settlement

Willis North America Inc. agreed to pay $51 million and end the use of contingent commissions as part of a deal to end investigations by the attorneys general of New York and Minnesota.Willis stressed that it is the only insurance broker to resolve these matters without the New York Attorney Gene...

By Stephen Taub • April 11, 2005

The Limits of Mercy

What happened to the kinder, gentler Securities and Exchange Commission? Less than four years ago, then-chairman Harvey Pitt wanted an agency that favored cooperation over confrontation. The SEC seemed headed in a business-friendlier direction, and critics feared that the agency would grow softer...

By Tim Reason • April 11, 2005

AIG: Papers May Have Been Swiped

The troubles continue at American International Group Inc. On Sunday, AIG president and chief executive officer Martin J. Sullivan sent a letter to shareholders, assuring them that AIG’s “unique global franchise is sound, our financial position is solid, and cash flow remains strong.”In the lette...

By Stephen Taub • April 4, 2005

Ford To Issue Climate-Change Report

Activist stockowners have struck again.Yielding to a shareholder resolution filed by environmentally-focused investors, management at Ford Motor Co. indicated that it would issue a report on climate change by the end of the year. The report will examine the business implications of greenhouse gas...

By Stephen Taub • April 4, 2005

A License to Print Money?

Are financial printers consistently exceeding the initial estimates they give clients? The answer seems to be yes — particularly for such transactions as initial public offerings, mergers, or debt offerings.Consider a few examples. When Alibris, an Emeryville, Calif.-based online bookseller, file...

By Don Durfee • April 1, 2005

Who’ll Stop the Rain?

Terrorists and hackers may spook corporate managers, but the forces of nature remain the biggest threat to the daily operations of most companies. It didn’t take much besides fallen trees, after all, to knock out electrical power throughout the Northeast two summers ago.To ensure that such an out...

By John Goff • April 1, 2005

AIG No Longer AAA Member

American International Group was booted from a very elite group Thursday when Standard & Poor’s lowered the insurance giant’s senior debt ratings to AA-plus, down from AAA.AIG had enjoyed its AAA rating for 22 years and had been just one of eight US companies to hold the top rating from both ...

By Stephen Taub • March 31, 2005

Buying Bias Coverage: Risk Doesn’t Discriminate

In 1999, Nicholas Koutrakos made a decision that may have seemed out of step with his peers. At the suggestion of his company’s insurance carrier, the CFO and co-owner of Call 4 Health/Health Care Answering Services expanded the company’s workers’ compensation policy to include employment practic...

By Marie Leone • March 31, 2005

AIG: Just Subtract $1.7 Billion

American International Group, Inc., whose accounting practices are being scrutinized by regulators, said it may reduce its shareholders equity by nearly $1.7 billion. The reason? Errors and changes in AIG’s accounting estimates and classifications.The embattled insurance giant also said that docu...

By Stephen Taub • March 31, 2005