Study finds one in 3 finance chiefs goes after less than a year in the job
By Gabriel Chen 16 February 2009
Singapore’s listed firms are having major problems holding on to their chief financial officers (CFOs) - the most important person in a company’s financial engine room.
About one-third of all CFOs quit - or are fired - after less than a year in the job, according to a recent study of departures.
These departures can prove to be very disruptive to the quality of the financial reporting process.
The incoming CFO, even if a replacement can be found immediately, has to learn the ropes of the trade as well as the financials of the firm. This takes time and sometimes can be costly for the company.
The resignations were mostly at ‘small caps’ with market capitalisation of less than US$100million (S$151million), said BNP Paribas.
BNP combed through Singapore Exchange (SGX) filings from Sept27, 2007, to Jan31 this year, and found that there were 176 CFO resignations, or 2.5 resignations a week, during this period.
It also found that 34.1per cent of CFOs resigned after having been in office for less than a year.
The only ‘big caps’ that saw CFO changes were DBS Group Holdings and SingTel.
Former DBS CFO Jeanette Wong took on a new role at the bank, while SingTel’s Francis Heng stepped down for ‘personal reasons’ after less than 18 months on the job. He later joined agri-business group Wilmar International.
CFOs routinely come and go, often for purely personal reasons, while some get fired because they do not perform well.
Asa Group, for instance, sacked its CFO, Mr. I Shu Te, after just two months, claiming he had been ‘incompetent’, ‘uncooperative’ and ‘hampered the job and functions’ of other executives.
Still, the study begs the question why senior finance brass working at small caps leave so much more often than their peers at bigger firms.
CFOs told The Straits Times that some leave as they feel the compensation at smaller firms may not be enough, given their responsibilities.
The pressures on CFOs are increasing in this age of more corporate governance. They are not just responsible for financial reporting, but also supervising internal controls, handling major financial projects and driving strategic issues.
Some CFOs leave as they want exposure to a broader set of roles and challenges, which could help their careers.
‘If you work in a small-cap company, you’ll find your job very stable after a while. For younger guys, if they are ambitious enough, they will want to move,’ said Mr. Lim Jin Sin, financial controller at Singapore-listed SunVic Chemical Holdings.
CFOs of foreign companies listed here can find the task of managing the expectations of different stakeholders draining.
Mr. Francis Lee, the CFO of Singapore-listed Man Wah Holdings, is stationed in Hong Kong, but the sofa-maker’s factories are in China. As the key financial person, he must make clear to his management details about the local financial listing rules.
‘I juggle between Singapore, Hong Kong and China. It’s also about understanding the different cultures,’ said Mr. Lee, a Singaporean, who travels home to see his family.
With the ‘extra’ work that CFOs put in, it explains why those at smaller firms want more pay. And since small caps might have tighter budgets, greener pastures beckon.
Large caps can pay CFOs an annual package of $300,000 - twice that of their peers at small caps.
CFOs at smaller firms might also find added pressure in that such firms could face more accounting irregularities than large companies do.
It is common that the departure of a CFO from a small firm triggers market rumours about problems in the company.
‘Corporate governance and accounting issues can have some influence,’ said Mr. Alan Yong, former CFO of Labroy Marine and now finance director of Beng Kuang Marine.
Beng Kuang is an associated company of Drydocks World, which bought Labroy and took it private.
Take Global Ariel former CFO Tony Law, who resigned in July last year from the China-based concrete supplier.
He alleged that it had poor corporate governance practices, including the provision of ‘incorrect or misleading information’ to the SGX.
BNP’s research showed that the shortest tenure was one day - that of Advance Modules Group’s (AMG) Chang Poh Hin.
AMG said this was due to Mr. Chang being offered an overseas posting by a multinational company on his second day at work. The study found that three CFOs resigned at AMG within two years.
AMG has been accused of ‘round-tripping’ transactions with certain parties.
‘Round-tripping’ refers to the practice of manipulating sales figures to give the impression of higher revenues.
Mr. Tan Soo Jin, director of executive search firm Amrop Hever Group, said CFOs should stay at companies for at least five years.
‘When you appoint a CFO, the first year he’s learning, the second year he’s beginning to implement some of the changes, and the third year, he’s reaping the first result of his fruit. But for sustainability, you need at least two more years,’ he said.
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CFOs gone too soon
Study finds one in 3 finance chiefs goes after less than a year in the job
By Gabriel Chen
16 February 2009
Singapore’s listed firms are having major problems holding on to their chief financial officers (CFOs) - the most important person in a company’s financial engine room.
About one-third of all CFOs quit - or are fired - after less than a year in the job, according to a recent study of departures.
These departures can prove to be very disruptive to the quality of the financial reporting process.
The incoming CFO, even if a replacement can be found immediately, has to learn the ropes of the trade as well as the financials of the firm. This takes time and sometimes can be costly for the company.
The resignations were mostly at ‘small caps’ with market capitalisation of less than US$100million (S$151million), said BNP Paribas.
BNP combed through Singapore Exchange (SGX) filings from Sept27, 2007, to Jan31 this year, and found that there were 176 CFO resignations, or 2.5 resignations a week, during this period.
It also found that 34.1per cent of CFOs resigned after having been in office for less than a year.
The only ‘big caps’ that saw CFO changes were DBS Group Holdings and SingTel.
Former DBS CFO Jeanette Wong took on a new role at the bank, while SingTel’s Francis Heng stepped down for ‘personal reasons’ after less than 18 months on the job. He later joined agri-business group Wilmar International.
CFOs routinely come and go, often for purely personal reasons, while some get fired because they do not perform well.
Asa Group, for instance, sacked its CFO, Mr. I Shu Te, after just two months, claiming he had been ‘incompetent’, ‘uncooperative’ and ‘hampered the job and functions’ of other executives.
Still, the study begs the question why senior finance brass working at small caps leave so much more often than their peers at bigger firms.
CFOs told The Straits Times that some leave as they feel the compensation at smaller firms may not be enough, given their responsibilities.
The pressures on CFOs are increasing in this age of more corporate governance. They are not just responsible for financial reporting, but also supervising internal controls, handling major financial projects and driving strategic issues.
Some CFOs leave as they want exposure to a broader set of roles and challenges, which could help their careers.
‘If you work in a small-cap company, you’ll find your job very stable after a while. For younger guys, if they are ambitious enough, they will want to move,’ said Mr. Lim Jin Sin, financial controller at Singapore-listed SunVic Chemical Holdings.
CFOs of foreign companies listed here can find the task of managing the expectations of different stakeholders draining.
Mr. Francis Lee, the CFO of Singapore-listed Man Wah Holdings, is stationed in Hong Kong, but the sofa-maker’s factories are in China. As the key financial person, he must make clear to his management details about the local financial listing rules.
‘I juggle between Singapore, Hong Kong and China. It’s also about understanding the different cultures,’ said Mr. Lee, a Singaporean, who travels home to see his family.
With the ‘extra’ work that CFOs put in, it explains why those at smaller firms want more pay. And since small caps might have tighter budgets, greener pastures beckon.
Large caps can pay CFOs an annual package of $300,000 - twice that of their peers at small caps.
CFOs at smaller firms might also find added pressure in that such firms could face more accounting irregularities than large companies do.
It is common that the departure of a CFO from a small firm triggers market rumours about problems in the company.
‘Corporate governance and accounting issues can have some influence,’ said Mr. Alan Yong, former CFO of Labroy Marine and now finance director of Beng Kuang Marine.
Beng Kuang is an associated company of Drydocks World, which bought Labroy and took it private.
Take Global Ariel former CFO Tony Law, who resigned in July last year from the China-based concrete supplier.
He alleged that it had poor corporate governance practices, including the provision of ‘incorrect or misleading information’ to the SGX.
BNP’s research showed that the shortest tenure was one day - that of Advance Modules Group’s (AMG) Chang Poh Hin.
AMG said this was due to Mr. Chang being offered an overseas posting by a multinational company on his second day at work. The study found that three CFOs resigned at AMG within two years.
AMG has been accused of ‘round-tripping’ transactions with certain parties.
‘Round-tripping’ refers to the practice of manipulating sales figures to give the impression of higher revenues.
Mr. Tan Soo Jin, director of executive search firm Amrop Hever Group, said CFOs should stay at companies for at least five years.
‘When you appoint a CFO, the first year he’s learning, the second year he’s beginning to implement some of the changes, and the third year, he’s reaping the first result of his fruit. But for sustainability, you need at least two more years,’ he said.
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