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Tag >> career/management
New federal sentencing guidelines from the Department of Justice have cast a spotlight on the question of whom a Chief Compliance Officer should report to. Unfortunately, the guidelines themselves, which are used by judges to sentence those convicted of crimes, provide little guidance. And the result could mean that the CCO reports to several different individuals, which could lead to confusion or even conflict over compliance. But experts say that may be the price companies need to pay to make sure the CCO's voice is heard.
The guidelines amended by the DoJ in April merely state that the individual or individuals with day-to-day operational responsibility for a company's compliance and ethics should have direct reporting obligations to what they call "the governing authority or an appropriate subgroup thereof."
First there was say on pay, now it's say on severance...maybe.
The Senate conferees trying to hammer out a massive financial overhaul bill have seemingly agreed to include a House supported provision that would give shareholders an advisory vote on golden parachutes, according to Dow Jones.
There's no shortage of drama at KV Pharmaceutical. Last week Chairman Terry Hatfield, Stephen Stamp, who was named CFO April 13, and board member John Sampson quit, citing "serious concerns" about newly elected board members and senior management.
The previous week, immediately following the company's annual meeting, the newly elected board ousted interim President and CEO David Van Vilet, who had been in charge since December 2008.
More than half of companies today cannot immediately name a successor to their CEO should the need arise, according to new research conducted by executive search and leadership consulting firm Heidrick & Struggles and Stanford University's Rock Center for Corporate Governance.
"The lack of succession planning at some of the biggest public companies poses a serious threat to corporate health, especially as companies struggle toward a recovery," said Stephen A. Miles, vice chairman at Heidrick & Struggles in a prepared statement. "Not having a truly operational succession plan can have devastating consequences for companies - from tanking stock prices to serious regulatory and reputational impact."
As everyone knows, incentive compensation is a two-edged sword: Such pay can incentivize the wrong as well as right type of risk taking. That is, the prospect of a bonus may motivate employees to game the numbers instead of improving a company's actual returns. The latter is obviously a plus for a business, the former a negative to the extent it fools management into overpaying for poor performance.
Now a new study shows the risks of such compensation schemes is greater than the rewards.
Governance activists have argued for years that companies are better off when a majority of their board members are outsiders.
And in the aftermath of the accounting scandals at the beginning of the millennium, listing standards on US exchanges were changed to require boards contain a majority of outside directors. In addition, Section 407 of the Sarbanes-Oxley Act required public companies to disclose whether their audit committees include at least one member who is a financial expert, and if so, whether the person is "independent" of management.
A majority of CFOs are sharing the pain of their rank and file...sort of.
According to a new comprehensive survey, more than half of all finance executives (57 percent) said they did not receive a salary increase in 2010.
The financial reform bill passed by the Senate would do a lot more than require a say on pay from shareholders. And its other provisions could do much more to limit excessive compensation for top management, experts say.
The Restoring American Financial Stability Act of 2010, recently approved by the Senate and now part of conference committee discussions with the House, would not only provide for a shareholder vote on executive compensation disclosures, which is non-binding in any case. The bill would also require that each member of the company's compensation committee be an independent member of the board.
Hurdle rates and other metrics based on a company's cost of capital go only so far in making investment decisions, as every CFO knows. That means effective allocation requires at least a bit of gut instinct. But how to apply it?
Contrary to some notions, instincts of this sort are not uninformed, knee-jerk reactions, most experts say. Instead, they reflect an abiding knowledge that needn't be brought consciously to bear on a decision but instead can be relied on without second thought. But what's the difference?
What will cost CFOs' the most sleep in the second half of the year? Risk experts say corruption abroad, information security and government regulation are most likely to keep you awake.
The US isn't the only country cracking down on bribery and other forms of corporate corruption in foreign markets. Consider the UK, where a new law takes effect later this year. Like the Foreign Corrupt Practices Act of the US, it applies to any company doing business in the country, but the UK law is broader and easier to trigger, experts say.