Cash Only Please – BearingPoint (BE) Gets an Interim CFO
Wachovia Weekly, a service industry research newsletter produced by Wachovia Capital Markets, LLC, reported this little factoid on page 4 of this week’s (7/3/2008) issue:
“BearingPoint (BE, Market Perform, $0.73) announced its new interim CFO, Eddie Munson, will receive a monthly salary of $75,000. He won't participate in the company's bonus compensation program or receive any stock compensation for his services as CFO. He remains a director on the company's board.”
When a new CFO of a publicly held firm negotiates their compensation package, they usually insist on a combination of salary, deferred compensation, stock options, perks, etc. When a CFO insists on a cash-only deal, then one or more of the following could be in play:
- The Interim CFO may truly be ‘interim’ and will not be in the position long enough to vest any stock options.
- The Interim CFO may believe the company’s financial picture is doubtful and sees no value/point in accepting stock options.
- The Interim CFO is already a board member and already has a nice stock option package.
It turns out that Mr. Munson is an ex-KPMG audit partner and has been on the board of BE since last Fall. With 30 years experience in audits and a former managing partner of an audit firm, Mr. Munson should be able to fill this role admirably. How ‘interim’ he will be is not known but the longer the better. BE is still righting itself and it needs a team that will work together for the long haul.
The track record of CFOs at BE hasn’t been great. This list may not be complete but from my records, I believe BE has had a number of folks in as interim or permanent CFOs in just the last five years alone.
- April 2003, Robert Falcone takes the role. He stayed until November 2004.
- Around the start of 2005, Joseph Corbett assumed the CFO spot. He left after four months.
- Harry You, ex-Accenture CFO, assumed the interim CFO position while also serving as BE’s CEO. Mr. You stayed until late last Fall.
- Judy Ethell had the role during the first half of 2008. She was a former PWC tax partner. She is still with the company but not the Interim CFO anymore.
- Eileen Kamerick took the role in May of this year. She stayed only three weeks.
- Now, Mr. Munson is filling the interim CFO spot.
Investors get nervous when the CFO spot changes hands. A periodic change in CFOs is fine but this many changes in a short time period look questionable.
Good luck Mr. Munson.
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