Financial Executive

RJR Nabisco pension plan - Employee Benefits RJR Nabisco Inc redesigned its pension plan to meet the benefit requirements of its diversifying work force. Called the 'Pension Equity Plan,' it combined the best attributes of the traditional final average defined benefit plan of one of its dometic operating company, R.J. Reynolds Tobacco Co, and the defined cash balance plan of its other company, Nabisco Foods Group. The final-average-pay-based benefits of the plan is expressed in lump sum terms. A standard benefit buildup and cost neutral...

An open letter to President Clinton: pension money for the infrastructure.

Viewpoint The Clinton administration's plan to use pension funds worth $2 trillion to $3 trillion for the renovation of the nation's infrastructure should be properly managed, if it pushes through. Mismanagement may raise worries among retirees, burden taxpayers and imperil the successful implementation of the projects. Morever, mishandling of the program could undermine the potential economic benefits to be had from such an undertaking. Of the two proposals being put forward with regard to the pension...

At long last, meet EDGAR! (Electronic Data Gathering, Analysis and Retrieval system of the SEC) (Corporate Reporting)

The SEC has finally implemented its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The electronic filing project was designed to address the mounting volume of paper filings the agency receives per year, estimated at about 10 million pages. Since filing through the system becomes mandatory in 1993, filers had better make the necessary preparations. The first thing they must do is to form a technically knowledgeable EDGAR working group. It will be tasked with ascertaining ti...

Beakers & bellows.

Fisher Scientific Co. collection of scientific instruments - Corporate Gallery: The Fisher Collection - Cover Story Fisher Scientific Co owns one of the most complete science collections in the country. The gallery of the science instruments and high-purity chemicals supplier boasts of over 900 high-quality artwork and memorabilia. The pieces trace 2,000 years of scientific development, from AD 142 alchemy in China to the Atomic Age. The primary museum of the company exhibits forty masterpieces while the nearby Pasteur Memorial holds pictures, letters, notebooks and laboratory equipments of Louis Pasteur. ...

Can honesty be legislated?

From the President The Committee of Sponsoring Organizations (COSO) of the National Commission on Fraudulent Financial Reporting, or the Treadway Commission, has released 'Internal Control - Integrated Framework.' The report describes internal control and its elements, and furnishes a standard for evaluating internal controls. Several organizations, including the Federal Deposit Insurance Corp, have expressed their satisfaction and agreement with the report. However, there are individuals who maintain their obj...

Can stock compensation accounting accomplish anything that disclosure can't?

Executive Compensation in the Spotlight The proposal by the Financial Accounting Standards Board to account for employee stock options with the use of an option pricing model has regenerated debates regarding stock compensation. Under the plan, 30% to 70% of the value of the underlying stock would be charged to the corporate earnings as compensation expense. Furthermore, it would designate broad-based stock plans in the same way as other fixed-stock plans. The proposition was strongly opposed by several organizations and individual...

Charting performance: the SEC's new disclosure rules.

Executive Compensation in the Spotlight The SEC has issued new rulings on executive compensation disclosure. The new regulation is aimed at supplying shareholders with a systematic and easily comprehended information on the executive compensation policies and practices of a firm. It is also intended to make board members completely accountable at the corporate ballot box by a properly apprised shareholder voters. The new standard wherein an outline of compensation awarded to, earned by and paid to the five highest paid executives i...

Current values: finding a way forward.

Includes related articles - Corporate Reporting The current debate on the use of current values to determine and report marketable securities in financial statements can be resolved through the establishment of a model that incorporates the elements of both current value accounting and historical cost accounting approaches. The proposed model would maintain the basic structure of the historical cost accounting. However, it would also recognize market values, or current values, in the financial reports. Marketable financial assets would be ...

Letting markets slip away.

The Future Businesses and industries should not quit their market sectors in response to political and socioeconomic changes. Instead, they should identify emerging market influences and create proactive marketing, sales and new-product initiatives to take advantage of these new market forces. Several industries have already prematurely forfeited their markets in the face of seemingly uncontrollable changes. The list includes the newspaper, railroad, baking, canning and sewing sectors. What these indust...

Market value: the debate rages.

Corporate Reporting - Panel Discussion A conference on financial accounting issues conducted by the Financial Executive Institute was the setting of heated debate on market value accounting, one of the most hotly contested accounting topics. The discussion was participated in by four prominent experts on the subject. They are Citibank Exec VP Thomas E. Jones, Aetna Group Executive of Finance and Administration Patrick W. Kenny, Financial Accounting Standards Board (FASB) Vice Chmn James J. Leisenring and SEC Chief Accountant Walte...

Municipal bonds: the choice of wise investors.

Personal Financial Planning Investors are attracted to municipal bonds for a variety of reasons. First, interest from these state- and local government-issued bonds may be exempted from federal and state income tax. Second, muni bonds have an almost-zero default history. Third, they are normally given ratings by security-rating companies, enabling investors to assess the quality of the bond. Lastly, insurance companies protect bondholders from default. Thus, municipals are relatively less risky and simpler than common s...

Readers support North American Free Trade Agreement.

Financial Executive One-Minute Survey Results Results of the one-minute survey conducted by the Financial Executive Magazine show the support of its readers for the North American Free Trade Agreement (NAFTA). Eighty-four percent of the respondent readers expressed their support for the treaty and only 6% said they are not in favor. However, only 75% said NAFTA would be economically advantageous and 22% believed it would be economically harmful. Regarding the impact of the agreeement, 31% said they are worried about the potential environ...

Shareholders look at executive pay.

Executive Compensation in the Spotlight Shareholders regularly review information on executive compensation due to its potential investment opportunity. First, a compensation plan of a company serves as a guide to shareholders in deciding whether to buy or sell. Second, efforts by shareholders to harmonize management and shareholder interests can be an investment themselves. In 1992, shareholder rights on information regarding executive compensation were dramatically expanded. This development was brought about by four factors: the...

The name of the GAO's game is more legislation.

General Accounting Office - From FEI The General Accounting Office (GAO) expressed its dissatisfaction with the report of the Committee of Sponsoring Organizations (COSO) on internal control. In his letter to COSO Chmn Robert May, GAO Asst Comptroller General Donald Chapin stated that the report does not emphasize the importance of internal controls, falls short of requirements set by the Treadway Commission regarding the reporting of internal control procedures, and passes the chance to improve monitoring and assessment of inte...

Your board of directors in a different light.

Corporate governance at Dayton Hudson Corp - Business Talk Minneapolis, MN-based retailer Dayton Hudson Corp has one of the most innovative corporate governance structures in the country. One of the changes implemented in the company's board of directors was in the area of term limits for its members. The revision changed term limits from one year to three years with compulsory retirement after 15 years or at age 68. Another governance transformation was the appointment of directors who are at the peak of their careers in Dayton Hudson. Thus, the boa...