How CFO's can approach tension and solve disagreement with the CEO
Robert completed an MBA from Harvard Business School in 1980 before starting his career as a banker with JP Morgan and Deutsche Bank where he spent over 23 years working on IPO’s, M&A and LBO’s with corporates. In 2004, Robert joined Codere as CFO where he spent nearly 6 years leading to a successful IPO. Robert was then hired by UBM, a UK-listed media conglomerate, as CFO with a plan to roll up various other B2B and B2C media assets. UBM is now the largest trade show operator after around 60 acquisitions before recently merging with Informa. Robert also serves as Vice Chairman of the Board and Chairman of the Audit Committee at eDreams and enjoyed one year as CEO of PR Newswire in 2015. Robert has over 12 years of experience as CFO of large public companies and has a deep understanding of communicating with all stakeholders and delivering excellent corporate governance.
I can speak of my own experience, but it varies a lot. CFO’s are expected by the board to stand up to the CEO - and again, I'm talking about best practice - to challenge where necessary and to report to the board on issues where, there may be a difference of view or difference of opinion. In particular, if there's some sort of fraud or issue that the CEO doesn't want to have discussed at the board level. Or other issues. They can be as broad as “we haven't communicated a strategy properly to the company as a whole and that's creating motivational issues.” Whatever you see as an issue. Having said that, the board has invested in the CEO and the CEO is clearly the boss in the business. And the CFO report to the CEO first. So, it's a subtle relationship where you need to show unity but also independence. I think the way that played out for me is that I would have frequent meetings with the chairman and the chairman of the audit committee which were independent of the CEO.
The audit committee, in particular, is a forum where the CFO can present information that may be distinct from what the CEO projects. For example, I was very concerned about IT security, so I prompted the audit committee to ask me about IT security. That led to a series of conversations and initiatives that dramatically improved IT security. That was one of a number of issues. Again, it wasn't a big difference of opinion, but at the same time, the CEO and his direct reports, who are business leaders, all wanted to make their budgets so we can make our bonuses. And the CFO has to take a longer-term view and say, "Yes, but we're exposed to significant risk." So how do you find a way to communicate that stuff? Ideally, it isn't confrontational.
It varies a lot. I know companies where the CEO gets 95% of the board time and support and the CFO gets 5%. I've been very lucky to work in companies where my voice as the CFO was very carefully listened to on the board and respected by everyone around the table.
"Forced" is a strong word. Reporting on IT security requires a more regular discussion of what IT security standards should be. By the way, when I was in that position, cybersecurity had not taken on the prominence it has today and so it was harder to come up with a standard to which UBM should adhere. Again, I'm perfectly prepared to confront when necessary. I think it's generally better in an organization if you can find ways to convince as opposed to confront.
That's a case where I used the audit committee as a neutral means to get out the information about where we stood on cybersecurity and to make sure the audit committee was conscious of where that was and what priority it should take in the audit committee's agenda of risk management. The audit committee chair was eager to follow up on that.
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Robert completed an MBA from Harvard Business School in 1980 before starting his career as a banker with JP Morgan and Deutsche Bank where he spent over 23 years working on IPO’s, M&A and LBO’s with corporates. In 2004, Robert joined Codere as CFO where he spent nearly 6 years leading to a successful IPO. Robert was then hired by UBM, a UK-listed media conglomerate, as CFO with a plan to roll up various other B2B and B2C media assets. UBM is now the largest trade show operator after around 60 acquisitions before recently merging with Informa. Robert also serves as Vice Chairman of the Board and Chairman of the Audit Committee at eDreams and enjoyed one year as CEO of PR Newswire in 2015. Robert has over 12 years of experience as CFO of large public companies and has a deep understanding of communicating with all stakeholders and delivering excellent corporate governance.
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