Finance Monthly CFO Awards 2018 Winners Edition

www.finance-monthly.com 49 Describe a typical day for you as the CFO at McDermott? On a given day, there’s always plenty going on. I try and squeeze in a little exercise before heading to work early. My work day usually starts out touching base with our Middle East and European offices and it ends with a final call to Asia. And there’s never a shortage of meetings or phone conferences in between. This role also requires a fair amount of travel. All in all, while it’s certainly busy—it’s a good kind of busy. It’s very engaging and rewarding work. Who do you travel to meet with? Typically, I meet with investors, banks, and advisors. I also travel for internal management reviews, project reviews, town halls and supporting customer visits with our CEO, David Dickson. Can you describe the transformation that McDermott has made over the years? About four and a half years ago, McDermott was a turnaround story. There were so many basic things that we needed to start looking at and improving going forward. At the same time, we were trying to do big initiatives—like take cost out of the company and reposition the company in a downturn. The CEO and the Executive Committee started to think about our journey in large periods of time and, given the significant amount of work in the turnaround, we concluded that this first phase was about stabilizing the company. We had loss-making contracts, a recently refinanced balance sheet, performance issues and a heavy cost structure with not a lot of profitability. It really was all about stabilizing the company. All of our goals, plans and objectives were focused around that collectively. Once you get everyone focused, then you can get things moving forward. Once we got it all stabilized, then our focus shifted—how can we do all of this better—or what we called optimizing. How can we be more efficient? Can we get our functions into an optimal position? How can we go to the next level of project management? How can we then go into a new country? It was really all about getting more efficiency for all those initiatives that we had started. After getting more predictable and more stable, the horizon for making decisions gets longer. You are no longer looking at the next month or quarter. You start to have confidence that your year is going to be in tact because you know you can deliver on all the plans and initiatives. You start looking further forward, such as potential investments in technology. What will our next capital investments be? Where should we position the marine fleet of the future? How can we become a leader in digital? You look further forward because you can make investments in the near term to support it. You also think about what can be accomplished internally, the organic view, versus what can be accomplished externally, the inorganic view. When you look at the external one, as a company, there’s one basic decision to make—do I want to be consolidated or do I want to be a consolidator? The status quo is never enough to guarantee that you will survive as a company on your own. What was McDermott’s approach after it had stabilized? The CEO and the Executive Committee had a lot of debates about which way we wanted to go, but we quickly came to the decision that we wanted to be a consolidator and began to look internally and externally. We created this whole new process where we mapped out a 10-year strategy. We looked at adjacent industries and came up with an inorganic strategy and slowly started stepping down that path, assessing opportunities and companies. Like most strategic initiatives, you have to try a few things before you get the right one. We had initially looked at CB&I, but it was in nuclear and government and the market cap was bigger than us, so we screened it out. We came back the next year after CB&I divested its nuclear and government businesses, and it had the same market cap as us so we began an assessment and we went from there. With CB&I, our CEO and Executive Committee focused on three things. First, can we understand the performance issues that the company has been having? Second, can we convince ourselves that we can address and fix those performance issues? And third, can we find the money to finance the combination? Those were the USA Finance Monthly CFO Awards 2018 Finance Monthly CFO Awards 2018 - McDermott’s Stuart Spence Shares Successes - Since Stuart Spence joined McDermott as Executive Vice President and Chief Financial Officer in 2014, the company has undergone a tremendous amount of change. This change has been led by the company’s President and Chief Executive Officer, David Dickson, as well as Stuart and a strong executive team. As the CFO during this time, Stuart has been instrumental in repairing McDermott’s balance sheet, reducing the company’s cost structure and helping to execute a strategic combination that expanded McDermott’s portfolio—all during a commodity down cycle. As McDermott’s Executive Vice President and Chief Financial Officer, Stuart has overall responsibility for the Finance and Information Technology functions from vision to execution and is a member of the Executive Committee and the Company Strategy Committee. In an interview for this award from Finance Monthly, he outlines his career, discusses McDermott’s financial transformation and shares some insight into the company’s strategy that led to the decision to combine with CB&I.