How to Ask the Tough Questions in the Boardroom | Tip #9: Have the Courage of Your Convictions

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 #8: Don’t Be Afraid to “Go Public.”

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 discussed the importance of asking open and honest questions in the boardroom. In doing so, it is also imperative for an independent director to remember his/her main purpose in serving on the board: to make decisions in the best interest of the corporation itself. Keep reading for more on having the courage of your convictions.

Tip 9: Have the Courage of Your Convictions (a.k.a., What Does “Independent Director” Really Mean, Anyway?)

Directors should frequently remind themselves whose interests they represent in the boardroom. There has been a decades-long debate between those who believe directors should manage the corporation solely to maximize shareholder value, and those who argue that corporations are so powerful that they should also be managed to advance the interests of their employees, customers, communities, and society at large. There is no denying, however, that directors must make decisions in the best interest of the corporation itself. The corporation is a distinct legal person under state corporate law, with an identity and existence separate from those of its stakeholders. Directors must make decisions in the best interest of the organization over the long term. This fiduciary role may, in some (hopefully rare) instances, put directors in conflict with the CEO, the management team in general, or a significant stockholder. That is uncomfortable and unfortunate, but it is also unavoidable. Directors must remember that one of their most important functions is to ask tough questions. Having the courage to do so is part of the reason why they were selected for the job.

This is the final installment of Gershanik’s series, “How to Ask the Tough Questions in the Boardroom.” You can find all previous tips on Fishman Haygood’s News and Resources page.