Today’s directors have a lot on their plates. Scanning many recent publications advising public company directors, a fair job description would range from “overwhelming” to “impossible,” sometimes even veering into the managers’ lane. Directors are told they must not only continue to attend to tasks as they have always had but assume substantial new ones and even prepare for possible future demands. A collation of prescribed tasks:

Historical Tasks

  • Review and appoint senior executives, plan succession and set compensation and incentives
  • Vet strategy, probing risks from prevailing economic and market conditions
  • Oversee financial reporting controls and periodic financial reporting
  • Review and approve capital allocation strategy and related decisions ranging from acquisitions to dividends
  • Conduct oversight of compliance, with both law and corporate policy
  • Assure board continuity and proficiency

Contemporary Tasks

  • Probe to understand the company’s employee engagement and satisfaction
  • Probe to understand the company’s environmental impact
  • Weigh in on corporate activism addressing public policy debates
  • Participate in shareholder engagement with institutional asset managers, shareholder activists and public policy activists
  • Assure board governance practices gel with external demands
  • Participate in mitigating cybersecurity risks
  • Conduct board self-evaluations and peer evaluations

Prepare for Future Demands

  • Plan for forthcoming rules on emissions management and disclosure
  • Plan for forthcoming rules on human capital management and disclosure
  • Plan for forthcoming rules on supply chain management and disclosure

Additional duties are borne by committee chairs, committee members, lead independent directors, non-executive chairs and others holding specific offices. In addition to such a burgeoning list of tasks, all these exercises seem to require more time and attention today than in the past and sometimes venture into corporate management rather than board oversight.

In short, more is expected of directors than ever before – and those expectations may lead some to believe directors can or should do more than is either feasible or desirable. After all, taken as a whole, there is virtually no director or board capable of discharging all these tasks faithfully under their fiduciary duties to a corporation and its shareholders.

Boards must prioritize. Each board and company is different, so priorities must be tailored according to the board’s collective judgment. How to set priorities will also differ. But one useful general framework to consider is that attributed to President Dwight D. Eisenhower and popularized by thought leader Stephen Covey. Classify tasks in terms of both importance and urgency, then plan accordingly.

Probably, for most boards, most or all the entries under “historical tasks” above will reside in the green box, as these are the endless and central tasks for a fiduciary board. The other entries will reside elsewhere, as their relative urgency and importance varies with context.

Above all, directors should not permit the expanding list of proposed duties to change their role. As a matter of practice, they should remain “nose-in, body out,” adhering to their traditional role as overseers of managers, not substitutes for managers.


Author

Lawrence Cunningham
Special Counsel, New York
lcunningham@mayerbrown.com
+1 212 506 2203