Best Practices: Annual CEO Expense Audit
I’ve started a new category on my blog called “Best Practices.” These are going to be posts inspired by my experiences with various companies that I feel are above and beyond the normal activities you’d expect. The first one comes from Matt Blumberg, the CEO of Return Path. Earlier this week the board received an email from him that included the following:
“Although [our CFO] approves my expenses in our accounting system, inspired by Mark Hurd, I decided it would be a good idea to add a level of transparency to you in terms of my expenses.
To that end, I’m doing two things:
- I’ve asked our auditors to include some analysis/testing of my expenses in this year’s audit
- Attached, please find a spreadsheet which details all expenses, with a summary tab that has the overall picture and a few explanatory notes
Trash or treasure, as they say, but please feel free to ask any questions or poke any holes you’d like. I can assure you that I’m pretty disciplined about expenses (both in terms of not being profligate and in terms of not abusing company money for personal use), but I did think it would be good housekeeping for you to have visibility.”
To a person, we responded that while unnecessary, this was a nice gesture of transparency. The spreadsheet that Matt sent around had every expense item he was reimbursed for in the year. The summary was helpful for putting it all in perspective, but I could look and see where (and with whom) Matt ate dinner, which hotels he stayed in, how much he paid for plane flights, and what he charged to the company as miscellaneous expenses.
I thought about it more and decided it was an awesome display of trust. I have immense respect for Matt, his leadership, and his management skills. But more than that, I’d go to the ends of the earth to do anything for him. Unilateral, unexpected gestures like this one just reinforces that for me. So, more than just transparency, this best practice increases the level of trust between a CEO and his board.