June 1, 2011

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CFO of the Year

Candace M. Little, Heather Stewart, Sarah Ryther Francom

June 1, 2011

Today’s CFOs play an increasingly vital role in securing a corporation’s future. Our CFO of the Year award recipients take on that challenging role and go beyond it, working side by side their CEOs to ensure their company’s short- and long-term success. Join Utah Business as we celebrate 12 of the state’s top financial leaders. Mitch Tibbitts Chief Financial Officer | MountainStar Healthcare Under Mitch Tibbitt’s leadership, MountainStar Healthcare tackled the recession head on by improving its operational efficiency and reducing costs—all without affecting the quality of patient care. Tibbitts has financial responsibility for the company’s assets in Utah, Idaho and Alaska including nine hospitals, six surgery centers, three imaging centers and 30 physician practices—representing approximately 7,000 employees. The economic downturn caused a sharp drop in patient volumes. For example, MountainStar facilities saw fewer births and elective procedures. But in spite of those challenges, Tibbitt’s cost-cutting measures ensured that the company achieved earnings growth in 2010. “In addition, we were able to make considerable capital investments in the communities we serve in three states, including a satellite emergency department, two imaging centers and one ambulatory surgery center in Utah, as well as six physician clinics—four of which are in Utah,” he says. “[Tibbitts] has an ability to enlist people in operations to support financial initiatives that can be difficult to implement, such as reducing costs involved with staffing, supplies and other operating expenses. By presenting a business case at the onset and then managing through the change, he gains the support of others in the organization,” says John Hanshaw, CEO at MountainStar. And while the organization underwent some belt tightening, it was not at the expense of patient care. “In fact, many of our patient care initiatives actually improved during the recent period of cost reduction,” Hanshaw says. Furthermore, Tibbitts was able to reduce staffing hours without laying off a single employee. Tibbitts says he finds motivation by drawing on the spirit of caring that permeates MountainStar. “It’s rewarding to work with outstanding individuals who do their best to improve patient experiences every day.” Patrick Keenan Chief Financial Officer | Kennecott Utah Copper Patrick Keenan began his career with Rio Tinto in 1994 as an accountant for Kennecott Utah Copper. In the intervening years, he served the company in Indonesia, London, Australia, back to London—and then he returned home to Utah to become CFO of Kennecott Utah Copper in 2009. “My career has been a bit of a geographic whirlwind,” he says. Now he is deeply involved in Kennecott’s Cornerstone Project—an effort to gain approval to widen and deepen the mine in order to extend its life to 2028 or beyond. Keenan has the crucial job of providing the financial data necessary to convince parent company Rio Tinto that the Cornerstone Project will pay off handsomely. Thanks to his work, Rio Tinto recently approved $238 million to continue Kennecott’s preparations for the Cornerstone Project. “Being a native Utahn and second-generation Kennecott employee, I am keen to see the operation successfully continue well beyond my own career,” he says. Kennecott experienced a dramatic dip in copper prices at the start of the recession. But prices quickly rose from about $1.25 a pound to more than $4 per pound. The company’s 2010 revenue exceeded $3.3 billion, nearly $1 billion more than the previous year. In fact, the company generates an economic impact of nearly $1 billion in Utah each year. Despite the volatility, “our business is well-positioned for success throughout the market cycle,” Keenan says. “We have the financial flexibility to maintain our assets in excellent condition, our approach to operating and capital expenditure is disciplined, robust options have been developed for future developments, we have implemented a structure to advance new technologies, and we have improved our processes and systems for managing business risks.” Brandon O’Brien Chief Financial Officer | ZAGG, Inc. Instead of dealing with the challenges of a distressed economy, Brandon O’Brien found himself managing rapid growth, expansion into international markets and—just five months after becoming ZAGG’s CFO in 2007—the conversion into a publicly traded company. “We’re a retail-based company; when the economy is down, retail really takes it hard. We’ve had the benefit of seeing extreme growth during that timeframe because of the rapid adoption of our product,” he says. The company’s revenue grew from $2.7 million in 2006 to $76 million in 2010. Additionally, it expanded from its online store to include a partnership with Best Buy and a recent partnership with Franklin Covey, as well as ZAGG brick-and-mortar stores and kiosks. “We’re a small public company, and when we started we were even smaller. So any senior manager has got to take on a lot of different responsibilities,” O’Brien says. “Some days I focus on just the numbers, other days it’s business strategy, it’s shareholder relations—it’s a very diverse role to be a CFO of any company, particularly a public company.” Because ZAGG is publicly traded, O’Brien’s role includes maintaining strict compliance with the 2002 Sarbanes-Oxley Act, which can be challenging for small companies. But he says following the guidelines and maintaining honest communication with shareholders has bolstered confidence in the company’s stock. Thanks to O’Brien’s guidance, the company has experienced a tremendous increase in the value of its stock. And its market cap has grown from 15 million to about 200 million. “[CFOs are] much more than just numbers guys,” he says. “The CFO has got to be a strategist for the company. And really, I see myself as the watchdog.” Brian Hall Chief Financial Officer | Kilgore Companies, LLC At the time Brian Hall joined the company, it was called Kilgore Paving and was making $1.2 million in revenue with 20 employees. Now, Kilgore Companies has 750 employees and is earning revenues of $160 million. Much of the growth has happened recently, when the company became part of Summit Materials’ Western Section. The company started 2010 in one office with 170 employees. By the end of the year it had expanded to four offices in three states and added a retail store, ready mix and precast locations. In less than six months, Hall helped acquire and combine five companies. “This has been a very challenging, time consuming and interesting experience,” Hall says. “It required us to quickly blend the systems, employees and cultures of five different companies while simultaneously working as a newly formed company.” Regardless of the amount of hard work Hall puts in to acquire and run these different companies, he says, “This job has never felt like a job to me. I truly work with many of my closest friends and we enjoy our jobs and each other. Being able to work at a job you enjoy and with people you enjoy makes all the difference.” As he has watched the company grow, he has found it particularly satisfying to see people beneath him grow, step in to their roles and succeed. To Hall, being the CFO is more than managing accounting and finance. He says a CFO is someone who “helps provide forecasts, manage risks and offer insight into issues from pricing to production. The role of CFO is essential in bringing all of the business departments together and moving towards the goals of the company.” Kent B. Forsgren Chief Financial Officer | Spring Retail Group Kent Forsgren says his favorite thing about being a CFO is the constantly changing environment, economy, opportunities and challenges: “The fact that I have something different to do every day, something new, some problem that we haven’t encountered before, some project needed yesterday, new acquisitions, right sizing, meeting with bankers and investment bankers to try to convince them of our strategy and what we are trying to accomplish, meeting with AT&T and Apple on a regular basis and rubbing shoulders with key people in these organizations. This is pretty exciting stuff,” he says. Forsgren, a CPA, spent eight years in public accounting, starting with Grant Thornton in Houston, Texas, and finishing with Deloitte in Salt Lake City. He has been a CFO for four different companies over the last 20 years, and he has served in various capacities throughout the community for organizations including the Farmington City planning commission, Oakridge Country Club and Make-A-Wish Foundation of Utah. One thing Forsgren has learned is that it’s not always best to give an immediate answer. “The longer I am in my career, I find that sometimes it is OK to listen a little longer, ask a few more questions and find out a few more facts. With a little patience and a little more understanding of the issues, I believe that I give better advice.” His advice to colleagues and peers is to “keep all aspects of your life in balance and try to learn something from each opportunity or challenge, and enjoy each step of the journey. Try to avoid saying ‘when I get here, then I will be happy.’ Time passes quickly. Don’t wish it away.” Gordon Holladay CFO, Secretary-Treasurer | SME Steel Though the construction industry has been hit hard by the economic slowdown, SME Steel has managed the downturn successfully. Gordon Holladay says much of the company’s relative strength in today’s economy has to do with strategic planning that took place prior to the recession. “What SME did in 2003 to 2008 had more to do with a successful 2010 than anything we did in 2010,” says Holladay. “You work now for what you will face two, three or five years from now.” Holladay, who has been serving as SME Steel’s CFO for nearly 20 years, says the CFO has a responsibility to instill a long-term plan that will keep the company healthy. “I have always believed that financial capital and a strong balance sheet are to business what a greenhouse is to plants,” he says. “Like light, water, soil and air, it provides the nutritious environment for people, talents and ideas to flourish and grow. Strong financial environments do not produce goods and services, but without it there would be no way for industry to grow.” Under Holladay’s direction, the company has opened new offices in Phoenix, Las Vegas and Salt Lake City while increasing revenues from $150 to $450 million, according to Mark Wilkey, vice president and general counsel of Central Refrigerated Service. “With growth at this level, Gordon had to create the delicate balance of positioning SME to finance large projects while ensuring cash flow,” says Wilkey. “I love my job and believe I work for something greater than myself,” says Holladay. “In the end, those who love their work will outlast their competitors who are motivated by fear, money, fame, power or any other less authentic versions of success.” Jim Madsen Director of Finance and IT | Deer Valley Resort Since Jim Madsen joined Deer Valley in 1990, the resort’s total revenue has grown more than 1,000 percent and the resort has been able to maintain zero debt. The resort also experienced a 10.9 percent year-over-year skier revenue increase as of April 2011. Madsen says strategically planning for short- and long-term success is a vital responsibility, but adds that, in his case, Mother Nature can make the planning process difficult. “The extreme seasonality of the ski industry is probably what makes working there so unique,” he says. “Deer Valley fluctuates from around 500 employees at the low point of the year to over 2,500 at the high point. We bring in over 90 percent of our total revenue in four months. Trying to maintain consistency and quality with that kind of fluctuation presents significant challenges.” Madsen manages those challenges by continually evaluating and modifying the company’s processes. “We are constantly in the cycle of performing a service, evaluating our performance to see what we could to better, coming up with a plan, implementing that plan and trying to improve the service the next season.” Innovation is also key to any company’s success, says Madsen, and when he sees an opportunity, he jumps. For example, when two of Park City’s largest property management companies declared bankruptcy, Madsen recognized an opportunity and worked with the CEO to launch a property management company. “We basically went from scratch to one of the largest property management companies in Park City overnight,” he says. “From an accounting perspective, we had no systems, no software and no experience. I think we basically overcame it with blood, sweat and tears.” Wolfgang T. N. Muelleck Executive Vice President and Chief Financial Officer People’s Utah Bancorp One of Wolfgang Muelleck’s great mentors taught him, “If it’s not measured, it will not improve.” With that advice, he believes some of the key duties of the CFO are understanding the company’s key performance indicators, developing measurement tools, and continually challenging and adjusting—thereby improving. He has done just that working for People’s Utah Bancorp, the parent company for Bank of American Fork, Utah’s largest community bank. Among many things, he developed a scorecard-type report in graph form that measures 20 of the most important metrics for the organization. This report is filtered down to front-line employees so the entire organizational team knows where the company is and where improvement is necessary to meet goals. “It is equally important to gain ‘buy-in’ from the employees and train them on the key performance indicators and their important role in challenging the process to serve customers in a helpful and efficient way,” Muelleck says. The previous 30 years of Muelleck’s professional career were spent as a partner at Ernst & Young, CFO of a $1 billion banking, company and later as an independent CFO and strategic consultant. He graduated with a bachelor’s degree in accounting from BYU and earned an MBA from the University of Utah. He is a certified public accountant as well as a certified management accountant. As CFO of People’s Utah Bancorp, Muelleck says he is able to utilize the vast knowledge and experience he’s gained to provide strategic and financial direction to the organization. “Knowing that my financial analysis and strategic thinking can have a profound effect on the success of my company is one of the most daunting, but also most rewarding, aspects of the job,” he says. Mark Eugene Whiting Chief Financial Officer | Lifetime Products, Inc. Whether or not it’s 20 degrees below freezing, Mark Whiting begins his day with a 5 a.m. two-mile run. Maybe growing up on a farm taught him a thing or two about crisp air and early rising. A private pilot by age 16, and in college on a scholarship at BYU by age 17, Whiting has perhaps always been ahead of his time. After passing the CPA exam in his first sitting, he spent five years in public accounting and then began his industry career. For the past 22 years, he has made a 70-mile commute from Heber (where his family, quarter horses and beef steers are) to Utah’s 12th largest private employer, Lifetime Products, Inc. in Farmington. Whiting has witnessed Lifetime grow from the back yard to an international player and meet its goal of becoming a “recession-proof” company. Even with the recent recession, thanks to the owners’ insight, vision and management style, he says the company has continued to progress. “With Lifetime’s accumulated financial strength, support from great financial services organizations, and respect in the retail community, the company has purchased multiple new subsidiaries, entered multiple new product categories, and sold in new markets,” Whiting says. Watching the company and its associates grow and progress is what Whiting likes most about being a CFO. And finding motivation to work hard and keep improving is easy. “I love my work. I love the people I work for. I love the people I work with,” he says. “I’m grateful to be alive. I’m grateful to live in this great country of ours. My Dad commuted to Salt Lake City and taught school from a wheelchair for many years. He has been a real inspiration to me to try to continually improve.” Larry Worrell Senior Vice President and CFO | Big-D Construction Larry Worrell joined Big-D Construction in 2002 during a very challenging time: the national economy was still reeling from the September 11 attacks, and the construction industry in Utah had come to a screeching halt due to the Olympics. As CFO, Worrell helped guide the company through the rough period by reorganizing its accounting functions, restructuring debt and improving cash management. The direct result: Big-D’s revenues grew from $210 million in 2003 to more than $680 million in 2008. But Utah’s construction industry experienced another dramatic downturn in the following years. “2010 was a very difficult year with entire segments, such as private development, crashing to almost zero new activity,” says Worrell. “The actions we took were defensive in nature. We aggressively reduced costs. We accelerated our marketing efforts. We focused on exceeding the expectations of our loyal customer base so that as their businesses improved, Big-D would be the partner they turned to in meeting their construction needs.” With a continued focus on cost control, risk management and core operations, Worrell is positioning the company to take advantage of every opportunity the economic recovery will bring. “Without a doubt, Larry has the technical skills,” says CEO Jack Livingood, “but Larry Worrell’s greatest attributes are his integrity, honesty and work ethic.” Worrell’s guiding philosophy reflects this assessment. “Doing the right thing does not automatically make problems easier to solve and does not necessarily yield immediate positive results; however, doing the right thing is the only sustainable path to achieve your vision and goals,” he says. “I have never found a good business reason for doing the wrong thing.” David A. Kwant Chief Financial Officer | Mountain America Credit Union Like most financial institutions, Mountain America Credit Union (MACU) faced turbulent times during the Great Recession. But under David Kwant’s leadership, the company was able to navigate the economic storm. “MACU is pretty much in the back-to-business-as-usual mode,” Kwant says. “The satisfaction that comes from contributing to the financial turnaround of a company is tremendous.” Since Kwant joined MACU in 1988, the company has grown from $180 million in assets to almost $3 billion. “It has been quite a ride,” says Kwant, noting that he’s experienced a lot of change during his tenure at the credit union. “When I started with MACU 22 years ago, PCs were pretty sparse in the organization.” Kwant says that though times have changed, the CFO’s role in a company’s success has remained crucial. “Regardless of the type of business, payrolls have to be met, vendors need to be paid, taxes must be paid, etc. During the annual business cycle, there are usually ebbs and flows with liquidity. The CFO needs to keep idle funds earning a return and also be certain funds are available when needed during the entire business cycle,” he says. Ensuring the business cycle operates smoothly is what Kwant enjoys most about his position. “One of my favorite things of being a CFO is seeing the inner workings of a company and how all the pieces fit together to make a successful organization,” he says. Though the past few years proved challenging, Kwant’s keen leadership skills helped guide MACU through the chaos, says Marshall Paepke, MACU executive vice president. “His steady hand and influence was instrumental…during the challenging economic period, his 20 years with the credit union have provided insight and stability.” Scott E. Westra Chief Financial Officer and Senior Vice President Workers Compensation Fund Scott Westra says a successful CFO must be able to heed advice from others and execute decisions. “Not every decision you or those that work with you will be right, but failure to make a decision can be even more detrimental,” he says. “The role of a CFO is to get the necessary information and, in consultation with other stakeholders and experts, make a decision and execute for success.” Though WCF did not escape the troubled economy, Scott Westra played a vital role in helping the company grow its surplus by $38 million and generate $33.8 million of net income during 2010. WCF was also able to return $16.8 million in dividends to policyholders. The company continues to build its presence in Utah, and recently opened a branch office in Utah County. According to Ray Pickup, president and CEO of WCF, Westra has been integral to the company’s long-term success. “As CFO, Scott takes the lead in ensuring the financial strength and stability of WCF,” says Pickup. “Scott ensures that WCF’s investments are prudent so that funds will be available to take care of the long-term needs of injured workers and provides excellent returns to supports WCF’s operations.” Today, WCF represents approximately two-thirds of all Utah employers. “I am blessed to have the opportunity to be part of something that has a significant, positive impact to our state,” says Westra. “Despite the best efforts at risk mitigation, accidents will happen. I feel our efforts have made a positive impact.”
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