The pace of change is accelerating, and relying on past assumptions can set a company up for failure. More CFOs are finding that holds true even with corporate disclosures, where sharing the same old information can create an impression at odds with the company’s true performance. Adobe this week joined a growing number of finance teams that are rethinking how they define and measure success—and what data gets shared with investors.
4 need-to-know headlines
1. Finance chiefs redefine success
Adobe announced recently that it will no longer share quarterly subscriber numbers with investors, as the software giant unveils more delivery methods at wildly varying price points. “All of this further dilutes the relevance of the number of subscribers as a measure of the health of the business,” CFO Mark Garrett said. Instead, Adobe is shifting its performance benchmarks, disclosing a combination of subscription fees and corporate contracts. It’s hardly alone in shaking up corporate reporting. More finance chiefs are rethinking both which metrics to disclose and how corporate success is defined, given the rapidly shifting business environment. (via Studiodaily.com and WSJ.com [log-in required])
2. SEC cracks down on vague proxy proposals
The Securities and Exchange Commission is urging companies to stop using vague language meant to obscure the purpose of shareholder proposals opposed by management. Proxy cards, the SEC directed, should “clearly and impartially” describe the intended action that’s up for vote. The directive follows a wave of investor complaints that some companies purposefully fail to clearly convey voting items ahead of annual meetings. (via CFO.com)
3. With a global focus, Fed outlines gradual interest rate increase
Negative interest rates in Japan and Europe, combined with the slowdown in China, the world’s second-largest economy, seem to be weighing heavily on the Fed’s outlook. In a highly anticipated talk this week, Federal Reserve chair Janet Yellen reiterated that there will be fewer rate increases in 2016 than originally expected and laid out a plan to lift rates at a more gradual pace than previously thought. But discerning attendees also noted factors beyond national borders loomed large. The words “China,” “dollar” and “global” were uttered far more often than in the past year, with “global” in particular being used four times as much as in the last speech in December. (via FT.com and Marketwatch.com)
4. California reaches deal on $15/hour minimum wage
In a move that could have repercussions for companies far beyond the Golden State, California’s governor announced plans to raise the state minimum wage to $15 per hour by 2022. The move is the largest win to date in a nationwide battle to raise minimum wages, which means as it unfolds the impact will be closely scrutinized by finance leaders and economists alike. “Just as the benefits of this policy are likely to be greater because it covers a greater share of the work force than for past minimum wage increases, the risk of these costs is also higher,” one expert ventured. (via Nytimes.com)
The stat: 47%
The percent of U.K. boards that have considered the possibility of a “Brexit” (or, Britain voting to leave the European Union this summer), according to a new poll by ICSA: The Governance Institute. Even fewer firms (just 41%) have hashed out what the Brexit might mean for them. “It is surprising that boards are not at least considering the knock-on effect that an exit could have on the underlying economy,” ICSA CEO remarked. (via Forbes.com)
Sound bite of the week
“This lawsuit may be over, but the Constitutional and privacy questions it raised are not.”
– Congressman Darrell Issa, following news that the FBI had dropped its court case against Apple that would require the tech company to help hack into the iPhone used by one of the San Bernardino shooters.
For tech execs everywhere, the dropped case only means that questions around corporate obligations to government encryption efforts — and whether companies can be compelled to devote resources to weakening their own product security — will be postponed, not answered. (via Usatoday.com)
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.