How (and why) to land a corporate board seat

CFOs are often approached to serve on corporate boards for their financial expertise. Since Securities and Exchange Commission regs require boards to have an audit committee chair with an accounting background (thanks, Enron and Sarbanes Oxley!), the CFO is most often sought after to fill that role.

But the number of CFOs on company boards has decreased in recent years. The number of CFOs at Fortune 500 companies that hold board seats fell to 23%, a drop from 32% in 2009, as finance chiefs struggle to get a seat at the table, the WSJ reported earlier this year.

While the challenge to land a board role may have increased, having an executive with deep finance acumen has its benefits, according to a study from Northeastern University that evaluated finance chiefs in boardrooms. The survey found that companies with a CFO on their boards typically have fewer material weaknesses, or misstatements of revenue in reporting. And for CFOs, there’s still value in serving on a board, even as the requirements for board involvement have increased, Byron Loflin, global head of board advisory at Nasdaq, told CFO Brew.

Loflin said that board members with finance expertise are also expected to bring to the board awareness of cultural aspects, like the relationships between internal audits, CEOs, and C-suite executives, external audits, or have a background in environmental, social, and governance (ESG) issues, for example.

Changing the mindset: Adding diversity to a board can energize a boardroom to “think better,” Loflin said, helping a company to not miss key opportunities to improve. That’s a main difference between boards in 2008–2009 and boards today, he said, adding that boards are also seeking people who can help educate other members on ways to improve boardrooms overall.

Scott Dussault, CFO of Workhuman, a talent-management software company, said that he is frequently approached by private companies on the brink of going public, given his experience taking a company private, both as a CFO and board member.

“The reason why I joined boards…is it makes me a better operator,” Dussault told CFO Brew. While the benefit of sitting on a corporate board is certainly a resume booster, it can help prep CFOs for their own role, Dussault said. “Not only do I get different perspectives from board members, but I understand as an operator what’s expected [of me] and those conversations that happen at the board level.”

And thinking with a board mindset is vital for the current macroenvironment, Dussault said. “Whether people want to admit it or not, we’re in a recession, and a lot of companies are making really challenging decisions.

“For example, if a company is going through [a restructuring]...as a CFO, oftentimes, we make decisions that are based on cutting costs that we view as discretionary,” Dussault said. “As a board member, there is a vision beyond just the immediate concern.”

He pointed to startup companies as an example; they typically don’t turn a profit early on, and board members may urge company executives to focus more on conserving cash. “But those decisions need to also be weighed with longer-term goals for the company.”

There’s also the added benefit of being paid. Typically, private companies compensate their board members with equity or a cash retainer, but public companies compensate through both cash and equity, Dussault said. And, the amount of compensation can range from the single digits up to the $500,000 mark, Mike Kelly, consulting leader for EY Finance, told CFO Brew.

First time is the hardest: Getting the first board position is the hardest, Kelly said. While Fortune 50 company CFOs may get asked to serve on multiple boards, it requires significant time and commitment. Being an operator at both a private and public company is one of the main reasons Dussault finds that companies approach him, he told CFO Brew.

When a company is mirrored in controversy, while the board isn’t the spokesperson, they often are heavily consulting behind the scenes, Loflin said. He pointed to coffee giant Starbucks, which doesn’t have a current CFO on its board, but has executives from Microsoft, Domino’s, Nike, Apple, and Salesforce at its table. The board hasn’t been publicly active as Starbucks deals with growing union drives at its US stores, and has been mostly shielded from the backlash leveled at Starbucks executives, including outgoing CEO Howard Schultz. But many of the executives on its board have experience with unionization efforts at their own companies.

“I do think that the Starbucks board needs to help,” Loflin said, “They could do some extra heavy lifting. And I would imagine they’re doing this around long-term succession planning.”

Despite the lower overall numbers, CFOs appear well represented across boards: former Boeing CFO James A. Bell sits on Apple’s board of directors; Susan Li, incoming Meta CFO, sits on Alaska Airlines board; Ruth Porat, CFO of Alphabet, sits on Blackstone’s board; Kimberly A. Jabal, former CFO of Unity Technologies, sits on FedEx’s board; Christine M. McCarthy, Walt Disney CFO, sits on Procter & Gamble’s board; and Mario J. Marte, CFO of Chewy, sits on BestBuy’s board; to name a few. General Electric has a board chock full of finance pros, including two former CFOs from American Airlines and HP. And Alex Gorsky, executive chairman of Johnson & Johnson, sits on JP Morgan, Apple, and IBM’s boards, in addition to non-profit and university boards.

Investor concerns: In recent years, corporate boardrooms have attempted to diversify the voices speaking on behalf of shareholders, but they face a central hurdle: limited board turnover, as the Conference Board reports. Institutional investors have also grown concerned about the number of boards executives sit on, citing time and attention conflicts. Aside from internal company rules, there isn’t a limit on how many boards an executive can serve.

But the conference board cautions that companies should expect investors to be paying attention to outside board appointments: “While institutional investors may defer to the board on whether to adopt mandatory retirement policies, many are keeping a close eye on average board tenure and the balance of tenures among directors, and will generally vote against directors who serve on too many boards.” —KT