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You’re on a public company board and the phone rings at midnight and it’s not good news: Your CEO or CFO has passed away. The next morning, the board convenes in emergency session. There’s only one subject beyond condolences for the tragic passing: Who is going to step into the interim CEO or CFO role?
Will you choose a placeholder from among your board, or will you choose to do something more proactive?
Let’s dive into the options.
Scrambling in a Crisis
The result likely will be something like this: The board members on the emergency call will look around and see who volunteers to step into the CEO or CFO seat immediately.
That person will most likely babysit the job, allowing the company to meet the letter of the Sarbanes-Oxley law by signing off on the financials and calming the markets. Most often when you hear this news publicly, you can bet that it is a placeholder executive who has specific orders to take no actions other than to be ready to sign off on the financials when they’re ready.
Despite that make-no-big-moves mandate, the board member who volunteers still is taking a huge risk. No longer an amorphous board member or “member of the audit committee,” the board member suddenly is fully exposed and at risk for errors in the financial statements.
The company, meanwhile, is in a holding pattern. The board-member-turned-interim-CEO or interim CFO is neither expected or even allowed to move the organization forward.
A Better Approach to Sarbanes-Oxley Compliance
What if your organization had a fully vetted, experienced executive ready to take over on a moment’s notice? That’s possible by working with InterimExecs RED Team.
RED Team executives have successive records of outstanding performance as CEOs or CFOs and can be on-site in 48 hours or less.
It’s a new way to think about your Sarbanes-Oxley compliance plan. Rather than installing a board member as a placeholder to meet the letter of the law, you can have a skilled interim executive who can meet the requirements of SOX, but do so much more.
This is somewhat akin to the capability of the FDIC. The US Federal Deposit Insurance Corporation (FDIC) stands ready on a moment’s notice to put in a veteran banker if a US bank should face crisis. That executive is highly skilled – not just a placeholder or babysitter. The same level of highly skilled operational capability is now available to US public companies through InterimExecs RED Team.
An Interim Who is Ready to Lead
By contracting with an experienced InterimExecs RED Team CEO or CFO, you get a world class executive who, yes, can meet the letter of Sarbanes-Oxley compliance rules and sign off on the financials. But a highly qualified, experienced interim CEO or CFO can do much more. They can keep your company on track and moving forward while the organization searches for a new permanent hire.
But doing that requires forward thinking on the part of the board. You need a contingency plan that looks beyond the skills of the board and thinks longer-term about the success of the company.
Call or text us at +1-847-849-2800 for a confidential conversation about how you can make your contingency plans solid to ensure you have the right executive ready to step in when the crisis happens.
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