Steve Naughton: Evolving with the profession

Naughton plans to move on to a new firm with a desire to face new challenges in the near future.

As a leader in the compliance field for over 12 years, his career path reflects the changing corporate mindset regarding compliance. He was formerly vice president of compliance and chief compliance officer, as well as the vice president of litigation, for PepsiCo. Before working in the compliance function at Pepsi, he served as chief litigation, sales, and operations counsel for The Quaker Oats Co. and Tropicana Products, both subsidiaries of the beverage giant. In those roles, he oversaw the legal function for all litigation, supply chain, and manufacturing and purchasing, as well as having responsibility for antitrust compliance and sales counseling. Further in the past, he was a partner with the former Chicago law firm Pope, Ballard, Shepard, and Fowle.

At Pepsi, along with his predecessor, Pam McGuire, Naughton is credited with building a world-class compliance program, despite working with an initial staff of just three people, including himself.

The move to compliance was a good fit, he says. “At the time I thought it was a natural progression first as a trial attorney, then into corporate litigation and, then basically, an in-house generalist, into compliance.”

The siren call of compliance led him to Kimberly-Clark in 2013. “I really wanted to get back into compliance and that was the main driver,” Naughton says. “Kimberly-Clark is a great company with strong Midwest roots with a great reputation for integrity. That was attractive to me.”

“The scope and importance of a chief compliance officer continues to evolve and continues to become that much more important,” he says. There is no question that the demands and expectations for CCOs continue to grow. When I started, we were all trying to sort it out and figure out where we sat. The CCO has changed over the years and is now looked to as a person with high authority and even greater responsibility. If something goes wrong, everyone looks to the CCO. In fact, the CCO is sometimes referred to as the ‘canary in the corporate coal mine.’ As far as the marketplace is concerned, I certainly think it is recognized by industry as a much more important job and the demand for qualified, dedicated, people of integrity is going to be very high.”

He also sees, as many do, compliance split into specializations to meet the unique business sector demands in finance, healthcare, and consumer products.

How has a CCO’s skill set changed over the years? “When I started, I did a lot more investigative work myself,” Naughton says. “I still do investigations, but what you are seeing now is more on the level of a strategist and a person who is connecting the dots to identify risk, instead of somebody who, 10-12 years ago may have been more siloed into specific areas like investigations.”

“There is no question that the role of the compliance officer is going to continue to grow,” Naughton adds. “Every time there is a major corporate scandal, we are probably going to see additional legislation in response. The CCO is going to be looked to more and more as the person who really needs to identify risk, not just be in a position where he or she goes back and investigates something after the fact.”

Naughton’s advice to his colleagues who are new to the profession: “Establish a good strong network of contacts within the compliance field.”

“You have a lot of people who have a great deal of knowledge,” he says. “To the extent you can, tap into that network so you can rely upon people that have been there and gone through it all. It is also very important to understand roles and responsibilities. Where do you fit? Where does compliance fit within an organization? Know what that role is and be in a position where you can raise issues, and raise them independently.”