Should a CFO be a Board Member?
Answers
A reminder that the Board is the strategic overseer of the company AND
No they shouldn't. The Board's mandate is different than Management's. The CFO should most definitely participate in Board meetings, but having them on the Board of Directors undermines the ability of the Board to challenge management in my mind. Keep your CFO off the Board, but not out of the boardroom.
In my opinion, no. It is taking up a board seat that could be better utilized with additional outside perspective.
This question could be viewed from the perspective of the corporate governance principles in place within the company and also what the system is in the country where the company is operating. If the system is rules-based, then the answer is obviously no but if its a principles based system then this may be possible.
The overriding principle to make sure that the CFO's independence is not threathened and he should act in public interest as he performs his duties. Therefore, as a qualified professional, the CFO is supposed to thrieve to meet with his professional body's code of ethics and conduct and there would normally be safeguards and ways to manage any such threats arising from holding dual functions of CFO and member of BODs.
I agree with Blair's position as this reflects the position within a rules-based governance system. For example the
I will be the devils advocate in the room. It depends, is the company large with a sophisticated board? If so, then I agree with everyone else that the CFO's job is to be an adviser and the board should be overseeing their performance. However, if the company is an ESOP with employees as board members and outside council on the board is lousy then it might be a necessity. I have served as a companies CFO adviser to a board with the companies janitor, shipping clerk and procurement manager, as well as non-financial outside board members. There was not one person who could understand financial performance of the company on even a basic level let alone advise the company in this regard. It would have been beneficial for my position in that circumstance to be a board member. However, this is a unique circumstance and 9 times out of 10 CFO should only advise.
There is no blanket yes or no answer. Circumstances should be weighed on a case by case basis. If the CFO has particular expertise/experience that addresses longer term challenges of the company and balances/fills a gap in skills of the Board, then why not?
For example, a company is undertaking/undergoing major changes such as restructuring or major expansion. Prior experience in these areas can be an invaluable resource/contributor to Board deliberations.
In my experience having served on more than 15 Boards, success is a result of the people on the Board on how well they work together and communicate. Also, they know how to manage conflicts. The CFO might not even be a member of the audit committee.
no.
I am not a member of the Board where I serve as the CFO.
That being said, I have been present for all Board meeting and the majority (not all) executive session meetings.
While I don't have an official vote, my opinion is heard and evaluated the same as the Board members.
The same is true for some of the non-profits where I hold a "c-level" type role, if I'm not on the board I don't get an official vote, but my voice is heard.
I think for the sake of independence the CFO should not have a seat on the company , board,however should be in attendance when board meetings take place. In most cases they are better placed to explain the financials especially.
It's already bad governance when a public company's BOD is headed by an imperialistic CEO. It's inexcusable when the BOD further includes the CFO and/or other members of management. When I see such bad governance, what I really see is a great short sale candidate as it is only a matter of time before it implodes in a scandal.
I don't think it makes any real difference in most instances. The majority however should be independent. But if they aren't a board member they need to be present at every board meeting.
The board cannot make good decisions with out the CFO being involved. Doesn't mean he/she has to be a member, but the board better listen to the CFO when it comes to financial matters.