What are shareholders to do when executive stock options do not work to consistently align management performance with shareholder interest? The hostile takeover option is very unsightly. That leaves firing somebody: Aha! That arrogant, good-for-nothing CEO and his "little dog, too," the CFO. What is a CFO to do under conditions where everyone is just trying to survive the next change of management? Small-company CFOs aren't off the hook, because if their firms are healthy, they emerge as delectable morsels for the big M&A fish. If the firm underperforms but has some juicy assets, owners often get out while the getting is good, and sell at a loss. What is a CFO to do, indeed?

One thing is certain: Something must be done, and it must be done proactively. Several routes to the same end might be employed, some of them distinctly more mature than others. They may be considered alone or in combination.

Go private. Going private is perhaps one of the most mature moves a CFO can orchestrate, and with a deflated market many CFOs are doing just that. Reasons include: depressed market so repurchase is within reach, cranky shareholders, burdensome new regulations for public companies, and for the weariest, just being able to concentrate on products and services again. Some standard ways of restructuring include management buyout and merger with a nonpublic firm. CFO Magazine cites other restructuring methods: leveraged recapitalization merger, reverse stock split, and asset disposition (1). CFO Magazine also reports that one of the most prominent companies to go private is Dole Food Co., whose executives cited short-term pressures as one major reason for the exit. Other departures include companies of all sizes and types: Coast Dental Services in Tampa, Landair Transport (of Tennessee, with 2001 revenues of $106 million), and National Golf Properties in a deal worth $1.1 billion, to name a few. The going-private trend appears to be steadily increasing (2).

Employee ownership is clearly a highly mature option. This could take the "going private" forms mentioned above. Some cooperative-based companies, like the high-end sporting goods company REI, already are fully into employee ownership. Imagination, again, is the limit to how employee ownership may be accomplished. Some "company" towns operate in partnership for the long-term interest of their shared communities, like Hershey, Pennsylvania, and number two on the Business Ethics "Best Corporate Citizens" list, Columbus, Indiana, home to Cummins Engine [Company].

Forge stronger links between board and shareholders. This move includes making your board members "active" actual shareholders, if they are not already. This action offers a way to get the board interested in company well-being. Another version related to the developmental transformation of the board discussed in the previous section is to set board members the task of building, repairing, and renewing relationships with absentee shareholders.

Court mature shareholder-partners. These owner-partners, of course, have the long term in mind as well, and have the fund power to help consolidate the fragmented shareholder base. For example, there are socially and environmentally conscientious mutual funds. Periodically, Business Ethics and other corporate governance reform publications rate socially responsible mutual funds in several categories. For example, the Spring 2003 issue of Business Ethics listed -- with phone numbers -- dozens of funds, including Walden Socially Balanced Fund, and Parnassus in three categories: bond and equity, large and small cap funds. A few public pension funds (Calpers in California) take shareholder governance seriously. Of course, a big owner wants a big say, but if you are partnered with others of your kind, this design is almost always a good thing.

Organize long-term institutional investors. Efforts toward such organization in the interest of improved shareholder governance are already taking place, which should be of interest to millions of people because this where the retirement monies of the nation reside. John Bogle, founder of Vanguard and now a retired elder, is active in this movement. In 2002, he said, "We have very, very few corrupt people in the financial world, . . . but I believe we have a corrupt system." (3) Perhaps the issue is more one of developing immature governance systems than of mass ethical corruption.

Shift capital structure. Consciously and steadily move out of equity and into debt markets. This strategy, of course, is the stock in trade of the leveraged buyout, which brings us to the most mature alternative, although a course of action that is not for everyone.

(1) Tim Reason, "Off the Street," CFO Magazine, May 2003, 57.
(2) Ibid., 54-58, with statistical credit to Mergerstat, and Scott Larson National-Louis University.
(3) Marc Gunther, "Shareholders of the World Unite!" Fortune, June 24, 2002, 86. 
 
CATHERINE STENZEL, MST, MBA, and JOE STENZEL, M.D., are co-editors of the Journal of Cost Management, a bimonthly RIA Group periodical. Catherine Stenzel is also curriculum developer and a national instructor for the Institute of Management Accountants (IMA) where she and Joseph co-develop seminars and organize conferences. Their new book, CFO Survival Guide: Plotting the Course to Financial Leadership (Wiley, February 2004) is available now, which includes a supplemental Web site.