February 2006 
Volume 04, Issue 9 
Main Feature

Dollars and (good business) sense

Dollars and (good business) sense

3 Corporate Treasury initiatives show how diversity pays off

If there's any organization in Boeing that understands how initiatives are only as good as the business results they create, it's Corporate Treasury.

And it's not just because its daily operations focus on cash. The teams and individuals within the organization have a responsibility to do what's best for Boeing and its stakeholders. Their activities aren't done merely because they sound like good ideas: They have to create value.
Led by Corporate Treasurer Paul Kinscherff, the organization supports business-unit growth and profitability with financial-support services such as management of cash operations and banking relationships, as well as risk management and insurance. Treasury also manages the company's pension assets.

The organization received a 2005 Global Diversity Process Improvement Award for three separate activities stemming from engaged employees seeking out a diverse set of suppliers. Treasury looked not only at large institutions that have traditionally done business with Boeing and other big companies, but also smaller firms, many of which are owned by women and minorities. Their results demonstrate that diversity makes good business sense. "Diversity is first and foremost about enhancing performance," said Kinscherff. "It's a win-win for our shareholders and our communities."

Here's a look at these initiatives.

Share Repurchase Program. In May 2004, Boeing said it would resume its authorized share repurchase program, which it had suspended after Sept. 11, 2001. (Companies typically undertake share buyback programs to help increase the value of the shares held by investors.) To help undertake this work, the Global Treasury Operations and Corporate Finance and Banking teams worked together to tap about 15 financial institutions, including four minority-owned firms.

"It made sense to think outside the box and see if there were nontraditional firms that could add value to some of our Treasury activities," said Ruud Roggekamp, assistant treasurer, Corporate Finance and Banking. That decision's paid off for Boeing. Each of the four minority-owned firms—Blaylock & Partners, Samuel A. Ramirez & Co. Inc., Utendahl Capital Management and Williams Capital Management—has placed in the top half of performers, in terms of cost savings.

Insurance Brokerage. The Risk Management and Insurance team decided to broaden the number of insurance brokers that handled Boeing's insurance needs. In November 2004, Boeing retained The Goss Group, a small, minority-owned firm based in Detroit, to broker the placement of a number of Boeing's insurance programs.

"They have very good access to a wide range of markets, which is what we were interested in. And frankly, they are very responsive to our needs," said Mark Meyerhoff, senior director, Risk Management and Insurance. Meyerhoff added that with Goss in the mix, Boeing gets a better insurance product and a higher level of service from its diversified lineup of brokers.

Trust Investments. The Trust Investments team, which manages Boeing's pension assets, decided to take a look at smaller firms that Boeing typically hadn't done business with, including investment funds run by minority individuals or women. To help sift through the roughly 500 opportunities available, the team in 2004 tapped two firms with experience in this market segment, Progress Investments—which is minority-owned—and Northern Trust, to invest up to $1 billion into 22 emerging equity portfolio managers, most of which are run by minority individuals or women.

Their performance in 2005? Mark Schmid, vice president and chief investment officer, said it was "excellent": Their collective performance beat the market's return by 2.5 percentage points. "That's very good for a pension fund as we pay out benefits over time," Schmid said.

Treasury leaders emphasized that although the Global Diversity Process Improvement Award might reflect Boeing's willingness to think outside the box, what matters most is the bottom line. The award "shows that Boeing is very open to allowing everyone to have seat at table," said Verett Mims, assistant treasurer, Global Treasury Operations, about the minority firms in the Share Repurchasing Program. "It's interesting for me, as an African-American woman, to see someone across the table who looks like me. But that's not the only reason they were invited. We have responsibilities to get the best performance. And in this case, they gave us the best performance."

—Junu Kim

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