Back in the good old pre-Enron days, serving on corporate boards was a pretty cushy job--a few meetings, a couple of conference calls, and some fancy dinners for a nice fee and maybe some stock options for your trouble. But these days, directors of public companies are facing a whole new ball game. New rules adopted by the stock exchanges and Congress have heaped new responsibilities and potential risks on corporate directors--particularly members of audit committees. "The days of showing up and nodding off in the corner are over," says Peter Crist, vice chairman of recruiting firm Korn/Ferry International. "There's going to be more work, more scrutiny, and more sensitivity."
And probably fewer people willing to take on the job. A study by executive search firm Christian & Timbers found that estate planners are advising their clients to get off corporate boards because of the liabilities they might face. CEO Jeffrey Christian estimates that Fortune 1,000 companies could lose up to half of their directors in the next year. "People may decide they've worked too long and hard to risk sitting on corporate boards," says Olivia Kirtley, a retired CFO. Not her, though; Kirtley intends to remain audit- committee chair for three public companies.
That seat is the toughest to fill--and the hottest. Not surprisingly, CFOs are the most sought-after candidates for the job. "I have four clients asking for a sitting or former CFO," says Crist.
The candidate pool is also shrinking because companies are asking their CEOs to reduce the number of boards they sit on. And tighter definitions of independence adopted by the stock exchanges are further reducing the number of qualified candidates.
For their part, potential candidates are spending more time vetting companies; they want to make sure there are good corporate-governance practices already in place. When Jeff Rodek, CEO of software maker Hyperion Solutions, interviewed candidates for the company's board recently, they asked about everything from directors' and officers' insurance to how Rodek reacts to being challenged. "It's a big commitment now," says Rodek, who has hired one new director and is looking for another. "It's already difficult recruiting people. We may have to cast a wider net." How about financial journalists?