Ask the Dumb Questions? Where journalism and corporate governance meet.

• Author: Hall, April
• Position: ENDNOTE

Very early in my career, an editor said, "If April doesn't know the answer, she knows where to get it."

Considering that was more than 20 years ago, it's obviously a point of pride for me. I don't think I have to be an expert in all things in order to do my job well. I need to find the experts, ask the right questions and then let them speak. I need to be able to translate "expertise" into prose that nearly anyone could read and understand.

Directors need to have the same kind of curiosity and often find themselves in trouble when they don't. That's been illustrated by recent Delaware Supreme Court rulings. Under Caremark and Marchand, plaintiffs were able to bring cases against boards for not knowing about risks associated with their businesses, rather than making poor decisions around known risk.

For directors to protect themselves, attorneys from Freshfields Bruckhaus Deringer LLP suggest in a recent piece for the Harvard Law School Forum on Corporate Governance, " ... when follow up steps are requested by the board, management should promptly provide any additional information to the board, and the board should expect, and indeed ensure, that they receive answers or information that satisfies their requests at subsequent board meetings."

This is not always the way it happens. And sometimes it's not solely management's fault. Dennis Cagan, an experienced director of both private and public companies, recently wrote a piece for the Directors & Boards website, "The Mushroom Board: Don't Be Kept in the Dark."

In his experience, he says one of the downfalls of the mushroom board is that directors "generally ask very few questions and even those are not difficult, probing ones. On these boards, dissent is clearly frowned upon. All votes are in unanimous perfunctory agreement with the CEO."

We also learn about breakdowns in communication that can keep a scandal-level problem off of the board's agenda in Frederick D. Lipman's book, Enhanced Corporate Governance: Avoiding Unpleasant Surprises, which is reviewed in this issue.

For example, if the board is hearing only from the CEO, directors are hearing only one perspective on the company's operations. It could be that the CEO is misinterpreting information received from subordinates or, at worst, may be averse to reporting bad news. That single report at meetings could also represent a problematic relationship in the C-suite. Do other...