How to Get on a Board

CFOs may seem like strong director candidates, but few actually make the final cut. How can they improve their chances?

By any measure, Geoff Hibner is an experienced financial executive. The 60-year-old Harvard MBA has been CFO of five companies (four public and one private), in industries from consumer products to manufacturing. He’s bought and sold companies, done stock buybacks and dividend issuances, and defended against hostile-takeover efforts. Having recently wrapped up a long-term consulting engagement for a major manufacturing company, Hibner has accomplished practically all of his career goals, with one exception: joining a corporate board.

Although he has connected with recruiters who specialize in director searches and informed colleagues and professional contacts of his interest, Hibner says he’s had few bites so far. Meanwhile, having sold his last company in 2007, he’s seeking another CFO position. “I’ve drawn the conclusion that I’ll be much more likely to find [a directorship] if I am employed than if I am not, because you inherently have more opportunities to meet people if you’re employed,” says Hibner.

Why should a CFO join a board? For one, it’s a practical way to expand a professional network, and to gain a better understanding of different business models. Also, some say the high-level view of operations that a board seat affords can make finance chiefs better at seeing the big picture at their own companies. Others see board service as a way to give back some of what they’ve learned from their own training. “It’s a great way to end a career, where you can contribute without being the CEO or CFO,” adds Hibner.

The pay isn’t bad, either: last year the median pay for independent directors at Fortune 500 companies was $182,102 (excluding additional fees for sitting on particular committees), according to Equilar, a compensation-research firm. A BDO Seidman survey of companies below $1 billion in revenue found that in 2009, directors earned anywhere from about $40,000 to $140,000, depending on company stage and industry.

Unfortunately, as Hibner has learned, joining a board isn’t easy for CFOs. Back in 2003, when companies were first required by the Sarbanes-Oxley Act to disclose whether or not they had “financial experts” on their audit committees, CFOs were a hot commodity in director searches. Now, companies “feel more comfortable [that] they have that [financial-expert] box checked, so we’re back to a more typical kind of demand profile, which is replacing those financial experts who are retiring or moving out,” says Thomas Kolder, president of executive-search firm Crist Kolder. For general board seats, “we’re still being asked for sitting CEOs,” he says.

Indeed, “it’s not that common that we would serve up a candidate with a CFO background for a board search that’s not specifically looking for one,” says Robert E. Reilly, a Chicago-based executive recruiter who just placed two CFOs on the board of Westell Technologies.

Few and Far Between

According to a CFO analysis last October, only 1.5% of S&P 500 company directors are or have been CFOs; of those directors, about 30% are current finance chiefs. Those proportions change only slightly when considering a set of smaller publicly traded companies, the CFO 1,500. For those companies, with revenues between $100 million and $1 billion, 2.2% of their directors are or once were CFOs, with about 45% currently in the role.

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