Keeping Up With the Board

CFOs, more than any other C-title holders, have a vested interest in understanding the hearts and minds of corporate directors, and highlights of an annual survey conducted by PricewaterhouseCoopers and Corporate Board Member magazine can help minimize guesswork about what board members think.

The importance of finance executives' role in board issues is reflected in a slew of questions covered in the survey, which reported that CFOs are the group of non-board members most commonly found at board meetings. Those meetings have eaten up more time over the past six years; full board meetings last from three to four hours for 27 percent of respondents, five to six hours for 38 percent of respondents, and a jaw-dropping seven to eight hours for 22 percent of respondents.

Compensation committee meetings, where finance executives' input is particularly important, take two hours or less according to half of respondents and three to four hours for 45 percent of directors surveyed.

Serving on the audit committee is seen as the most difficult responsibility for board members, with 80 percent indicating it is difficult. Serving on the compensation committee, determining CEO compensation, and ensuring the company's strategy and risk appetite are also seen as difficult.

Survey findings indicate that finance executives should give themselves a pat on the back in terms of educating board members about financial performance and earnings quality. Directors say that they're fairly confident in their understanding of their companies' financial statements, discussions with management about the financial statements, and discussion with the external auditors about the financial statements.

Most respondents (78 percent) say they are very comfortable with their companies' quality of earnings -- the degree of conservatism versus aggressiveness in the accounting policies and accounting judgments/estimates.

CFOs who seek ways to lower the costs of their directors and officers insurance (D & O), may be interested in knowing that according to the survey, the great majority (76 percent) of responding directors would be willing to have an outside board assessment of risks they face. Only 27 percent of respondents who have either resigned or considered resigning cite concerns over personal liability as the reasons.