For decades, corporate board seats have been a semi-retirement strategy for chief executive officers and chief financial officers who want to stay in the game.
With institutional investor calls for greater board diversity, corporate board membership has been brought from behind closed executive suite doors and into the spotlight as an opportunity to improve both corporate governance and to distribute power and leadership opportunities more equitably among women and people of color.
Undoubtedly, if you’re reading this, you support the need for increased compliance and ethics expertise as part of a board member profile.
When I speak with compliance professionals, there is a strong interest in board service as a career goal. My experience matches the results of Compliance Week’s fifth annual “Inside the Mind of the CCO” survey, which found chief compliance officers and chief ethics and compliance officers desire progressing to the board (17 percent) more than any other role change.
So, what does it take to get on a corporate board?
First, let’s walk through some basics about classic board profiles. According to the 2023 U.S. Spencer Stuart Board Index, which drew from S&P 500 company data:
- 53 percent of boards added at least one new director in 2023, for a total of 388 new seats.
- Financial expertise is consistently in demand, meaning boards are looking for current and former financial executives and CFOs, accounting executives, bankers, and investors.
- 30 percent of new director seats in 2023 went to active and retired CEOs.
- 5 percent of new board members—about 19 seats—have a general counsel/legal background.
- 54 percent of new independent directors have spent time working at an international location.
The average board tenure is about eight years, and most board members are in their 60s. Nearly half of new directors are women (46 percent), and 36 percent of new directors self-identify as underrepresented minorities, leading to a current diversity figure at 48 percent.
Most boards have audit, compensation, nominating/governance, finance, and executive committees. The first three are required by the Securities and Exchange Commission. A growing board trend is the addition of a technology committee (15 percent). About 6 percent of boards have a standalone legal/compliance committee in addition to their required audit committee, predominantly in the healthcare industry.
Depending on the board seat that is being vacated, the strength of candidates’ credentials will be judged on a needs analysis of the gap to be filled.
What compliance brings to the table
To further place this data in context for compliance professionals, I spoke with Jeannine Lemker, director, board services and in-house practices at legal search firm Major, Lindsey & Africa. A former Microsoft compliance leader, Lemker pointed to the modest number of seats held by former general counsel, noting legal is a more common profile for boards than compliance.
“Just being a CCO isn’t going to get you on a board, like just being a general counsel will not,” she said. “Find a way to diversify” your skill set, she said.
Board service is just that—service
There are three false expectations people might have of serving on a board, according to Betsy Berkhemer-Credaire, founder of 50/50 Women on Boards and author of “The Board Game: How Smart Women Become Corporate Directors”:
- The prestige factor: Board service is hard work. Most companies pay a modest retainer, and often stock does not vest for five years. You’re in it for the long haul and because you love the company and want to serve.
- The “get rich quick” factor: Don’t join a board for the money. Yes, there is an upside if a company does well and there are stock awards and ownership for directors, but it is not a sure thing (and equity grants are often required to be held for several years). An extraordinary amount of time might be spent on a bad acquisition or challenging CEO succession, which can make your work feel like you are getting paid below minimum wage.
- The “I deserve it” factor: You don’t join a board thinking you can run the show. The CEO runs the show, not you, so you need to understand there is a lot you don’t know.
CEOs and CFOs are strong candidates because they understand both risk and strategy, and corporate board risk management has generally focused on finances and the filings of a public company. Nearly all legal or compliance professionals who earn a corporate board seat also have gained strategic planning, innovation, and finance expertise through other roles. They expand beyond their legal or compliance role, perhaps moving into a chief administrative officer or chief operating officer role with multiple function oversight.
Others might earn their financial credentials through entrepreneurship, running a business (e.g., a side investment or family business) concurrent with or following their legal or compliance role.
Veena Lakkundi is a great example of the diversified business acumen sought by boards. She started her 20-plus-year career at 3M initially leveraging her chemical engineering background in a research and design product role, then moved to sales. It was her stint as managing director of 3M Indonesia, however, that ultimately led to her subsequent vice president and CCO role at the company.
“When I was in Indonesia, we faced a lot of challenges on doing business the right way,” she said. “I underestimated how much time I’d need to spend educating people on how 3M expected people to do business.”
Her efforts to build integrity into the DNA of her business—such as measuring sales quality by integrating audit results and investigation/speak-up metrics—were noticed by the CEO. Asked to “make the code the language of our salespeople,” Lakkundi earned the CCO title. She later became 3M’s senior vice president of strategy and business development and left two years ago to become the SVP of strategy and corporate development at Rockwell Automation.
Once she joined Rockwell, she asked to serve and secured a seat on the board of Claroty, a private cybersecurity company in which Rockwell owns a large stake.
A recruiter then placed Lakkundi on her second board, Trinity Industries, a rail company interested in her strategy, acquisitions, and innovation background. When Trinity reviewed her experience and noted her compliance and ethics background, they immediately wanted her to serve on the audit committee.
“Never underestimate the value of the experience you bring,” Lakkundi advised. “Whether it’s a public or private board, the experience CCOs bring is invaluable.”
“Some of the compliance and ethics questions you ask may seem basic, but others just haven’t thought of those things,” she continued. Board audit committees tend to overindex on financial experience, forgetting CCO experience brings a valuable lens.
“I had a lot of financial experience from leading businesses, but there’s different ways to grow your financial acumen,” she added. Lakkundi is currently completing a CFO certification from Columbia University, including an elective course on environmental, social, and governance (ESG) investing. She recommended checking to see if your company has a tuition reimbursement policy to enlist in such a course or investing in it yourself.
Cindy Moehring, former CCO of Walmart and leader of the Business Integrity Leadership Initiative at the University of Arkansas, is another successful compliance executive who transitioned to board service.
Moehring was initially contacted by a recruitment search firm and ultimately selected to serve on the board of publicly traded agriculture company Pyxus International. She is chair of its ESG committee and serves on the compensation committee.
Regarding networking with board search firms and colleagues, she said, “I should have done that earlier; I was just so darn busy at Walmart.” She also serves on the advisory boards of two privately held tech companies, which, like most startup advisory boards, provide a small equity stake in the company and no direct compensation.
Director compensation at S&P 500 companies averaged $321,000 in 2023, according to Spencer Stuart.
Advisory boards valued Moehring’s business connections and ability to open doors to potential customers to help them grow. They also sought her thoughts on their products and services, which tied to her Walmart experience.
“Never underestimate the value of the experience you bring. Whether it’s a public or private board, the experience CCOs bring is invaluable.”
Veena Lakkundi, Board Member, Claroty
“I don’t do any of it for the money. … It’s just a different lane to be in, to use your experience in a portfolio career in a way that is intellectually stimulating,” she said.
Although Moehring did not have profit and loss responsibility at Walmart, she managed a $70 million budget and led a multidisciplinary, 400-person team that implemented blockchain technology, artificial intelligence, machine learning, and other digital tools to advance controls in critical regulatory risk areas for more than 5,000 facilities. Her CCO position matured over time and became part of Walmart’s leadership teams, where every member had horizontal responsibility to decide on, discuss, and raise issues as a business leader.
“I was expected to know it and have a perspective,” she said.
Lemker is optimistic about the potential for compliance expertise to be valued more strategically by boards and investors. The conscious capitalism movement is pushing investors to think more holistically about areas that compliance professionals might gain expertise in, such as carbon neutrality.
“Boards have woken up to the idea that they need to look beyond the CEO and CFO,” she said. Smaller companies, particularly purpose-driven ones, have to think more broadly about who to bring on their board. Private portfolio companies that are backed by larger private equity companies are open to compliance and ethics as well. Organizations that have been in trouble and need to clean up their reputation and business practices “have an added incentive to showcase the way they’re doing it,” added Lemker.
Where to start
If you are interested in board service, it’s good to treat it as a long-range job search and start planning five to 10 years out.
As a first step, research the resources that might be available at your company to diversify your business experience, build your financial acumen, and support your board search. CCOs at large companies with subsidiaries or startup investments should research the possibility of serving on their boards or advisory boards.
Ask about company support for executive board programs, offered by most top business schools and the National Association of Corporate Directors, that provide certification, help you put together a board bio and résumé, and gain networking strategies.
Lastly, some companies seek to grow their executive bench strength by retaining recruiters to find appropriate external board placements to gain leadership depth and breadth. If you’re not sure, ask a trusted executive at your company.
Board service can be a fulfilling, significant commitment when you’re ready to take that step. Finding the fit and liking the people is important. As Moehring said, “I view it as giving back, because you care.”
Editor’s note: This story was updated Dec. 6 to correct that Cindy Moehring serves on Pyxus’s compensation committee. The original article said she chaired the committee.
