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The Age Old Appearance Argument: Hide Success or Flaunt it?

Being one of us stereotypical accounting types can have its limitations, and counting the beans isnt always as much fun as one would like, so its always tempting to veer off on any interesting tangent that comes along. Today the CEO turned up in a new Mercedes S550 AMG (black of course) and I suggested that he should have parked it way across the far side of the car park where it would less likely be seen by (a) investors who are already wishing they hadnt given us quite so much of their money, (b) employees who are now getting 10% less of our money, and (c) vendors who are fed up with waiting for us to send them any money.

We got into the age old dispute about whether the trappings of success are likely to be interpreted by our business partners and stakeholders as signs of extravagent excess and distorted values in the current economic climate, or symbolic proof of success!  Like the chicken and egg, I am sure there are no absolute CFO answers, but generally my view is that us CFO types are more conservative about these visual signs than CEO marketing types ( although the fact that I dont actually own an impressive car may influence my thinking!)

I would like to get some feedback on examples of CEO excesses so I can measure where our CEO stands on the spectrum and whether there is the perfect "CFO" car that can inspire our stakeholders while typifying economic reasonabless.

Answers

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

Funny you should say that as the last time I bought a car I thought long and hard about how it would reflect on any customers, co-workers or board members who saw me in it. I mean, do you buy a car coming off of lease to show how brilliant you are at squeezing money? Do you get a 15 year old used Toyota to show that you care more about value than anything else? Do you buy the ubiquitous BMW to show, well I'm not sure that shows anything other than "I really like cars and to hell with the price!"?

I ended up with a used but recent Acura TL. Looks fine. Not embarassed if I have to drive my CEO to a meeting. Good mileage. And reasonably priced. So that's my CFO answer: practical, yet reasonably nice.

As for CEOs, do they care? My last two have had top of the line Porsche's and Ferrari's and reveled in them. Good for them. I don't think they spent much time thinking about how that would reflect on themselves or the company and I wouldn't want to be the one to bring it up either. Luckily, I think that's pretty much expected of CEOs, so no worries :).

David Fittz
Title: Corporate Controller
Company: PJ Trailers
(Corporate Controller, PJ Trailers) |

In a former life (previous employer), I had a CEO pull into the employee parking lot in a brand new Mercedes the same day we had previously determined we would announce a 20% layoff. (He had an assigned parking spot right in front of the employee entrance so everyone knew whose vehicle it was.) He successfully dropped an Atom Bomb on employee morale. Not only did he make the laid off employees mad but the remaining employees were mad too. I (as the CFO), had a long talk with him about it. I knew he had just come into a small fortune as an inheritance, but his timing was horrible!

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

If the business and everyone is doing well, why not flaunt it. However, if the business isn't or the disparity in sections of the employees are great (called low morale/labor issues) then I think very bad is a term that comes to mind.

Aspects which impact this generalization is industry, locale, known personal fortune of the owners, etc.

Just remember, reality isn't perception, but perception sure is reality!

Chris Sommerfield
Title: Associate Professor of Oceanography
Company: University of Delaware
LinkedIn Profile
(Associate Professor of Oceanography, University of Delaware) |

I worked at a Silicon Valley Start-up with a very pragmatic CEO. He drove 15 year old Camry's. He shopped at Costco and even did his own dry cleaning using his dryer. He claimed that he could easily afford a top of the line Mercedes, but he said that he could do better by taking that money and investing in Real Estate (post 2005) than wasting it on a depreciable asset. I say stay humble, give as much as possible and do not worry what other people think.

Michael Abernethy
Title: Director of Finance
Company: Handy & Harman
(Director of Finance, Handy & Harman) |

No reasonable employee would fault the CEO for driving a car large enough to seat 3-4 adults comfortably and after that it should be in keeping with the health of the business.

Steve Kahn
Title: Controller
Company: Carolina Lumber & Supply Co.
(Controller, Carolina Lumber & Supply Co.) |

As far as the Chicken adn Egg thing -- I believe there is an answer: what is in the egg is destined to be whatever it is going to be (any change in the creature inside had to occur before forming an egg), so since the chicken had to come from the egg, but the egg did not have to come from the chicken, the egg must have come first.

The CEO may show off excesses, but must also keep in mind the impact of that showiness on others (sounds like HR may need intervene, using the some right brain functionality)

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