Beyond Sox

Beyond Sox

PUBIC COMPANIES by Francis X. Gilpin | Associate Editor

What's a gathering of corporate executives these days without a little grousing about the Sarbanes-Oxley Act of 2002?

The chief financial officers for three of the Tampa Bay area's most prominent public companies certainly delivered that at a March 20 meeting of the local chapters of Financial Executives International and the Association for Corporate Growth.

But Jabil Circuit Inc.'s Forbes I. J. Alexander, Raymond James Financial Inc.'s Jeffrey P. Julien, and Outback Steakhouse Inc.'s Dirk A. Montgomery also offered their views on a range of other topics, including how the Bay area can attract and retain more large companies.

First, however, came the bellyaching about SOX.

"Our biggest business concern right now is overregulation," says Julien, who has been CFO at Raymond James for 19 years.

Julien says Raymond James doesn't just have to look out for the U.S. Securities and Exchange Commission, which has gone after the St. Petersburg financial services firm for poor supervision of rogue financial advisers. The enforcement arms of the National Association of Securities Dealers and the New York Stock Exchange want to outdo their federal counterparts at the investigation game, according to Julien.

"There's been a lot of piling on by all the other self-regulatory organizations," Julien says. "The pendulum – everybody knows, I think – has swung too far. There were bad actors. There probably was a need to strengthen things. But we have crossed the line here into the realm of punishing the innocent."

But securities regulators aren't the only annoyances facing Raymond James.

Julien says some of the other firms populating the financial services space with Raymond James aren't playing fair. "It's not that we mind competition," he says. "It's that we mind stupid competition."

Assorted banks and insurers, many just entering the securities business with more capital than Raymond James, are undercutting his firm on price in order to grab market share right away, says Julien. Julien didn't mention the names of any specific competitors engaging in such practices.

Alexander says the biggest challenge facing Jabil is managing rapid sales and profit growth. The Jabil CFO predicts both lines on the income statement of the St. Petersburg contract electronics manufacturer will increase by 25% this year.

Jabil is trying to be of greater service to telecommunications and computer equipment customers by getting into the assembly and even the design of components that it makes. Much of the production for the likes of Cisco Systems Inc., Hewlett-Packard Co., and International Business Machines Corp. is overseas.

Alexander, a Scotland native who has been Jabil CEO for less than two years, attempted to minimize the impact of the company moving more factories offshore. "We're in the outsourcing business," says Alexander. "We want people to outsource to us."

Montgomery, who joined Outback last fall from ConAgra Foods Inc., says the Tampa restaurant chain is trying to "reconnect with customers." Outback has suffered flat sales in recent quarters, especially at the flagship steakhouse division, in spite of international expansion.

Outback is still adding locations, particularly with Carrabba's and other divisions where the company can get diners in and out quickly. But Montgomery says real estate prices have complicated site selection. Higher land costs frequently make it impossible for the company to meet investment return targets for individual restaurants, he says.

With a new generation of top executives taking over daily operations from the founders, Outback is upgrading areas, such as technology. At the Fleming's Prime Steakhouse & Wine Bar, Montgomery says the new reservation system tracks the food and beverage preferences of repeat customers so they feel like VIPs.

Bigger and better roads

Julien was again the most outspoken about what the Bay area needs to do to appeal to the Raymond James-caliber company.

Astronomical housing costs and the resulting nightmarish work commutes are undermining the quality-of-life argument that used to be a consistent winner for Raymond James employee recruiters.

"The infrastructure has become a major impediment now, as the bedroom communities get farther and farther away from downtowns," Julien says. "They're going to need roads, bigger and better roads, or some form of mass transit, or something to accommodate the movement of people around the Tampa Bay area better than the road system we've got today."

The poor reputation of Florida public schools continues to be a challenge to luring employees with families, he says.

Finally, even though the stadium for the local National Football League franchise bears his company's name, Julien thinks the Bay area must support the arts as well as it does professional sports teams.

"It kills us to see organizations like the Florida Orchestra struggling," says Julien, who sounds a lot like his boss, noted arts patron Thomas A. James. "Our company, and Tom in particular, are huge supporters of all of the cultural events that we have around here. We'd like to see everybody else join in."