Companies need to find the right employees, but they also need to pay them the right amount, which can be a challenge. Even with less job hopping in an uncertain economy and cuts taking place across industries, pay that’s too low is still a reason for someone to leave their job, or feel less loyal to it.CFOs constantly work to figure out that math. I talked to Philip Watson, CFO of data company Payscale, about strategies to support your employees and your budget. An excerpt from our conversation is later in this newsletter. Until next time.This is the published version of Forbes' CFO newsletter, which offers the latest news for chief finance officers and other leaders focused on the budget. Sign up here to get it delivered to your inbox every Tuesday.Economic IndicatorsNew Federal Reserve Chairman Kevin Warsh delivers remarks after being sworn in last month.Roberto Schmidt/Getty ImagesKevin Warsh will chair his first meeting of the Federal Reserve Open Market Committee today, and it’s very unlikely to deliver the interest rate cut President Donald Trump wants, writes Forbes senior contributor Simon Moore. According to CME FedWatch, 99.6% of analysts expect no change to the 3.5% to 3.75% baseline interest rate at the meeting. Figures from the Bureau of Labor Statistics showed 4.2% inflation in May compared with a year earlier, the highest rate in three years. And while the bulk of the inflation comes from energy and food costs elevated by the Iran war, core inflation still reached 2.9%, above the Federal Reserve’s preferred 2% rate. Forbes senior contributor Simon Moore writes this kind of inflation sets the stage for the Federal Reserve to raise interest rates later this year—though how Warsh guides the Fed through those decisions should become clearer after this week’s meeting.Consumers may be far from the policy wrangling, but it’s apparent they’re having a rough time—and aren’t getting much sympathy from policymakers. After last week’s inflation report, President Donald Trump told reporters, “I love the inflation,” and said it would fall as soon as an agreement to end the Iran war is signed. Such an agreement appears to be on the table for Friday, but details remain unclear, and many are skeptical it will make a difference in the short-term economy.Another long-term economic issue moved into public view this week. A critical Social Security fund will start to run out of money in 2032—years earlier than previously expected—unless Congress makes changes to shore up the program. The annual Social Security Trustees Report projects an automatic 22% benefit cut starting in six years, writes Forbes senior contributor Teresa Ghilarducci. So far, Congress has responded with calls for reform and finger-pointing, but no single comprehensive plan has yet emerged.Stock Market NewsSince SpaceX’s blockbuster IPO last Friday, the space exploration, satellite connectivity, AI and social networking behemoth has raised more than $85 billion, with its share price surging 19% in its first two days of trading. CEO Elon Musk became the world’s first trillionaire, an idea that was unfathomable until recently, Forbes’ Matt Durot writes. Musk’s net worth is currently about $1.3 trillion, but he’s not the only one who’s gained significantly from the IPO. Durot broke down the biggest winners—including SpaceX investors, SpaceX executives and backers of the former Twitter—and Forbes’ Iain Martin wrote about the venture capitalists who profited from the IPO exit.SpaceX isn’t the only action on the stock market, and it’s not the only massive IPO on the horizon. AI giant Anthropic hasn’t given a date for when its shares will start trading—though traffic to its chatbot Claude surged last week—and OpenAI confirmed speculation last week that it filed paperwork for its own IPO. Artificial IntelligenceIn the past couple months, AI costs have become a headache for many CFOs. Token-based pricing models—tying enterprise costs to how much AI computing activity they use—led some major companies to burn through their entire AI budgets in Q1, quickly making AI cost control a financial priority. J.R. Storment, executive director of the FinOps Foundation, told me many CFOs are finding themselves in the middle of an uncomfortable squeeze. CEOs are pushing for more AI use. CIOs are excited about the innovation but also recognize AI creates new vulnerabilities, which drives demand for even more AI. “That kind of lands us in this place where CFOs have had to step in and be moving from just tracking and reporting to, ‘We need enforceable guardrails,’” Storment said. “...There’s a real tension.”How can companies figure out how to control their AI costs, ensuring the enterprise gets access to tools to make a competitive, operational and security difference while also tracking use, value and ROI. A new group, the Tokenomics Foundation, will form to establish standards. The Tokenomics Foundation will work closely with the FinOps Foundation, which took on a similar challenge when cloud computing was new and continues to develop those standards. Both groups operate as programs under the Linux Foundation. Several large companies in AI and other industries have expressed initial support for the soon-to-form Tokenomics Foundation.Off The LedgerHow To Build Employee Trust And Loyalty Through PayPayscale CFO Philip Watson.PayscaleEmployee compensation is one of the biggest challenges for every CFO. A recent report from software and data company Payscale showed that 51% of organizations work to balance pay expectations with financial constraints. I talked to Payscale CFO Philip Watson about how companies can address the compensation challenge—especially in an era of pay transparency laws and an uncertain economic outlook. This conversation has been edited for length, clarity and continuity. How do pay transparency laws change the game for CFOs and pay decisions?Watson: It really comes down to you as an employer not just saying, ‘Hey, you did work, so we’re going to pay you for it,’ but that softer-scale emotional connection, making them feel good about the number. They may not agree with the number they get, but if you can show proof of the number—‘We’ve got the data on hand that shows you are paid at the X percentile among all your peers, either nationwide or in this metro area’—that at least provides rationale.Nobody likes to be negatively surprised. At least knowing the why behind that, and having the transparent data and philosophy of, ‘We’re always going to pay X percent for this role or Y percent for that role,’ takes some of that emotion out of it. It leaves people to feel like there’s not a black box, but there is thought behind what the company’s doing—why they’re getting paid what they’re paid. And it also gives them a real roadmap to know how they could get paid more. What about companies that don’t necessarily have that philosophy but are suddenly subject to pay transparency laws? I think it’s going to be a real shock to them. It’s a thing, literally by law, they’re going to have to follow, so there will be some legal and regulatory requirements. It will certainly manifest when they come to merit [raise] time and employees may see a posting [from] the company: ‘We pay between X and Y.’If the employee’s not in that range, or even if they’re in the lower range, that will certainly drive questions. A hiring manager who can’t answer those questions or has to punt it back to HR is a bad look and lowers that level of confidence the employee may have. I’m pretty positive everybody would agree that happier, more trusting employees are going to be much more productive, much more likely to stick around, much more likely to recommend their friends come work there. Right now is a difficult time for many companies and employees, but organizations have had to navigate the Covid pandemic and the Great Recession in the recent past. How do strategies from those periods relate to what’s happening now?Companies that have established compensation philosophies, stuck to them, and executed against them have probably performed better. All of those were negative shocks from an employer and an employee perspective. While you can’t plan for everything, your plan has got to have enough flexibility to allow you to absorb those shocks. How pay can relate is: maybe we want to pay lower-level people a higher percentage of base, and more expensive people cannot have a higher percentage of variables. That way, if we don’t hit our targets because of some shock, we get some natural money back because we’re not paying as much in bonuses, whereas the people we pay the least and are the most vulnerable are going to be impacted less, so you build in some natural shock absorbers. The other main way companies handle these shocks is to go back to that always-on compensation philosophy I’ve mentioned. You have to be thinking about this constantly because things may change. If you don’t have the philosophy, the people thinking that way, and if you don’t have the data, it’s hard for you to be able to pivot.The only way to absorb shocks is to be as prepared as you can with a philosophy and a plan, build[ing] up the trust among the employee base to give yourself some credibility. Be willing to be flexible, pivot and be thinking about this as not just a one-time event, but constantly: Are we paying the right people the right amount in the right ways at the right times?What advice would you give a CFO about setting fair compensation?If you don’t have the right data, it’s much harder. Agree on the data and use the data. You may not be able to get to where you want immediately. That’s fine. If you are constantly walking up the mountain, making progress against your goal, that builds credibility. When you have an employee that [is] really under the mark, you say, ‘I can’t get them there in one fell swoop, but I can get them there in smaller increments.’ Employees generally get that: you’re getting them there over time. The concept that you’re taking the steps turns out to be just as important.Comings + GoingsCreative software firm Adobe tapped Steve Day to act as interim chief financial officer following the departure of Dan Durn, who was appointed CFO of semiconductor company Marvell Technology effective June 15. The transition leaves Adobe without a permanent CEO or CFO, contributing to a 10% decline last week in its share price, despite reporting better-than-expected results and guidance last week. Semiconductor company Texas Instruments elevated Julie Knecht to senior vice president and chief financial officer, effective August 1. Knecht, who joined the firm in 1999, currently works as chief accounting officer and vice president of accounting and tax. She will succeed Rafael Lizardi, who is retiring.Workforce management software firm UKG hired Rod Johnson as its chief revenue officer, effective June 1. Johnson joins the firm from Oracle, where he most recently worked as executive vice president of North America Applications.Strategies + AdviceIt’s great to grow your business, but leaders need to remember the law of diminishing returns. Adding more to something that’s already growing doesn’t guarantee the same pace of growth. It’s worth pausing to check in and make sure new initiatives are actually delivering the returns you expect.Employee well-being is important, and burnout harms your business. The ROI Estimator was developed to quantify how much burnout costs and can help determine when to invest in programs for your people, including coaching, well-being initiatives and leadership development.QuizWhen Wall Street opened today, SpaceX became the world’s fifth largest company by market cap. Which company did it overtake?A. MetaB. AmazonC. MicrosoftD. TSMCSee if you got the right answer here.