The Best CFOs in America

Here’s who investors picked -- and why -- in our inaugural survey.

In January 13 Andrew Fastow, former chief financial officer of Enron Corp., agreed to a plea bargain that could land him in prison for up to ten years. Prosecutors portrayed the Texas energy company’s CFO as having played a pivotal role in an elaborate financial fraud that cost investors billions. And if Fastow doesn’t cooperate fully in the impending cases against his ex-bosses, Kenneth Lay and Jeffrey Skilling, he could spend even more time behind bars.

The fallout from America’s corporate scandals is having an impact on all senior executives, but none more so than CFOs -- and not just because a few, like Fastow, may wind up in jail. CFOs are, in effect, the chief integrity officers of corporations, the stewards of their companies’ reputations in the marketplace. And they are only too aware these days that any financial reporting problem, innocent or not, can brand their companies with a scarlet letter. “If shareholders get even a hint of impropriety, it can taint a company for years,” notes one institutional investor.

The climate of scandal and suspicion has made the job of CFO not only more challenging but also more critical to companies’ well-being and even survival. Yet such trying circumstances also serve to make the most accomplished CFOs stand out. To identify -- and acknowledge -- the work of the most noteworthy financial executives, Institutional Investor asked fund managers and securities analysts from all over the country to name the best CFOs among the companies they invest in or cover.

In all, more than 1,300 professionals at more than 400 firms responded to the survey, our first of U.S. chief financial officers. The fund managers who voted represented some $4.2 trillion in equity holdings. Altogether we list winners in 62 industry sectors. We also note the leading scorers in nine broader business groupings. (Profiles of the CFOs who won the most votes in the broader groupings appear in the surrounding pages. A list of all the winners appears in the table, and a complete accounting of CFOs who received votes can be found on our Web site at

Our winners have little in common with Andy Fastow. But the whole sordid Enron saga can’t help but remind them and all other CFOs that, more than ever, they must safeguard their companies’ good names with investors and regulators alike and deliver honest and meaningful information about their businesses. Indeed, if there was any doubt about this, it is now formally codified in law: CFOs as well as CEOs of public companies must certify the accuracy of their financial statements per sections 302 and 906 of the 2002 Sarbanes-Oxley Act. As the winner in our financial services category, Goldman Sachs Group CFO David Viniar, observes: “When it comes time to certify that your financial statements are okay, you have to really know what’s in them.”

With all this emphasis on reputation and regulation, CFOs are spending a lot more time monitoring financial systems and controls. They’re training staff more exhaustively, developing new reporting processes, enhancing corporate governance and revamping relationships with auditors. Whether it’s coping with Regulation FD, new governance guidelines from the exchanges or the slew of new rules relating to Sarbanes-Oxley, our leading CFOs all testify to devoting much more time to the nonoperational aspects of their business.

And they’re not entirely happy about it, either. Although the winning CFOs acknowledge the importance of restoring confidence in financial reporting, many question whether the extra cost and effort have resulted in better corporate disclosure. “I don’t believe there’s a discernible difference in the information we disclose,” says Comcast Corp. co-CFO John Alchin, who notes that the new requirement for an audit of internal controls will cost his company more than $5 million this year. Adds his co-CFO and fellow honoree in Media, Lawrence Smith: “You could argue that they’ve gone backwards, because investors are now confronted with more complex information and have to dig a lot deeper to make an informed decision.” Or, as Alchin puts it, “A couple of bad apples did some bad things, and the government in some respects overreacted.”

All the same, our winners have been getting their financial houses in order. A buoyant stock market and a recovering economy have helped to compensate for the new regulatory rigors. “Companies have more cash on hand, and they have been cleaning up their balance sheets,” notes David Wyss, chief economist for Standard & Poor’s. “They’re starting to get a little more aggressive” in investing in their businesses. Capital spending by U.S. corporations is expected to show a 6 percent rise for 2003, after dropping 3 percent in 2002.

Still, many of our winners were wary of large investments in 2003, despite the lowest interest rates in 45 years. With the average corporate debtto-capital ratio at 53 percent -- just under the all-time high of 55 percent in the early 1990s -- CFOs must be mindful of not overextending their balance sheets.

Winning CFO Steven Shapiro of independent gas producer Burlington Resources was swamped with cash in 2003 as natural-gas prices remained sky-high for much of the year. But rather than pay exorbitant amounts for acquisitions or chase investments outside the company’s area of expertise, Burlington stuck to its knitting: producing low-cost gas from its proven North American reserves. “Just because you have a lot of capital, it doesn’t mean you should spend it,” Shapiro says.

Investors applaud that sentiment. Many remain uncertain about the sustainability of the recovery, so they continue to put a high premium on cost-cutting and efficient allocation of capital. “We like conservative CFOs right now,” says one investor who voted for the victor in the Consumer category, Clayton Daley Jr. of Procter & Gamble Co. When the company started to slide early in the recession, Daley and CEO A.G. Lafley were quick to act. They cut capital expenditures from 6.3 percent of sales in 2000 to about 4 percent last year and reduced the company’s head count by 12,000, even as P&G’s revenues were rising 9 percent.

Overall, this year’s winners have been disciplined with capital. Nextel Communications CFO Paul Saleh has been husbanding resources. He refinanced the once-overextended telecom to take advantage of falling interest rates and simultaneously reduced Nextel’s debt load, lowering its interest payments by $400 million.

Conservatism is good these days, but no one wants to be shortsighted. For instance, Saleh has continued to invest in high-speed data communications. Winner John Kispert of semiconductor equipment manufacturer KLA-Tencor Corp. draws praise for maintaining his company’s R&D investments despite a virtual depression in his industry. “KLA is as well, if not better, positioned than it was before the downturn,” says an investor. “If you don’t invest in the business, the company will suffer down the road.”

Praxair’s James Sawyer is a favorite CFO with investors because of his industrial-gas company’s cautious, incremental approach. For instance, in China, potentially a huge market for Praxair, the company entered into a joint venture with French competitor Air Liquide rather than go it alone.

Penny-pinching wasn’t the only key to the winners’ success. Several were involved in acquisitions. Pfizer has been the most aggressive company in the consolidating pharmaceuticals sector, acquiring Warner-Lambert Co. and Pharmacia in rapid succession. Its $45.2 billion in revenue in 2003 ranks it as one of the U.S.'s largest companies, and the success of CFO David Shedlarz and Pfizer’s senior management team in integrating acquisitions has made it one of the most valuable.

For equipment and tool manufacturer Danaher Corp., doing mergers is the core business strategy. “Acquisitions continue to be the first option,” said CFO Patrick Allender in a conference call last year. In 2003 the company executed nine acquisitions worth $298 million in total. He found himself having to defend to investors a buying binge that, superficially at least, resembled Tyco’s.

The spate of financial scandals has forced all CFOs to hone their public and investor relations skills. The winners report that they are communicating with investors more frequently. “Talking to investors has become a bigger challenge,” says KLA-Tencor’s Kispert. “It’s more important to set realistic expectations with the investment community and to talk, even when the news isn’t good and you’re taking it on the chin.”

Investors compliment the top CFOs for being accessible and for providing clear-eyed assessments of their businesses. Says one investor of Praxair’s Sawyer: “A lot of executives dishonestly measure their business and always emphasize the most-positive possible outcomes. Sawyer is honest about the company’s activities and the returns they generate.”

Companies, and CFOs, are being rewarded for delivering on promises. At Pfizer, Shedlarz’s ability to set firm financial targets and then hit them has earned praise. “He’s very good at managing expectations, and then he delivers on what he says,” one voter attests. Daley of P&G gets high marks for issuing earnings guidance early and often, even as other CFOs have abandoned guidance altogether rather than risk running afoul of Regulation FD.

Several companies, including Burlington and Comcast, have established formal board-level committees to monitor disclosure. And finance chiefs report that they are logging many more hours with their audit committees. Many CFOs have voluntarily decided to supply information not mandated under Sarbanes-Oxley. Goldman Sachs’ Viniar, for example, began expensing employee stock options last year -- a practice growing numbers of companies have chosen to adopt. He’s also providing more detailed business-segment information, something that investors have long been clamoring for.

Financial transparency is not necessarily a matter of providing more information, however. Less can be more, suggests Viniar: “If we can say in one page what someone else says in five pages, that’s better because it’s easier to read.” And for what it’s worth, Fastow and Enron produced tomes of thoroughly misleading disclosure.


Age: 55

Year named CFO:1995

Number of employees: 130,000

Earnings:$12.72 billion (before one-time, merger-related charges)

Compensation:$1.82 million

Stock options: $474,630

Shedlarz: “The most important qualifications for CFOs haven’t changed: technical capabilities, a good work ethic and integrity.”

ONE VOTER: “The integration of Warner-Lambert and Pharmacia has been a big, complicated job, and Shedlarz has been very methodical about it. He’s been a great support for [CEO] Hank McKinnell.”

Prescription drugs don’t always mix well; neither do prescription drugmakers. Yet Pfizer has managed to swallow both Warner-Lambert Co. and Pharmacia in the past three years with no ill effect. Much of the credit for this feat goes to Pfizer CFO David Shedlarz.

“It’s been a huge task,” says Shedlarz. “It has offered some very rewarding and some very humbling elements at the same time.” The 55-year-old CFO has been front and center in the integration effort, along with Karen Katen, president of Pfizer Global Pharmaceuticals, and of course Pfizer CEO Henry McKinnell, who was recently voted one of America’s Best CEOs in a poll of portfolio managers and securities analysts in Institutional Investor (January 2004).

The three executives, who all joined the company in the 1970s, are a close-knit team. “This is a complex business, and it helps that senior management has worked with each other for a long time,” says Shedlarz.

Pfizer managed to exceed its preliminary estimates of cost savings on both mergers. What’s more, it did so without harming the industry’s most efficient sales force. “You have to be extremely clear about the roles people have within the new company, and you have to communicate the information fast to get any dislocation out of the way,” says Shedlarz.

“No one has had more to digest than Pfizer, and nobody has done it more successfully,” says one investor. Earnings last year, before one-time costs related to the Pharmacia merger, were up 10 percent over 2002.

Shedlarz’s forthrightness has served the New York University MBA well with investors. Pfizer once had a poor record in providing reliable earnings guidance and delivering on expectations. Not anymore. Moreover, unlike most of its peers, Pfizer has had virtually no run-ins with the Food and Drug Administration or with the Securities and Exchange Commission. Investors, of course, don’t like bad surprises any more than do patients taking medicine. -- Andrew Osterland


Age: 57

Year named CFO: 1987

Number of employees: 30,000

Earnings: $536.8 million Compensation: $946,939 (for 2002)

Stock options: $29.7 million

Allender: “Acquisitions continue to be the first option."*

In late 2002, as Tyco International was beginning to implode in a maelstrom of fraud and greed, another conglomerate that had also been, like Tyco, growing rapidly through serial acquisitions -- Washington, D.C.based Danaher -- saw its own shares fall by more than one third, in a clear-cut case of collateral damage.

Patrick Allender, 57, CFO of the holding company, whose subsidiaries make process and environmental equipment and tools (including those labeled Sears Craftsman), responded by mounting an information campaign. Known on Wall Street as a straight shooter, Allender patiently explained in investor meetings that while Danaher had certainly done its share of acquisitions (50 since 1984), it was not engaged in any bookkeeping shenanigans. Indeed, in October 2002 the company took the highly unusual step of issuing a formal statement declaring that the company “does not spring-load its earnings and cash flows” and “includes all cash expenditures used to restructure both newly acquired and existing businesses as part of cash flow from operations, unlike the treatment used by some companies.”

Allender also made Danaher’s accounting more transparent. “They’ve always disclosed as much information as they can, and it’s gotten ever better in the past couple of years,” says Nicole Parent, an analyst for Banc of America Securities in New York.

In the 12 months through January 15, the company’s share price jumped 43 percent. (It has risen 50-fold in the 17 years since Allender became CF0.)

“People like to make inflammatory statements about Danaher,” contends Parent. “With purchase accounting [for acquisitions], there’s always a gray area. But when I go through Danaher’s financials, I feel very comfortable.”

Allender, who earned a BS in accounting from Loyola College, joined Danaher as CFO in 1987 after having risen to partner at Arthur Andersen. Last year alone he helped execute nine acquisitions worth $298 million in total. Although Allender has a reputation for promptly calling back analysts, he’s less open with the press. He declined to be interviewed for this article, indicating that as a member of a tight management team, which includes president and CEO H. Lawrence Culp Jr. and executive vice presidents Philip Knisely and Steven Simms, it would be inappropriate for him to grab the spotlight.

That attitude reflects the disciplined approach that has helped Danaher integrate acquisitions and put investors more at ease. -- Steven Brull


Age: 40

Year named CFO: 2000

Number of employees:4,800

Earnings: $137 million (for fiscal year that ended June 2003)

Compensation:$497,257 (for fiscal year ending June 2003)

Stock options:$2.72 million

Kispert: “The easiest part of my job is talking to Wall Street. The story really sells itself.”

Conditions these days in the semiconductor industry have sent the fortunes of KLA-Tencor, a manufacturer of measurement devices for chip producers, soaring as several trends have converged to excite demand for the San Jose, Californiabased company’s expensive, ultraprecise equipment. The most important: a cyclical recovery in semiconductors and three simultaneous chip-making improvements. KLA’s shares rose 62 percent in the 12 months through January 15. “It’s nirvana for us,” says the company’s CFO, John Kispert.

By most accounts, KLA is one of the best-run companies in the semiconductor equipment field. Its metrological devices, which can be as big as three refrigerators and cost as much as $5 million, are used in virtually every semiconductor plant in the world. “They’re one of the few companies that made it through the downturn without taking any major charges or changing plans,” says one portfolio manager. “Over time, that’s what builds shareholder equity and above-average returns.”

All this has made one crucial part of Kispert’s job -- speaking to Wall Street -- that much easier. KLA’s revenue and net income in last year’s fourth quarter rose 1 percent and 52 percent, respectively, to $339 million and $45 million, compared with the year-earlier quarter. The company boasts a balance sheet with no debt and $1.6 billion in cash. “The need to raise cash is certainly not foremost in my mind,” Kispert says, adding that the jingly money could someday be used for an acquisition. “We’re not shy when we see an opportunity,” confides the CFO, who is one of three people on KLA’s executive team.

What Kispert finds much more challenging than IR these days is operations management. “Any day of the week my biggest focus is the operations side of the equation, tweaking the supply chain for lower costs and greater flexibility and making sure regional service operations are properly staffed,” he says.

Operations comes naturally, if a bit circuitously, to Kispert. He grew up in Center Moriches on New York’s Long Island, and after earning a political science degree at Iowa’s Grinnell College in 1985, he returned to Long Island to open a delicatessen called the Country Store in chi-chi Southampton. Customers liked his sandwiches, and the deli boomed. But a customer impressed with Kispert’s operation persuaded him to join Newark, New Jerseybased Prudential Insurance Co. of America as a systems analyst. On weekends he commuted to work at the deli.

Kispert left Prudential after a year to enter UCLA’s Anderson School -- he sold the deli to pay tuition -- graduating in 1989 with an MBA in finance and marketing. After six years in finance at IBM Corp., he joined KLA, in 1995. Before becoming CFO in 2000, he rotated through both financial and operational jobs. “I like making things, creating value and moving things around,” says Kispert. -- S.B.



Year named CFO: 2000

Number of employees: 2,000

Earnings:$1.22 billion

Compensation: $1.03 million

Stock options:2002 grants: $463,600; value of unexercised options (not granted in 2002) as of December 31, 2002: $353,000

Shapiro: “My job is to determine where long-term value lies for shareholders. We try to spend each marginal dollar where it makes the most sense.”

Natural gas is far more volatile when traded as a commodity than when burned as a fuel. And as the CFO of one of the largest independent gas producers in the country, Steven Shapiro knows how gas prices fluctuate. In fact, his ability to cope with variability has made the Houston-based Burlington Resources executive one of the most successful financial managers in the energy business.

“In this industry CFOs are extremely important,” points out one investor. “It’s all about the efficient allocation of capital.” For most of the past two decades, gas producers -- Burlington included -- have tended to overinvest when prices were high, only to see their investments go bust when prices fell. But thanks largely to the 51-year-old Shapiro’s conservative financial management, Burlington has become one of the most predictable, and profitable, investments in energy. Earnings last year were up 168 percent from 2002, and Burlington’s stock has risen more than 70 percent in the past 18 months.

High natural gas prices this year have certainly contributed, but investors give ample credit to Shapiro’s disciplined capital management. The key, says the Harvard Business School grad, is sticking with what the company does best. “It’s all about aligning the skills and assets of the company with its business culture,” says Shapiro.

Since coming to Burlington in 2000, he has sold off riskier operations in the Gulf of Mexico, South Texas and the North Sea, and focused on less sexy but more dependable core assets in mature North American gas basins. With 90 percent of its production and reserves now located in the Rocky Mountains of the U.S. and Canada, Burlington produces gas at a cost of $1.18 per 1,000 cubic feet, compared with an industry average of $1.50.

Shapiro’s caution is all the more impressive given his wildcatter past. He spent six years in the 1980s at Vastar Resources, a deep-water driller in the Gulf of Mexico that was bought by BP in 2000. “This guy knows how to shift gears,” marvels one investor.

Shapiro has enhanced financial transparency at Burlington. “Lack of confidence in financial reporting has been an Achilles’ heel for the industry,” he explains. “We’ve done everything we can to improve our disclosures.” That includes creating a disclosure committee on the board, to monitor reporting, as well as a corporate governance committee.

These days Shapiro’s biggest worry is what to do with the $2.6 billion in cash generated by the business last year. He isn’t about to throw money at risky ventures or pay up for acquisitions. Instead, he’s buying up shares aggressively -- $300 million worth last year. “Just because you have a lot of capital, it doesn’t mean you should spend it,” he says. -- A.O.


Age: 47

Year named CFO:2000

Number of employees:25,000

Earnings: $585 million


Stock options:$2.34 million

Sawyer:“The key to being consistently successful is making fewer mistakes than other people. You have o anticipate risks and develop simple solutions to manage them.”

There’s no substitute for direct communication with shareholders,” asserts James Sawyer, CFO of industrial-gases manufacturer Praxair. Like many financial executives, Sawyer, 47, has been spending more time lately holding the hands of portfolio managers.

Not that he’s had a lot of reassuring to do: While its competitors faltered during the global economic slump, Praxair excelled -- posting earnings growth of 5 percent even in 2002, despite a small drop in revenues. Viewed as having lower growth than rival Air Products and Chemicals, Praxair managed to post a return on equity in the 12 months through September of 22 percent, twice that of Air Products, with 11 percent.

Moreover, thanks to a 90 percent rise in its stock over the past three years, Danbury, Connecticutbased Praxair’s market cap now surpasses that of Air Products -- despite the fact that its revenues are almost 20 percent less. “Praxair is a core holding,” says one portfolio manager. “It’s one of the few basic chemical stocks you can hold and not worry about when to get out.”

Sawyer, who has an MBA from Massachusetts Institute of Technology and has been with Praxair since it was spun off from Union Carbide in 1992, deserves a good measure of the credit for the company’s success. (His boss, Dennis Reilley, was recently named one of Institutional Investor‘s Best CEOs, January 2004). Advancing from assistant treasurer to CFO in 2000, Sawyer had a hand in creating a centralized treasury operation that allows him to manage interest expense, currency exposure and tax planning much more efficiently.

His disciplined approach to risk management and capital allocation has helped Praxair weather cyclical downturns better than its rivals. And Sawyer’s tight financial management -- he has an annual target of $100 million in cost savings on a constant-volume basis -- helps Praxair squeeze more profit out of every sales dollar.

The key to the company’s consistency, says Sawyer, is an incremental approach to exploiting opportunities. Case in point: In China, Praxair is partnering with French competitor Air Liquide to build a huge air-separation and hydrogen-production facility to serve an industrial park in Shanghai. While Praxair may forgo some growth as a result, it should also avoid pitfalls.

With Asian and Latin America markets improving and the U.S. economy rebounding, the company is poised to grow significantly. Although Sawyer does not foresee problems tapping the capital markets if need be, he does worry that the ballooning federal budget deficit will ultimately push interest rates higher.

“These deficits will have to be balanced eventually,” he says. Spoken like a true finance man. -- A.O.


Age: 46

Year named CFO: 2001

Number of employees:16,000

Earnings: $1.3 billion (consensus estimate for 2003)

Compensation: $1.68 million (2002)

Stock options:$2.9 million (as of December 31, 2002)

Saleh: “We’ve proven a lot of people wrong on the fundamental strength of the company and our ability to generate a lot of cash.”

Nextel Communications’ walkie-talkie cell phone has helped it to grab 13 million subscribers. But not long ago, the Reston, Virginiabased mobile phone operator’s debt had raised questions about its very survival.

Fleet fundraising by new CFO Paul Saleh has all but erased those doubts. As interest rates bottomed out last summer, Saleh refinanced and reduced Nextel’s debt by some $3 billion, to $10 billion, saving the company nearly $400 million a year in interest payments and trimming its net debt-to-cash-flow ratio from 3.8 times to 2.5 (though its bonds remain below investment grade).

Besides arranging a $585 million debt-for-equity swap and also issuing $499 million of new shares in 2003’s third quarter alone, Nextel has issued $2.5 billion in fresh bonds at a weighted-average coupon of 7.3 percent to replace other bonds and preferred stock costing it around 10 percent on average. The company also cut bank debt by $575 million and refinanced the remaining $2.2 billion at an average spread of 2.25 percent over LIBOR, saving a full percentage point. Additionally, Saleh was able to draw on more than $1 billion in free cash flow: Nextel’s revenues jumped 22 percent, to $7.81 billion, in 2003’s first three quarters, compared with the like period the previous year.

“The key to our success is the ability to generate greater cash flow and to use those resources to reduce our financial risk and cost of capital,” contends Saleh. His confident touch in capital markets matters is reflected in his communication with the Street. “He’s very pragmatic and down to earth and really gives you confidence that he has his finger on the pulse of the company,” says one analyst.

Born in Lebanon, Saleh moved to the U.S. at 18 to pursue a BS in electrical engineering at the University of Michigan. Eventually, he earned a master’s degree in computer information and control engineering, as well as an MBA in finance, also from Michigan. He spent 12 years at Honeywell before joining Walt Disney Co. in 1997, where he restructured Euro Disney and rose to CFO of Walt Disney International. That experience, plus Saleh’s technical background, prompted Nextel president and CEO Timothy Donahue to hire him.

Nextel is on solid financial footing again. Analysts, however, are concerned about how it will fare over the next few years as it builds a technically demanding and costly 3-G network. Saleh is well positioned for the challenge. -- S.B.

John Alchin and Lawrence Smith | COMCAST CORP. VITAL STATISTICS

Ages:54 (Alchin) and 55 (Smith)

Year named co-CFOs:2002

Number of employees:66,000

Earnings: $3.21 billion (for the 12 months ended September 30, 2003)

Compensation: $1.9 million (Alchin) and $2.21 million (Smith)

Stock options:$13.94 million (Alchin) and $11.26 million (Smith)

Alchin: “We’ve been finishing each other’s sentences for 14 years now.”

Smith:“We didn’t have a CFO to sign off on financial documents, and Sarbanes-Oxley requires an official CFO title, so e formalized what we had already been doing for over a decade.”

John Alchin and Lawrence Smith, the co-CFOs of Comcast Corp., make the most of their differences. Smith, a folksy type who raises horses in his spare time, handles the complex tax and balance-sheet issues that come with being the world’s biggest cable company. Meanwhile, Alchin, an urbane art lover, raises capital and deals with the investors and analysts clamoring for timely data about Comcast.

Or as CEO Brian Roberts (named last month as one of Institutional Investor‘s Best American CEOs) puts it, “John raises the money, and Larry spends it.”

This formula has certainly produced results. Comcast entered 2003 with $35 billion in debt, $4 billion of it in a bank line maturing in the fourth quarter. The company was able to negotiate its way around potential liquidity problems, largely through monetizations and sales of assets arranged by Smith. The most notable: the disposal of a $7.9 billion stake in home-shopping network QVC to Liberty Media Corp. By year-end Comcast had paid off $7 billion in debt and extended its earliest maturing bank debt to 2009.

The co-CFOs also bring complementary professional backgrounds to their jobs: Smith is a tax whiz and former Arthur Andersen partner, while Alchin came of age as Toronto-Dominion Bank’s executive in charge of making loans to cable companies. Both say their unusual arrangement works because of their personal chemistry and Comcast’s collegial culture. Though they’ve essentially been dividing the CFO job between them for more than a decade, they weren’t officially made co-CFOs until after the 2002 passage of the Sarbanes-Oxley Act, which requires the CEOs and CFOs of public companies to sign off on financial statements.

Comcast had gone for years without a designated CFO. But after Sarbanes-Oxley, says Smith: “I wasn’t signing off, and Brian wasn’t very happy about that. We needed to have a CFO, so we just kind of codified what each of us had been doing in reality.” -- Justin Schack


Age: 47

Year named CFO: 1999

Number of employees: 19,476

Earnings:$3.01 billion (for fiscal year ended November 28, 2003)

Compensation: undisclosed

Stock options: undisclosed

Viniar:“One of the most important things a CFO must do is articulately communicate what is going on in the company to outside constituents and do it with credibility. That’s always been important, but it’s even more crucial today.”

David Viniar tries to play basketball four times a week, from pickup games at his local gym in suburban New Jersey to a long-standing Saturday game that includes several executives from Goldman Sachs & Co., where he has been CFO for five years. “I’m a very slow, very small forward,” says the genial, six-foot-one Viniar, who played hoops in the 1970s at Union College in Schenectady, New York. “But I can hit the 15-foot jump shot.”

Straight shooters are what investors want these days. “You get no pretense with David,” says one investor. “He’s the opposite of slick. In evaluating a complex company that takes on a lot of risk, like Goldman, that makes me feel comfortable.”

Says Viniar: “I don’t try to tell people that we’re something we’re not or that we’re going to do things we’re not going to do. If I think Goldman Sachs is not good at something, I’ll say so. If somebody asks me a question I can’t answer, I say: ‘I don’t know. I’ll get back to you.’”

But Viniar is more than your everyday CFO in another way. As head of Goldman’s operations, technology and finance division, he also oversees nearly all the bank’s infrastructure. More than 40 percent of the firm’s 19,000-plus employees work under Viniar, who joined Goldman as an investment banker in 1980, straight out of Harvard Business School, and rose to head of finance and treasury before becoming CFO in 1999.

His two roles -- helping drive earnings, while overseeing financial controls -- sometimes conflict. “It is difficult to balance,” he explains. “When I talk to our traders about risk, I want to make sure our risk is not too high but also that it’s not too low. We also have to make money.” Viniar often gets involved with individual trades days or weeks before they’re executed, carefully evaluating risk, rather than just giving a last-minute “yea” or “nay.” That is a big job in a firm that relies heavily on proprietary trading to support earnings during banking droughts.

Says one voter of Viniar, “He has his finger on the pulse of his firm in a way that the other guys don’t.”

And with the recent departures of former co-presidents John Thornton and John Thain, Viniar has become a candidate -- along with president and übertrader Lloyd Blankfein -- to one day succeed 56-year-old Goldman CEO Henry Paulson. -- J.S.



Year named CFO:1998

Number of employees:98,000

Earnings:$5.2 billion (for fiscal year that ended June 2003)

Annual compensation:undisclosed

Stock options: undisclosed

Daley: “We believe frequent dialogue with shareholders is a good thing. They own the company.”

More than 300 products that generate $43 billion in revenues -- and rising profits that propelled a 16 percent stock gain last year -- aren’t all that endear Procter & Gamble Co. to investors. Besides selling powerhouse brands like Clairol, Crest and Tide, Cincinnati-based P&G plies Wall Street with an increasingly rare commodity: earnings guidance.

“Some companies don’t issue guidance, and others that used to do so have stopped,” notes Clayton Daley, who as CFO is responsible for this particular product line. “But the sell side is going to have estimates whether we give guidance or not, so we’re better off having some influence rather than no influence.”

Daley guides the Street early and often -- quarterly earnings reports include projections that are routinely updated -- and the recent feedback from the market has been flawless. Last December 12, the day after P&G affirmed estimates for the fiscal second quarter that it made in its October 27 first-quarter release, the share price rose 82 cents, to $96.82.

Of course, periodic guidance alone won’t satisfy investors; the underlying story has to be favorable. Institutional investors praise Daley for the way he conveys it. “This was a darling stock that went through a rough patch and has come back,” says one buy-sider. “Clayt has been there throughout, is well-grounded in the history of the company, and that speaks to his ability to give good guidance.”

Daley, like most P&G senior managers, is a lifer. He joined the company as a freshly minted Ohio State University MBA in 1974 and rose rapidly through a series of financial positions to become director of corporate planning in 1986, a divisional comptroller in 1988, comptroller of U.S. operations in 1991, international comptroller in 1992, corporate treasurer in 1994 and CFO in 1998.

He has worked under three CEOs and has been instrumental in the turnaround engineered by A.G. Lafley, who took the top job in June 2000, when growth was stagnating. The company embarked on a restructuring plan that called for $4 billion in earnings charges between 1999 and 2003.

Since then, P&G has downsized substantially, shedding 12,000 employees and reducing capital expenditures to about 4 percent of sales from 6.3 percent. The $43.4 billion in revenues for P&G’s 2003 fiscal year were 9 percent higher than those in fiscal 2000, and profits, at $5.2 billion, were 49 percent better.

“We’re feeling pretty good about where we are,” says Daley. “The key to our improved results has been to stay price- and cost-competitive, and one of our challenges now is to sustain that. We’ll come out of this fiscal year as a $50 billion-in-sales company, and consistent growth on that size of a base isn’t so easy.” -- Jeffrey Kutler

PICKING THE TOP CFOs Institutional Investor‘s top CFOs were selected based on the responses of research analysts and portfolio managers at more than 400 money management firms to the following question: Who do you regard as the best CFO in the sector (or sectors) for which you’re responsible? We asked the same question of every brokerage firm analyst who received votes in the magazine’s annual All-America Research Team rankings. The voting wrapped up in late September 2003.

Respondents were asked to name their first, second and third choices for best CFO; the responses were weighted to produce a score for each candidate. We named a top CFO in each of the 62 industry sectors that we survey for the All-America Research Team; in the Cable & Satellite Media sector, Comcast Corp.'s co-CFOs were named joint winners.

Our CFO ranking was complied by Institutional Investor staff under the direction of Senior Editor Jane B. Kenney with Researcher Michele Bickford.

The best CFOs, by sector and industry
Category CFO Name Company Notes
Chemicals/Commodity 1 J. Pedro Reinhard Dow Chemical Co.
2 Gary Pfeiffer E.I. du Pont de Nemours & Co.
3 William Hernandez PPG Industries
Chemicals/Specialty 1 James Sawyer Praxair
2 Michael Hogan Sigma Aldrich Corp.
Metals & Mining 1 Richard Kelson Alcoa
2 Richard Adkerson* Freeport-McMoRan Copper & Gold *named CEO on December 10, 2003
3 Richard Navarre Peabody Energy Corp.
Paper & Forest Products 1 Richard Taggart Weyerhaeuser Co.
Aerospace & Defense Electronics 1 Christopher Kubasik Lockheed Martin Corp.
2 Stephen Page United Technologies Corp. retires 2004 April
3 Michael Mancuso General Dynamics Corp.
HM Robert LaPenta L-3 Communications Holdings
Airfreight & Surface Transportation 1 D. Scott Davis United Parcel Service
2 Henry Wolf Norfolk Southern Corp.
3 Alan Graf Jr. FedEx Corp.
HM James Young Union Pacific Corp.
HM R. Jordan Gates Expeditors International of Washington
Business & Professional Services 1 Michael Van Handel Manpower
2 M. Keith Waddell Robert Half International
3 John Kenny Jr. Iron Mountain
HM Kenda Gonzales Apollo Group
Electrical Equipment & Multi-Industry 1 Patrick Allender Danaher Corp.
2 Keith Sherin General Electric Co.
3 David FitzPatrick Tyco International
HM David Anderson Honeywell International
Environmental Services 1 Tod Holmes Republic Services
2 Steven Bouck Waste Connections
Machinery 1 Jon Kinney Illinois Tool Works
2 Nathan Jones Deere & Co.
3 F. Lynn McPheeters Caterpillar
Packaging 1 Andrew Campbell Pactiv Corp.
Airlines 1 Gary Kelly Southwest Airlines Co.
2 John Owen JetBlue Airways
3 M. Michelle Burns Delta Air Lines
Apparel, Footwear & Textiles 1 Wesley Card Jones Apparel Group
2 Michael Scarpa Liz Claiborne
3 Donald Blair Nike
HM Kenneth Watchmaker Reebok International
Autos & Auto Parts 1 John Devine General Motors Corp.
2 Alan Dawes Delphi Corp.
3 George Strickler* BorgWarner *left co. November 2003
HM Stephen Roell Johnson Controls
HM David Wajsgras Lear Corp.
Beverages 1 W. Randolph Baker Anheuser-Busch Cos.
2 Indra Nooyi PepsiCo
3 Gary Fayard Coca-Cola Co.
Cosmetics, Household & Personal Care Products 1 Clayton Daley Jr. Procter & Gamble Co.
2 Robert Corti Avon Products
3 Stephen Patrick Colgate-Palmolive Co.
HM Charles Cramb Gillette Co.
Food 1 John Bryant Kellogg Co.
2 James Dollive Kraft Foods
3 Frank Cerminara Hershey Foods Corp.
HM Barry Fromberg Dean Foods Co.
HM James Lawrence General Mills
Gaming & Lodging 1 James Murren MGM Mirage
2 Maureen Mullarkey International Game Technology
3 Charles Atwood Harrah’s Entertainment
HM Arne Sorenson Marriott International
HM Glenn Christenson Station Casinos
Homebuilders & Building Products 1 Bruce Gross Lennar Corp.
2 Joel Rassman Toll Brothers
Leisure 1 Gerald Cahill Carnival Corp.
Restaurants 1 Charles Sonsteby Brinker International
2 Robert Merritt Outback Steakhouse
3 Matthew Paull McDonald’s Corp.
HM Kerrii Anderson Wendy’s International
HM Michael Casey Starbucks Corp.
Retailing/Department Stores & Broadlines 1 Douglas Scovanner Target Corp.
2 Richard Galanti Costco Wholesale Corp.
3 Karen Hoguet Federated Department Stores
HM Thomas Schoewe Wal-Mart Stores
Retailing/Food & Drug Chains 1 Roger Polark* Walgreen Co. * Stepped down January 14, 2004.
2 David Rickard CVS Corp.
3 J. Michael Schlotman Kroger Co.
Retailing/Hardlines 1 Darren Jackson Best Buy Co.
2 Sharon McCollam Williams-Sonoma
3 Carol Tomé Home Depot
HM John Mahoney Staples
HM Robert Hull Jr. Lowe’s Cos.
Retailing/Specialty Stores 1 Michael Devine III Coach
2 Donald Campbell* TJX Cos.
3 V. Ann Hailey Limited Brands
HM James Fernandez Tiffany & Co.
Tobacco 1 Dinyar Devitre Altria Group
Electric Utilities 1 C. John Wilder Entergy Corp.
2 Thomas Chewning Dominion Resources
3 Moray Dewhurst FPL Group
HM Robert Shapard Exelon Corp.
HM Robert Kelly Calpine Corp.
Integrated Oil 1 Stephen Chazen Occidental Petroleum Corp.
2 John Carrig ConocoPhillips
Natural Gas 1 David Porges Equitable Resources
2 Park Shaper Kinder Morgan
3 Gerald Luterman KeySpan Corp.
Oil & Gas Exploration & Production 1 Steven Shapiro Burlington Resources
2 Roger Plank Apache Corp.
3 Louis Baldwin XTO Energy
HM Timothy Dove Pioneer Natural Resources Co.
HM Marcus Rowland Chesapeake Energy
Oil Services & Equipment 1 C. Christopher Gaut Halliburton Co.
2 Margaret Dorman Smith International
3 Mark Jackson Noble Corp.
HM G. Stephen Finley Baker Hughes
HM John Jackson Hanover Compressor Co.
HM W. Matt Ralls GlobalSantaFe Corp.
Banks/Large-Cap 1 Robert Kelly Wachovia Corp.
2 Todd Thomson Citigroup
3 Neal Arnold Fifth Third Bancorp
HM James Hance Jr. Bank of America Corp.
HM Dina Dublon J.P. Morgan Chase & Co.
Banks/Midcap 1 Michael Pinto M&T Bank Corp.
2 Daniel Healy North Fork Bancorp.
3 Richard Neu Charter One Financial
HM Jonathan Downing UCBH Holdings
HM Doyle Arnold Zions Bancorp.
Brokers & Asset Managers 1 David Viniar Goldman Sachs Group
2 David Goldfarb Lehman Brothers Holdings
3 Stephen Crawford Morgan Stanley
HM Ahmass Fakahany Merrill Lynch & Co.
HM Samuel Molinaro Jr. Bear Stearns Cos.
Insurance/Life 1 Kriss Cloninger III Aflac
2 Thomas Moloney John Hancock Financial Services
3 Mark Thresher Nationwide Financial Services
HM Richard Vaughan Lincoln National Corp.
HM Michael Gersie Principal Financial Group
Insurance/Nonlife 1 David Johnson Hartford Financial Services Group
2 W. Thomas Forrester Progressive Corp.
3 Howard Smith American International Group
HM Jay Benet Travelers Property Casualty Corp.
Mortgage Finance 1 J. Timothy Howard Fannie Mae
2 Russell Kettell Golden West Financial Corp.
REITs 1 Bernard Freibaum General Growth Properties
2 Douglas Linde Boston Properties
3 Walter Rakowich ProLogis
HM Darell Zink Jr.* Duke Realty Corp. stepped down 12/31/03
Specialty Finance 1 Gary Crittenden American Express Co.
2 Vernon Wright MBNA Corp.
3 John Remondi SLM Corp.
Biotechnology 1 Richard Nanula Amgen
2 Louis Lavigne Jr. Genentech
3 John Milligan Gilead Sciences
HM Peter Kellogg Biogen Idec
HM Michael Wyzga Genzyme Corp.
Health Care Facilities 1 Robert Farnham Health Management Associates
2 W. Larry Cash Community Health Systems
3 Burke Whitman Triad Hospitals
HM Geoffrey Meyers Manor Care
Health Care Technology & Distribution 1 Richard Miller Cardinal Health
2 Michael DiCandilo AmerisourceBergen Corp.
3 George Paz Express Scripts
HM William Graber* McKesson Corp. stepped down December 2003
HM Howard McLure Caremark Rx
Managed Care 1 David Colby WellPoint Health Networks
2 Michael Smith Anthem
3 Patrick Erlandson UnitedHealth Group
HM Joseph Whitters First Health Group Corp.
Medical Supplies & Devices 1 Robert Ryan Medtronic
2 Robert Darretta Johnson & Johnson
3 John Heinmiller St. Jude Medical
HM Lawrence Best Boston Scientific Corp.
HM Elisha Finney Varian Medical Systems
Pharmaceuticals/Major 1 David Shedlarz Pfizer
2 Kenneth Martin Wyeth
3 Judy Lewent Merck & Co.
HM Charles Golden Eli Lilly and Co.