The Buck Stops With the Board: The Full-Time Job Of A Company Director

by Mark Friedman  on Monday, Jul. 2, 2012 12:00 am  

A wave of new regulations is making board services more of a full-time proposition. (Photo by Shutterstock)

“There’s always enormous amounts of material that has to be digested,” said Mary Good, who previously served on the board of directors of Acxiom Corp. of Little Rock and is currently the special adviser for economic development to the chancellor of the University of Arkansas at Little Rock.

She said that board telephone conference calls could eat up an hour and sometimes, when urgent business needed to be discussed, occurred three to four days in one week. Good gave the example of a situation in 2007 when Acxiom board members approved the sale of the company to two private equity firms. That deal later collapsed, however.

Foster, the Windstream board member, said his board meets at least four times a year, but holds telephone conference calls as needed. Being on a board “certainly requires more time, more reading, more research, more communication. … That’s what’s expected of a board member,” Foster said. “It shouldn’t be that they go to a meeting, sit [and] watch, get paid and leave.”

‘Protecting the Shareholders’

“The SEC intends for the board to play a very active role at least in protecting the interests of the shareholders,” said Carla Hayn, a professor at the University of California at Los Angeles’ Anderson School of Management. Hayn also is a co-coordinator of a board of directors’ education course.

But, Hayn said, the board also should be a sounding board for management in terms of strategy, marketing and other issues.

While directors probably won’t treat the board meeting as a congressional hearing and grill the CEO, directors should have a “healthy skepticism” of management, Hayn said.

The CEO should be able to explain why decisions were made, what alternatives were considered and why those were ruled out, she said.

Lorsch, of Harvard Business School, said that if a board member thinks something illegal or unethical has occurred, he should push for an investigation or try to uncover what’s going on.

“The problem for boards is they don’t often have the means to do that,” Lorsch said. “They’re not the FBI or the Securities & Exchange Commission or the Justice Department. They’re just a bunch of board members.”



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