No more hiding behind management's voice: the question now is not whether ... but who from the board speaks, and under what circumstances.

Author:Byrd, Francis H.

SINCE THE ONSET of the Great Recession, the critical question of who speaks for the board, or to what extent the board should speak, has become one of vital importance. The expectations facing directors from regulators, investors, and the business media may be misplaced, but they now represent a fact of life. The question now is not whether the board should speak, but who from the board should speak besides the CEO, and under what circumstances. Ordinary circumstances such as earning releases, new product introductions, analyst conferences, and engagements with shareholders usually do not require the presence of a board member.

Our experience at The Altman Group leads us to say that the party who should speak for the board depends on the answers to the following three questions:

What Is the Nature of the Issue/Situation? Is the company in a weakened industry and has accepted a massive taxpayer financed bailout, or is it a question of convincing shareholders and proxy advisory firms that the firm's compensation program drives performance and does not incentivize risky business practices?

* How Does the Issue/Situation Need To Be Addressed? Would the board member need to appear before Congress and/ or regulatory agencies to testify, or would participation in a conference with RiskMetrics or BlackRock be an appropriate course of action?


* Who Is the Audience(s) That Will Be/Is Being Addressed? Do the public markets, consumers, and regulators need reassurance about the company's viability, or are a group of vocal institutional investors perhaps asking for a review and report on the company's environmental or human rights policies?

Where public and investor confidence in management has been seriously shaken--for example, as in the present crisis at companies participating in a government bailout program--the role of a director speaking for the board can help demonstrate the board's...

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