Treasurers transform to today's realities: Financial Executive's Editor-in-Chief Ellen M. Heffes spoke recently with the treasurers of Progressive Insurance Co., Millipore Corp. and DuPont Co., to get their views on the impact of the financial crisis on their jobs, their changing responsibilities, the evolving tools and technologies of their trade, the needs of aspiring treasurers and the future of the treasurer's role.

AuthorHeffes, Ellen M.
PositionCOVER STORY - Interview

Though the world of corporate finance has changed enormously--and particularly over the last year and a half--the treasurer's prime responsibility, to ensure the business has enough money to support its needs, hasn't changed in 100 years, says Tom King, treasurer for five years of Progressive Insurance Co. in Cleveland. Of course, he adds, the tools and technology have made it faster and cheaper, while the financial crisis has brought more attention and value to the role.

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But the basics, as King puts it, "making sure his or her employer has enough--but not too much--capital to support the business needs," will always endure.

To Steven Kasok, vice president and treasurer since 2008 of $1.7 billion Millipore Corp., a life-science company in Billerica, Mass., the basic responsibility of the treasurer "is to ensure that the financial operations of the company never get in the way of actually running the business."

(Editor's note: Subsequent to the interview, Merck KGaA and Millipore Corp. announced they have entered into a definitive agreement under which Merck KGaA will acquire Millipore, for a total transaction value of $7.2 billion, and the two will create a $2.9-billion partner for the life-science sector.)

To Susan M. Stalnecker, vice president and treasurer since 2006 of $30.5 billion science company DuPont Co., the role has four elements. One, the functional aspects around global cash operations and management and ensuring financial flexibility that enables the corporation to do what it needs to do. Secondly, access to the capital markets "anytime and in any fashion to get the amounts we need in the time span we need at the best possible cost."

Third, integrated financial risk management, which involves monitoring all the company's financial risks and understanding the possible impacts. Finally, it's ensuring a "superior internal control environment."

Stalnecker stepped up to chair FEI's reinstated Committee on Corporate Treasury (CCT) when it was re-launched last year, supporting FEI's efforts to be a key player with decision-makers and regulators.

Kasok serves on FEI's CCT and recognizes this unique opportunity to help educate the lawmakers and regulators on how their work affects businesses. King serves on the Editorial Advisory Board for Financial Executive magazine.

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There's no doubt the impact of the financial crisis has been felt by just about every business around the globe. While the three corporate treasurers profiled here are with companies that have fared well, they acknowledge the significant impact of the recent events and articulate the differences of the new realities they now face.

Kasok says he feels fortunate about how well Millipore has performed, which has allowed it to do the "normal things one would need to do in running a business." But he now thinks more about "counterparty risk among the caliber of institutions that would not have been considered at risk in the past." And he makes sure he balances the company's needs appropriately in light of this risk.

For example, he thinks differently about refinancing activity. "In such a pendulum-focused world, the pendulum on credit spreads was well to one side (very low, we have a 35 BPS credit spread) when we developed our credit facility back in 2005, and a year ago, it was dramatically in the other direction."

At some level, he adds, there's more of a focus on what's the right level to lock in as the risk of markets closing is far greater than before, albeit "having a well-performing, solid company clearly helps."

Even in the worst of the market, Kasok says he was able to "put in very attractive credit arrangements for the company based on the strength of the company, banking relationships and the ability to tap markets outside of the U.S." But those windows do close more often and more rapidly than they had in the past and the cost of missing the window can be dramatic.

Stalnecker says she's still getting over last year. "The challenges of this year [2010]," she says, "really do pale in comparison to what we experienced last year, when the goal was just to make sure we had visibility to what was going on in the marketplace in a world that was extremely turbulent."

For her team at DuPont, she says, as with many other corporates, "the key was to make sure that we maintained our liquidity, meaning making sure we had a very strong cash flow." Doing that in a very uncertain environment, she says, "was a real challenge."

As a result of last year's activities, she notes, "since we did navigate those waters fairly successfully and we learned a lot about facing those challenges and what it took to overcome them, it provides much confidence for the future."

Peering ahead this year, Stalnecker sees a "new norm in the market. We're clearly not going back to the way things used to be," she says. Thus...

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