How FEI governs itself. (FEI Overview).

Like many trade associations, FEI has put together over the years a working arrangement featuring a central administrative staff and a diverse group of volunteer leaders working in harmony -- what incoming Chair H. Stephen Grace Jr. likes to call "the FEI family."

The structure has changed over the years, mirroring the organization's growth from the small Controller's Institute of America, founded in 4931, to Financial Executives Institute (FEI) in 1962 and then, in 2000, to Financial Executives International. With more than 15,000 members in the U.S. and Canada, and a growing presence around the globe, FEI has earned a worldwide reputation as the professional association of choice for senior financial executives from public, private and non-profit companies of all sizes and in all industries, and as the leading organization dedicated to advancing ethical, responsible financial management. FEI's professional staff, based in Florham Park, N.J., Washington, D.C., and Toronto, manages the operations.

FEI's governance structure now has five basic divisions. Working up the leadership chain, these are the Chapters, Area Boards, National Leadership Board, Executive Committee and Office of the Chair. All but one member of these groups are volunteer leaders; FEI President and CEO Colleen A. Sayther is a member of the Executive Committee, the Leadership Board and the Office of the Chair.

While other members of the headquarters staff in Florham Park and Washington don't sit on these boards, they are actively involved in many of the meetings and are in regular contact with volunteers at all levels. Staff members are responsible for the administrative side of FEI (accounting, membership, marketing, Web site, etc.) as well as professional services (conferences, publications, newsletters, advocacy, etc.)

FEI's technical committees -- the most prominent of which is the Committee on Corporate Reporting (CCR) -- aren't part of the governance structure but are a vital element in developing public policy positions, advancing member interests before legislators and regulators and sharing knowledge among members.

FEI Canada is a separately chartered entity with its own governance and bylaws, though leaders of the U.S. and Canadian associations work closely on many issues.

Looking more closely at the five principal parts:

CHAPTERS

FEI has 75 chapters in the U.S. and 11 in Canada, ranging in size from under 30 members (Inland Empire) to more than 1,000 (Boston). Chapters are run relatively auto-nomously, with a board of directors and a rotating leadership that allows interested members to serve in a variety of leadership roles over a period of years.

Chapters have a variety of offerings every month, including regular meetings, professional development sessions and career services offerings, to name a few. Traditionally, chapters follow a "school" calendar, and stop their regular meetings for July and August, which is also the transition period for its volunteer leaders. Chapters frequently engage in community services efforts in their local area -- such as teaching finance to local students or pro bono financial work for struggling companies -- and many have scholarship programs for college students choosing careers in accounting or finance. Many members view the social aspect of chapter meetings and the networking opportunities they provide as one of FEI's core membership benefits.

"The value proposition chapters offer has steadily grown over the last few years," says Andrej Suskavcevic, FEI's Director of Chapter Relations and Membership Operations. "Development of strategic partnerships has increased professional development offerings. Joint events with other organizations have increased networking opportunities, and career services programs have helped members get jobs."

AREA BOARDS

The seven Area Boards, divided geographically in the U.S. and including all of Canada as a separate board, are designed to oversee area and chapter activities and to alert the national staff to issues that might need attention. They are also asked to deliberate on and formulate positions on major issues to be addressed by the Executive Committee.

Each Area Board is led by an Area Vice President and an Area Director at Large, supplemented by elected directors (usually at least five), ex-officio directors who may be part of the Executive Committee and presidents of all the chapters in that area. Area Boards ordinarily meet three times a year, including one meeting that coincides with the National Leadership Board meeting at the annual Summit conference. Agendas for those meetings are developed with the help of the national Member/Chapter Relations staff, some of whom attend the sessions.

Among the areas commonly reviewed by the Area Boards: setting area goals; monitoring performance in membership growth and retention; developing new chapters; participating in conferences or technical committee activities; and chapter award programs. In particular, Area Boards are expected to monitor the performance of chapters and alert the staff to chapters in need of support.

NATIONAL LEADERSHIP BOARD (NLB)

Next up the organizational ladder is the National Leadership Board, which consists of about 140 people, including the elected officers of FEL, members of the Area Boards and technical committee chairs.

Meetings of the NLB, usually held twice a year, are designed "to be informative in nature and not heavily action-oriented," according to an FEL policy manual. Meetings afford FEI's top volunteer leaders to introduce themselves, exchange reports about area activities and to learn about the goals, objectives and financial health of the organization.

A key goal of the NLB is to improve communications with the chapters and chapter presidents, as well as with FEI technical committees, and to help surface national issues prior to their deliberation by the Executive Committee. The NLB has the final authority for establishing rules of eligibility for membership in FEI, and for development and enforcement of a code of ethics.

EXECUTIVE COMMITTEE (EC)

The smaller, more elite Executive Committee, which can have no more than 32 members, is designed to provide governance and oversight over all of FEI's operating activities except those specifically reserved in the organization's bylaws for the National Leadership Board.

FEI's top two elected officers, the Chair and the Vice Chair, sit on the Executive Committee, as do the President, Area Vice Presidents and Area Directors at Large, the Treasurer and Secretary of FEI, two Vice Presidents at Large, three Technical Committee chairs and the chair of the Financial Executives Research Foundation (FERF). Other members are determined by the committee itself.

This committee generally meets four or five times a year, usually for a full day, and often with an outside speaker; there is also opportunity for more informal discussion and networking.

OFFICE OF THE CHAIR (QOC)

Similar to the concept used at some corporations, the Office of the Chair is designed to help the elected Chair carry out the duties of the office. In recent years, the COC has had five members, but the bylaws don't specify the actual size of the group. Mandatory members are the Chair, Vice Chair, President and "immediate past chairs," though lately that has generally been only the most immediate past chair.

As well as being a consultative group for the Chair at the highest levels of the organization, the OOC is intended to provide continuity of direction and leadership for FEI. As a rule, new members to the OOC come in at the Vice President at Large level and rotate upward annually to Vice Chair and then Chair.

Ridge Braunschweig, Chair in 2002-03, has praised the OOC format. "There is only so much you can accomplish in one year," he said when his term began, "but, with the Office of the Chairman structure, I've been preparing for the last three years, and I have several other FEI leaders with whom to share responsibilities."

RELATED ARTICLE: 'Passion' for FEI Marks Grace Agenda

When H. Stephen Grace Jr. thinks back on his 33 years with FEI, he does so with unabashed enthusiasm that dates back to his first brush with the organization in 1969.

As he recounted at the National Leadership Board meeting this past May in Orlando and in a later interview, he had been given an invitation to a Dallas Chapter meeting that fall and listened, fascinated, as Clyde Skeen -- a finance whiz who had been brought in by LTV Corp. magnate James Ling -- talked about LTV's plan to buy Jones & Laughlin Steel and how it would be incurring a 90 percent debt/equity ratio as a result.

That was the story of the day in the business press, Grace remembers, and here was the architect of the deal, Skeen, "giving his defense of the proposed acquisition, and he was under heavy fire from the senior financial officers of the Dallas business community" assembled at the meeting.

Grace was hooked. He joined FEI several months later, and over the course of a business career that has taken him from public and private company senior management to a longtime business consultant heading his own firm, FEI has been a constant.

Over that period, few FEI members can point to a stronger record of service than Stephen Grace, who is FEI's National Chairman for 2003-04. The lanky, courtly Texan won FEI's Distinguished Service Award in 1996 -- four years before he joined the Office of the Chair but years after he had been president of both the Houston and New York chapters. (He was president in Houston in 1980-81 and headed the New York Chapter in 1990-91; he joined in New York after-being hired in 1988 by then-Touche Ross & Co. to build its national real estate consulting practice.)

When the CFO of Shell Oil Co., Bob Thompson, became chairman of FEI in the early 1980s, "he brought me in as an area director, where I served for four years." Grace then moved over to the Financial Executives Research Foundation (FERF) as a trustee from 1984-88. He served as Southern Area Vice President in 1988-89, and was chairman of FEI's planning committee in 1989-90.

Any conversation with Grace about FEL is liberally sprinkled with the names of former luminaries, some of them national chairmen or chapter presidents. While he has a doctorate in economics (from the University of Houston) and an MBA from the University of Chicago, he has an historian's feel for the last generation at FEI and a Houstonian's sense of the contributions made by local leaders there.

Houston, he says, has had "wonderful leadership on the local level," such as Oral Luper, CFO of Exxon Co. and a member of the old APB, who was the first person to be president of both the Houston FEI chapter and the AICPA chapter. Others included J.O. Edwards, Controller of Exxon, who was FEI Chairman in the mid-'70s; Bob Thompson, the previously mentioned CFO of Shell; and John Jacobsen, who succeeded Bob as CFO at Shell and served as Chairman of FERF in the mid-'80s. Finance people from the top banks were members there, as well as representatives from companies like Anderson Clayton, Tenneco, Entex, and Houston Lighting and Power. "It was a great group to grow up in," he says.

Professionally, Grace taught in the early 1970s at Texas Southern University and consulted with firms such as Marathon Manufacturing and Zapata, where he also served as assistant treasurer. In 1976, he became CFO of Century Corp. and its affiliate, Century Development Corp., which included over 60 subsidiaries, joint ventures, general and limited partnerships active in real estate, auto and equipment leasing, cable TV, architectural services, and national basketball, hockey and soccer sport franchises.

Grace and his partner, Richard Meyers, formed a series of firms in late 1981 and were active in real estate development and related areas. Meyers died in an tragic automobile accident in 1985, and Grace talks about how fortunate he was to extricate Meyers' estate and wife from the businesses and transfer insurance proceeds to them before the financial institutions and developers with whom they worked began to collapse.

Grace and the firms were caught up in the litigation associated with these collapses, and had nine law firms representing them over a seven-year period. While making it clear he has no interest in repeating those events, he says that experience "served us well as we began to serve as consultants and experts in complex commercial litigation in the mid-'90s."

Grace reactivated H.S. Grace & Company Inc. in 1993, with offices in Houston and New York. The firm is comprised of former senior executives who provide specialized financial and operational advisory services, serve as consultants and experts in complex commercial litigation, and advise on issues of corporate governance, oversight and control.

A couple of years later, he formed an affiliated strategic think tank -- Grace & Co. Consultancy Inc., whose board of advisors includes four past FEI chairmen and a past FERF chairman. Grace and his colleagues at the think tank have written widely and spoken to numerous groups and conferences on subjects ranging from audit committees and corporate governance to pension fund private investments and company buyouts.

He delivered the Emanuel Saxe Distinguished Lecture at Baruch College in 2000, serves as a member of Forbes CFO Forum Advisory Board and the Lamar University College of Engineering Advisory Council, and has been named a Distinguished Alumnus of Lamar University.

Priorities

Asked about his priorities for the coming year, Grace spoke about several:

* Increase awareness of the tremendous value that FEI provides to its members and to their firms. "Most members understand peer interaction and networking at the chapter level, but what they don't understand is what the technical committees, FERF and Washington do that helps our companies, large and small, public and private, profit and nonprofit -- across the board.

"Never in FEI's history has it been more important for our membership to understand this value. To address this, we are creating a 'national/chapter liaison,' someone who can be the eyes and ears for his or her chapter about what the national organization is doing. This liaison can demonstrate the value proposition [of FEI] to the [sponsoring] companies, not just the members. They can bring that news to the chapters, which will be doing them a great service."

* Ethics. FEI has been building a powerful story around ethical behavior, and it will continue to do so, he says. "But situations like the Health-South [scandal] -- a dark day for finance and accounting -- make clear that codes of ethics must be embedded in robust sets of checks and balances, which will define and remind all of the participants in the governance process of the entire set of responsibilities to be addressed.

"Checks and balances not only serve to encourage financial management and internal audit in the performance of their responsibilities, but can be highly effective in blocking those individuals who would seek to consolidate power in the governance structure, and use it to abuse and intimidate others. FEI is working to both support and protect its members."

His own firm has written a number of articles on governance and ethics, and he has spoken recently before the Institute of Internal Auditors, the City Bar of New York and the Forbes CFO Forum.

* Career Services. "This is a time to reach out to members. These are tough times, and there are a lot of people in transition."

* Share FEI's expertise with government and industry. "We have to reach out to other business and government entities and share our experience. We need to rebuild respect for the business sector." The New York Chapter, he notes, had done work with various entities such as the State Comptroller, city agencies, various universities and school systems, and others. But he cautions, "The hardest thing is coming up with the project. We need to find ways to build bridges -- to share the tremendous experience and talent our members possess. Members in transition could and often want to do things here -- giving back."

* International growth. "The world is more global. There is tremendous interest in good governance, and FEI needs to continue to look at the role we can play in serving senior financial management in the world marketplace -- talking about things like good governance, oversight and proper levels of regulation."

Grace's own enthusiasm is obvious. "When I talk about FEI, you hear a lot of passion for the organization, which I have." He wants that passion to spread, adding, "When people get involved, things just feed on each other."