|
|
|
Lonely at the Top
In the wake of corporate scandals, CEOs find themselves under unprecedented scrutiny by shareholders and the government
|
Business New Haven
11/11/2002
By: Melissa Nicefaro
|
Business New Haven speaks with four business leaders - two from public companies and two with non-profit organizations - about their jobs as leaders and the role of trust in today's business world.
David Struwas, CEO, DSL.net
Company function: Sells DSL service to small to mid-sized businesses in 200 cities throughout the U.S., including 30 markets in Connecticut.
No. employees: 190
Marshall Chiaraluce, CEO, Connecticut Water Services
Company function: The Connecticut Water Co., under the CWS corporate umbrella, serves 250,000 customers in 38 towns in Connecticut. Connecticut Water has operations in Clinton, Naugatuck and East Windsor.
No. employees: 185
Robert (Beau) Doherty, president, Connecticut Special Olympics
Organization function: Organizes 45 annual games and tournaments for mentally challenged athletes. Four major tournaments take place every year. Next year's Summer World Games in Dublin, Ireland mark the first time the event will be held outside of the U.S.
No. employees: 30
Hart Caparulo, president and chief professional officer, United Way of Greater New Haven
Organization unction: Organized corporate and individual charitable fundraising.
No. employees: 17, plus offsite staff working for Alternative Sentencing Program
What is toughest part of being a CEO?
Struwas: Keeping everybody focused on the vision that you have. People tend to want to diversify into a lot of different products or services and you have to keep people focused, especially in times of financial constraints.
Chiaraluce: Because this is a highly regulated business [water utility] - people actually drink my product - the toughest job is keeping up with the new regulations and convincing the regulators that we continue to need increasing amounts of money to invest in the company.
Doherty: Raising money. My stresses are pretty much the same as most mid-sized companies. When I go to meet with a company, I throw up the calendar and it has 45 events on it. Everyone feels a little bit overwhelmed. We have a fairly large budget for a Special Olympics program, but Connecticut is so small, we can do a lot.
Caparulo: We are a small organization. There are plenty of non-profit organizations that have hundreds of employees. At a smaller non-profit, the president is really involved in everything: personnel, strategic planning, fundraising, lease negotiations - everything we do. It probably does not allow me to be more focused on one or two things that might be my greatest skill. My greatest skill is asking people for money.
Have events such as WorldCom, Adelphia, Enron and ImClone had an effect on the way you do business?
Struwas: It hasn't, but we know it catches up with you to pump up numbers. They do it one quarter and don't make it up the next quarter and dig themselves into a bigger hole.
Chiaraluce: We've noticed a flight of investor back to companies like ours, a mom-and-pop with smaller investors. We don't do anything exotic with our books. Shareholders are looking for a safe place that doesn't have room for a lot of tricky accounting.
Doherty: I think since Enron, even though we're a non-profit, we're not insulated against corporations. We have so many companies that sponsor our games, so based on what I hear, trust is a big factor in the general public. In the non-profit world, it's no different from the corporate world: You'd better have a good auditor.
Caparulo: I think it's had an affect on how everybody operates. I think non-profit organizations that effectively raise money have always been more under public scrutiny than public corporations. As long as shareholders are happy at public corporations, there's not so much delving into that. But because we do ask people for money, we're very used to sharing our audited financial statements.
What is your opinion of the Sarbanes-Oxley Act?
Struwas: It takes an interesting twist to the CEO's position because now the CEO must find out and verify everything going on within the company. I am financially and criminally responsible now. It's been a major, major change for CEOs. If somebody in sales has been creating fraud and they're reporting sales that are not there, I am responsible for that. It's a fine of $1 million and possibly one year in jail, so that really changes the way CEOs run the company and make sure everybody within the company have the right controls to report the right financial numbers.
Chiaraluce: There are a lot of provisions of that act that are very good. There are also a few provisions where the pendulum is going too far the other way. For example, the requirement on the stock options and expensing. There are ways to accommodate those who are very visible to the shareholders that the shareholders would know what's going on without going to that extent.
Do you feel you're under closer scrutiny than ever before by shareholders or sponsors?
Struwas: We don't have a [large] institutional shareholder base, probably because of our stock price right now. We have more consumers, day-traders and that kind of shareholder. I don't know that they really dig into the numbers that well like institutions do. Our business is simple, too. We sell broadband for a certain amount a month and we have a certain number of customers. It's pretty straightforward.
Chiaraluce: Sixty percent of our investors are in Connecticut. Shareholders are finding they want a real value in their investment in a company that's solid. We've noticed with the different scandals, more investors are [buying] our stock. It is benefiting us, actually.
Doherty: We're clearly seeing the economy turn for the worse here, and we've got to batten down the hatches. I don't know how it works in bigger corporations, but I know how it works here. If someone who sits in my seat is not around the coaches and the athletes and the local coordinators and the directors, and they sit in the ivory tower, you're in big trouble. We are seeing some red flags and trying to be financially smart about how we're going to move forward in the next year or two. We don't want to diminish the program services when there are people out there who need it, but we have to be realistic.
Caparulo: There are laws through the state's Department of Consumer Protection that requires us to register on an annual basis, and report how much money we spend to make money. Non-profits overall are more used to disclosing their information [than corporations]. You're not going to find a page and a half of minutes from our meetings - you're going to find seven or eight pages.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
