CFO Studio Magazine - CFO Innovation Award Winners

BUSINESS & MONEY 24 WWW.CFOSTUDIO.COM 2nd QUARTER 2015 Join us in congratulating: James Mastakas Amneal Pharmaceuticals Thomas Crimmins B&G Foods, Inc. Peter G. Clifford Cantel Medical Why Boards Fall Short A ccording to the Harvard Busi- ness Review (Feb. 2015), of the 772 directors surveyed in 2013 about board effectiveness, only 16 percent claimed their boards had a strong understanding of the strategies and dynamics of their firm’s industries. Another survey of C-suite executives around the world revealed that 47 percent believed pressure from the Board of Direc- tors was most responsible for their organization’s “overemphasis on short-term value creation.”  Why these dismal statistics? The simplified answer seems to be threefold: A lack of expertise in the given field by members of the board; not enough time spent on long-term strategy; and too much emphasis placed on the demands of the investors.  The best boards are formed by acquiring custom-tailored expertise, i.e. board members with a specific skill set that is attuned to the needs of the company, and, upon occa- sion, having the talent refreshed. In addition, long-term investors should regularly be engaged through personal communication with board members. Finally, deeper strategic conversations need to be held between management and the board, which are not fettered to — or censored by — stringent, short-term goals. Though challenging to imple- ment, the results of such changes are a dynamic, effective board ca- pable of steering a company toward long-term growth and success.  Email new CFO info to Christopher.Borgese@CFOstudio.com Kudos, Congratulations, and Reasons to Celebrate O n Jan. 21, Standard & Poor’s (S&P) was ordered to pay a two-part multimillion- dollar settlement, which may be just the tip of the iceberg for the troubled ratings agency. According to the terms of the settlement, the Securities and Exchange Commission (SEC) will receive $58 million and the attorneys general of New York and Massachusetts jointly will receive $19 million. The groundbreaking penalty is due to the method S&P used to rate certain bonds backed by commercial property. (Remember derivatives?) The SEC claims S&P not only misled investors but also weakened standards to entice them. Of course, there’s an inherent conflict in that the firm being rated pays the rating agencies handsome fees to determine its creditworthiness. Look for more fireworks as the Justice Department investigates the high ratings S&P gave to derivative bonds prior to, and during, the financial meltdown. “Smart”Insurance Wants Your Data Sub-Standard & Poor-ly Rated T here was a time when insurance premiums rested on the imperfect calculation of risk assessment. However, thanks to technology, precise data about the habits of individuals now allows premiums to be set based on information provided by sensors and “telematic” trackers. (Telematic trackers are devices that plug into your car’s computer to detect and download information.) Once this rating method is in widespread use, the benefits to the consumer could include targeted pricing and lower premiums. But some consumers cannot overlook the creep factor. Detractors believe that data tracking by the insurance industry could quickly degrade into downright spying. Imagine your insurance company knowing every time you drive 5 mph over the speed limit, cruise through a yellow light, or jam on your brakes in a rainstorm. Would your “personalized pricing” reflect these driving habits? Also, would such precise knowledge about actual individuals create a subclass of “uninsurables?” Sean Burke Investors Bancorp Chris Rausch Turtle & Hughes