How to Ask the Tough Questions in the Boardroom | Tip 6: Ask the Experts for Help
May 7, 2024
Maureen Gershanik is a partner and a member of Fishman Haygood’s Business Section. She counsels boards of directors on corporate governance, securities law compliance, SEC reporting, executive employment matters, and executive compensation. In this biweekly series, she provides nine tips for directors as they navigate the boardroom. Click here to read Tip #5: Have an Attitude of Constructive Skepticism.
Public company directors are under more pressure than ever to oversee enterprise risk, even risk from day-to-day operations, which is normally addressed by management. However, directors are largely removed from the action. Critical to the role of the director, then, is the ability to face and question management.
In our last tip, we talked about how a director must be able to challenge management, not through debate or criticism, but by asking questions that encourage managers to elucidate their thought processes and explore how they came to their decisions. Read on for why directors should also be able to communicate freely with auditors and other experts in certain instances.
Tip #6: Ask the Experts for Help
Directors should have unfettered access to the board’s advisers, such as internal or external boardroom counsel, independent auditors, and other experts like compensation consultants. In fact, independence rules of the SEC and the stock exchanges require independent auditors and executive compensation consultants to be answerable directly to independent board committees, not management. Company counsel represent the organization, not any director or member of management, and may be able to field delicate or sensitive questions confidentially when a director is unsure whether it is prudent to ask the question in a meeting where minutes are taken. A management team that is reluctant to facilitate a direct line of communication between the independent directors and boardroom advisors should set off flashing red lights in the minds of directors.
Next time, Gershanik explores the importance of mixing and mingling.
