The CFO 411: When One Metric Defies the Others

Comparing apples and oranges - a line of apples with one orange

Wage growth is picking up. The pace of job openings hit a new record in March. Initial jobless claims have remained low. All good signs for the U.S. economy, right? Not so fast. When the Labor Department released its latest jobs report on Friday, it left financial executives and economists scratching their heads. The grim numbers also sparked trepidation at the Federal Reserve, though chair Janet Yellen cautioned against being too reactive to any one metric. “Although this recent labor market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report,” she said.

4 need-to-know headlines

1. Hiring screeched to a halt last month

The U.S. may have pulled through the economic tumult of this past winter, but not all metrics show steady growth ahead. The Labor Department revealed that just 38,000 jobs were added to the U.S. market in May—the weakest job growth since 2010, when the country was still battling a recession. That data defies other indicators that point toward stability and growth ahead. “This just does not square with all the other things we’re seeing in the economy,” one chief economist said. (via WashingtonPost.com and USAToday.com)

2. Feds rethink rate hike

The Federal Reserve has pressed pause on the expected increase of short-term interest rates. In May, Yellen had said that interest rates would rise “in the coming months,” but in a speech on Monday she made no allusion to a timetable. Analysts took that as a clear sign that the expected mid-June hike has almost surely been abandoned. And given how little fresh economic data will be available before the July meeting, a bump then seems unlikely as well. “I know market participants really want to know exactly what’s going to happen,” Yellen said during the meeting. “There is, as I said about 18 times, no preset plan.” (via NYTimes.com)

3. Self-reporting helps companies avoid bribery charges

One way to avoid being charged with violating the Foreign Corrupt Practices Act? Don’t bribe officials abroad. But Akamai Technologies Inc. and Nortek Inc. have learned there’s another way, even if a foreign subsidiary runs afoul of the rules. The U.S. Justice Department released a rare letter this week, detailing why it had decided to close cases against them without filing charges: The companies self-reported the misconduct, cooperated thoroughly at every stage, and agreed to forfeit any gains connected to the bribes. (via WSJ.com [log-in required]>

4. Investors clamor for green indices

AbbVie has good news to shout at its next shareholder meeting. The U.S. company just joined the FTSE4Good, the global index by FTSE Russell that measures how a company operates on three dimensions of sustainability: environmental, social, and governance. As more investors push for greater insight into a company’s practices—and an easier way to gauge those non-financial moves within the context of their industry peers—such “green” indices have risen in popularity. The latest tightening of inclusion criteria saw 43 companies removed from the list, with 77 added. The U.S. is home to 26 companies on the list. (via Forbes.com)

The stat: $217,509

That’s the average base salary these days for a CFO at a private firm, according to an annual survey of financial executives. CFOs and controllers both saw an average pay boost of 4% this year. That’s a slight dip from the year before—and out of tune with today’s competitive talent market. “The demand for experienced financial and accounting executives is stronger than it has been in several years,” said one compensation expert. (via AccountingToday.com)

Sound bite of the week

“CFOs can dramatically affect a company’s results through both strategy and execution. No longer the stereotypical scorekeepers of years gone by, they now are players on the field who deliver results.” —Bruce Nolop, former CFO of Pitney Bowes Inc. and E*Trade Financial Corp., on why the role of CFO is increasingly seen as a destination in its own right, rather than a stepping-stone to being CEO (via WSJ.com [log-in required])

 

4 Top Stories + 1 Key Statistic + 1 Industry Quote = The CFO 411
The CFO 411 is our weekly news roundup that brings you top headlines, data points, and sound bites to keep you in the know. Follow our updates on LinkedIn for more finance must-reads.

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