A shift is afoot: board seats are opening up as some directors swept into their positions by the Sarbanes-Oxley Act are retiring. But CFOs still need to focus on developing the necessary skills if they want to land the right prized spot on an outside board, according to Keith Meyer, global leader of the CEO and board practice at Allegis Partners, an executive search firm.

“It’s a competitive game to land a board seat,” Meyer said in an interview, noting that CFOs of the biggest companies such as Home Depot or JPMorgan don’t have to contemplate how to make themselves more attractive to a board because they’re already known to everyone. But those not in that category can take some steps to move higher up in the food chain and onto the radar screen to be in the running for more board opportunities, he said. 

First, Meyer counsels CFOs at public companies to examine and consider boosting what he calls their “external exposure,” meaning potentially increasing their visibility on earnings calls which are widely heard and seen by the financial community. A finance chief who “carries the water” rather than having the CEO handle everything on earnings calls can gain valuable exposure, he said. 

Second, Meyer suggests that CFOs consider developing and tapping their experiences and skills beyond the finance realm. While finance chiefs have long been sought after for their financial expertise by board audit committees, broader knowledge is now a key differentiator. Meyer said a board might ask: “not only could you be a member of our audit committee, but we’ve got all these technology issues we’re going to have to sort through here from an investment standpoint and make tradeoffs, have you had technology reporting [come] through you?’”

Third, prospective board candidates want to showcase prior board experience. Here, Meyer suggests candidates review whether they’ve been on committees or boards inside their companies, such as on the board of a joint venture entities. In addition, candidates will want to be actively involved with their own company’s board. 

“Do you actually participate in the full duration of the board meeting and have you actually taken part in any of the other committees like compensation?” Meyer asked. “If you add those three things up it’s sort of the road map for how you become, in many cases, a more attractive board candidate.” 

Don’t jump at first offer

There are myriad reasons that financial executives often seek outside board positions in spite of the fact that they are a serious and relatively long-term commitment that can take as much as 250 hours a year of a busy executive’s time. 

Sometimes a finance executive’s existing company or CEO will push them to take such a position to expand their knowledge base and prepare themselves for other roles in the company.  At other times the executive themselves may seek the role to gain a higher profile and more skills or to try out a role that they could potentially continue in retirement, Meyer said.  

There’s evidence that companies with a CFO on an outside board can be better run: companies whose finance chiefs were on the board of another firm had 21% fewer financial report misstatements than other companies, according to research by Sarfraz Khan, an associate professor of accounting at the University of Louisiana at Lafayette.

The positions are also potentially very lucrative, with some of the top boards paying directors roughly $200,000 to $300,000 in cash a year plus equal that amount in restricted stock, Meyer said. Board members at smaller Fortune 1000 companies might receive about $150,000 as well as restricted stock. 

But Meyer advises that executives proceed with caution and consider the full import and responsibility of joining a board before setting out to do so. In addition, he said researching boards to find one with the right cultural fit is crucial as it can be time-consuming process to get off a board once you’ve joined. “Don’t just jump at the first board that comes through,” he said.