Across the Board

Spurred by regulatory change, directors and CFOs forge a new relationship.

See the results of the CFO/NACD survey

Not long after Vada Hill joined the board of Denny’s Corp., CFO Andrew Green took him on a road trip. When Hill stepped off the morning train in Philadelphia, the two men hit four local Denny’s restaurants, sampling breakfast and lunch fare along the way.

The restaurant-hopping was a success, and not only because of the taco salads. (“I used to be CMO for Taco Bell,” says Hill, now senior vice president, marketing, at Fannie Mae, “and I know taco salads.”) Along with lessons about such menu items as the Philly Melt, Hill got a valuable tutorial about the chain — and its CFO. “He is clearly a holistic executive,” says Hill, who developed “huge respect for Andrew for not just sitting behind a desk in Spartanburg,” the company’s South Carolina headquarters. Green says, in talking about everything from marketing to M&A, “I think I gave him a window into the company — one that’s different from the CEO’s.”

While many companies hold meetings at stores, factories, and distribution hubs to expose directors to operations, it’s not often that the CFO serves as tour guide. Nor, in the past, might a director have particularly wanted that. But times have changed. Sarbanes-Oxley and other federal mandates make boards more accountable than ever. And for boards to assume that new responsibility, they must spend more time with the CFO. Nell Minow, a founder of The Corporate Library, a Portland, Maine-based governance-research firm, says that when trying to improve their understanding of a company, “the most important thing for directors may be to have a better and more direct relationship with the CFO, and to get to know the CFO as a full person.”

Dealing with the CFO on the same level as the CEO offers “a reality check,” adds Charles Elson, Edgar S. Woolard Chair in Corporate Governance at the University of Delaware. The finance chief represents “another set of eyes, and another set of body-language communications” that a board member can observe.

The amount of interaction between CFOs and boards has certainly increased under Sarbanes-Oxley — especially Section 404, which assigns the audit committee the duty of documenting, testing, and assessing a company’s internal controls. Improving the quality of the board’s information depends in large part on the professional and personal skills of the CFO. Finance chiefs must be able to tailor their board presentations to suit the occasion as well as the finance and accounting background of the audience, offering simple bird’s-eye-view reports in some instances and much more detail in others.

Beyond the Letter of the Law

Clearly, most board members expect the CFO to assume a stronger role in matters relating to governance. In an October survey CFO magazine and the National Association of Corporate Directors conducted with 434 NACD members, a full 42 percent of respondents who serve on public company boards said the CFO’s primary role in corporate governance should be to “lead in ensuring that the letter of the law is met.” Another 20 percent believe the CFO should go further, pushing “for change above and beyond the letter of the law” (see “The Directors’ Take“).


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