Board directors of quoted companies are well rewarded for undertaking heavy
responsibilities. But these days the burden is growing faster than compensation.
Not because salaries are going down, but because the hours people are working –
Monday through to Sunday – have increased.
The finance directors themselves aren’t complaining – well, not too much
anyway. So let me do it for them. The danger is that a growing number of
distractions – from shareholder relations to governance –are diverting finance
directors from the crucial core of their role.
Main board finance directors get to where they are because they like helping
to run a business. Of course, the technical aspects of their job are critical.
Ultimately they live or die by the integrity of the information their teams
But what gets them going is more likely to be turning around a loss-making
subsidiary, or making a business more profitable, rather than the intricacies of
IFRS or Sarbanes-Oxley.
Moving a business forward takes time – you won’t always get a return on
investment in three to six months. But investors expect you to have moved the
business forward pretty much every time you speak to them. As the finance
director, you are the face of the business to the shareholders. Explaining to
them what is happening, why it is happening and what it means in the
long-term, involves taking more time out of your diary.
So what gives? Well, unfortunately it has to be the operational areas. You
can’t reduce the time you spend on bread and butter governance and technical
issues. So the only bit of your diary that you can steal from is the time spent
supporting the business.
That invariably starts to fall to your number two, or to the divisional
finance structure, so you are free to explain to a new analyst for the 17th time
why in this half-year, you need to spend a little bit more on research &
development, or brand marketing.
So far no-one has come up with a good answer to getting the balance right.
The share price has to be managed, and investors want access to the finance
director in order to find out what is going on. But put yourself in your
investors’ shoes for a minute. Wouldn’t you rather the finance director was more
focused on creating value in the business than making presentations to the City?
Mark Freebairn is a partner and head of the CFO practice at Odgers Ray
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team
UK M&A activity bounced back strongly in July and August, according to analysis by the deals practice at PwC.
Smith & Williamson has added Jim Clark and Philip Marsden, of Marsden Clark Corporate Finance Limited, to its corporate finance team.