THE ROLE OF THE CFO

Renée Hornbaker

CFO, Stream Energy

Dallas Fort Worth Area IMA

January 15, 2015

My Journey

Roles of CFO

CFO and Director

What I Have Learned

Public Accounting

• How did this impact my career path?

▫ Foundation: technical and controls

▫ Credibility

▫ Analysis

▫ Multiple businesses and industries

▫ Board interaction

▫ M&A experience

Other Positions• Southwest Forest Industries

▫ Assistant Controller / Assistant Treasurer Planning and budgets

Cash management

Risk management

Information technology

External financial reporting

• Circle K Corporation▫ Vice President / Assistant Treasurer▫ Vice President Information Technology▫ Sr. Vice President Financial Services

Other Positions• Education Management Group

▫ CFO; multiple hats including sales support, accounting systems, benefits, product development

• Phelps Dodge Corporation

▫ Director Financial Analysis and Control

New position

5 industrial businesses

International scope

Process improvement

Other Positions• Flowserve Corporation (BW/IP)

▫ Vice President Business Development▫ CFO

Strategy M&A Financing Process improvement

• Shared Technologies▫ CFO

M&A Financing Financial team Process improvement

Other Positions

• Stream Energy

▫ CFO

Financial team

Controls

Process improvement

Risk oversight

Strategy and growth

Business responsibilities

Key points

• Good foundation

• Took career risks

• Expanded capabilities

Roles of the CFO*

• Freedom Fighter

▫ Reduce complexity and detail

▫ Streamline processes

▫ Purge and eradicate little value work

• From Reinventing the CFO: How Financial Managers Can Transform Their Roles and Add Greater Value by Jeremy Hope

Roles of the CFO

• Analyst and Adviser

▫ Attract and keep the best people and build the right team

Know the business

Analytical

Improvement orientation

▫ Work in teams

▫ Communicate

Roles of the CFO

• Architect of Adaptive Management

▫ Replace detailed annual planning cycle

▫ Install effective steering mechanisms

▫ Push down some planning and decision-making scope and authority to frontline teams

Roles of the CFO

• The CFO as Warrior Against Waste

▫ Eliminate embedded costs and flatten hierarchy

▫ Standardize processes

▫ Ensure projects add value

▫ Remove the non-value-added wastes

Roles of the CFO

• Master of Measurement

▫ Bring measurement back under control and provide clear guidance about its meaning

▫ Focus on six to seven

▫ Measures should relate to purpose and strategy and not be linked to targets

Roles of the CFO

• Regulator of Risk

▫ Provide framework for good governance and risk management

▫ Employ multiple levers of control that support:

corporate governance controls

internal controls

strategic controls

feedback controls

▫ Identify and deal with pressure points that encourage excessive risk-taking

Roles of the CFO

• Champion of Change

▫ Transforming finance operations

Beginning with the vision and goals

How to get buy-in from key people

How to implement the changes

Evolution of Role

Controls

Engineering

Compliance

Strategy

• Independent mindset

• Business understanding

• Big picture

• Analytic

• Strategic

• Process improvement focus

Key Competencies

Differences

Management Director

− Run organization− Keep board informed− Seek board’s counsel

− Select, evaluate and support CEO and management

− Recommend strategies, goals and policies

− Approve strategy and high level goals and policies

− Bring to board well-documented recommendations

− Make major decisions

− Provide board timely information− Communicate with candor− Be responsive to board

− Oversee management and organizational performance

− Interact with investors − Represent investors

CFO as a Board Member

• How to get opportunity?▫ Build brand

▫ Expand skills

▫ Leadership beyond your company

▫ Let others know of interest

• Why do it?▫ Improve CFO skills

▫ Enhance relationship with my board

Ask

Answers

Ownership

Skills

Risks

Summary

MY JOURNEY

• Solid Foundation• Diverse Experience

CFO ROLES

• Variety of Roles• Use Different Roles in Different Situations

Board Member

• Differences from management• Pursue like a job

Key Learnings

• Ask questions, be prepared, develop skills and take risks