Boards: What’s Your Max?

Directorships have much to offer CFOs, but companies are increasingly putting restrictions on these opportunities.

Darlene Deptula-Hicks’s retirement plan entails doing extra work now, on top of her day job as CFO of medical-imaging software maker iCad. About six years ago, she began actively pursuing directorships to gain experience she can use later, when it’s time to move beyond the 9-to-5 grind. “You get to keep your hand in the business world and have more flexibility in your life,” she says of her hoped-for future as a busy corporate board director.

To keep her dream alive, Deptula-Hicks persuaded iCad to let her hold up to two outside board seats when she was hired in 2006. She currently serves on the board of USfalcon, a private company that provides technology services to the Department of Defense, and is looking for another board position. Telling her then-new employer about her intentions protected her job and her extracurricular activities, which can include impromptu phone calls during regular business hours and two-day trips out of the office for board meetings.

CFOs may want to consider making similar agreements with their employers as companies increasingly reexamine their multiple-board policies — for their directors as well as their executives — following the recent financial crisis and the subsequent scrutiny of corporate boards across industries.

Before the Enron scandal and ensuing corporate reforms, it wasn’t uncommon for one person to hold as many as eight or nine board seats (also known as “overboarding”). Although those days are long gone, directors can still spread themselves thin with fewer seats. Today’s busiest directors tend to max out at four board seats, which often involve additional duties on subcommittees. For sitting CFOs, the maximum capacity is even lower.

Perhaps a deal like the one Deptula-Hicks has with her company could have prolonged Marsha Williams’s three-year tenure as CFO of Orbitz Worldwide. Last month the travel provider announced that Williams will retire following its decision to limit its employees to serving on one public-company board, or in some cases, two. Williams sits on three public boards (Chicago Bridge & Iron, Modine Manufacturing, and Fifth Third Bancorp).

“Marsha wanted to honor her current board commitments and therefore chose to retire rather than resign from her boards,” says Brian Hoyt, Orbitz vice president of communications and government affairs. The company declined to make Williams available for an interview. She will stay on as finance chief through the end of the year or until a successor is named.

In some cases, CFOs place restrictions on themselves, not wanting to let board commitments interfere with their main job. “Personally, I couldn’t sit on four boards and do a full-time job,” says Deptula-Hicks. “There are not enough hours in the day to do that.” Indeed, as the complexity and challenges of businesses have increased, directors’ jobs have become more difficult, and the demand for expertise on boards has never been higher. “The role of sitting CFOs on boards in this climate has been broadened and stretched,” says Clem Johnson, a partner at executive-search firm Crist Kolder Associates.

But just as companies are increasingly questioning how many board spots their executives can reasonably hold, they are also restricting the number of seats their own directors can occupy. Such a development may seem at first to bode well for CFOs trying to get into the board world, but it doesn’t. That’s because companies are generally wary of taking a chance on first-time board members. About 60% of new board appointments are given to people who sit on another board or have previously held one, according to Crist Kolder.

Directors who are testing the currently accepted limit of four board seats don’t recommend that full-timers do the same. Former CFO Ed Terino says his work on four boards, including that of Phoenix Technologies, is a full-time job in itself. “I come to work every day in my office and focus on my board responsibilities,” he says. “It’s not like I’m retired or on a golf course every day. When work for one of the boards has to be done, I adjust my schedule.”

And a director’s schedule can be a busy one. Finance executives who moonlight on boards — and who are often chosen to serve as the audit committee’s designated financial expert — may find themselves devoting their spare time to attending conferences and reading publications about accounting and regulatory changes. For a retired CFO, at least, there may be a silver lining to serving on more than one board. “By being on four boards, I’m engaged with four different law firms and four different CPA firms, and therefore I get a lot of information,” says Terino.

But even serving on just one board can enrich a CFO’s daily work and career, providing an opportunity to learn firsthand about how another company and its finance chief deal with challenges. “If you’re a CFO with a full-time operating job, the addition of one board is a positive; you can learn a lot from the other company,” says former Amdahl CFO Ed Thompson. Thompson should know: he chairs four audit committees, including those at ShoreTel and InnoPath Software.

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