On board and over your head.

• Author: Wittebort, Suzanne
• Position: Company board of directors face business pressures

Service as a company director -- lofty and lucrative though it might be -- turns into risky business.

Back when television executive Cullie Tarleton joined the board of North Carolina Federal Savings and Loan, everything looked rosy at the state's third-largest thrift. "1985 was a banner year for lending," its annual report trumpeted, and the Charlotte-based S&L posted record profits in 1986. Tarleton joined a board led by Charlotte Motor Speedway owner O. Bruton Smith, who had gained control in 1984 after a bitter takeover battle. The directors enjoyed the prestige and privilege of basking in one another's presence and were paid $750 a meeting, up to $9,000 a year.

Now Tarleton and 11 other directors have been tarred a dirty dozen. After losing millions in the real-estate crash, the thrift was taken over by Resolution Trust Corp. and its board-slapped with a federal suit: Their negligence, the government contends, cost taxpayers an estimated $48 million.

"We did nothing wrong, and there's no justification, no reason for the RTC to take this action," says Tarleton, now general manager for WCCB-Fox TV in Charlotte.

Win or lose, it's an expensive problem because the directors are not protected from the government's claims by directors and officers' insurance. Their indemnification expired with the collapse of the S&L, so if any penalties are assessed -- and the feds are seeking unspecified damages exceeding $50,000 -- the money will come out of the directors' pockets. So will their legal fees, which Bill Diehl, attorney for Bruton Smith, describes as "gargantuan."

Tarleton says he'd probably serve on another board. But, he adds, "I'd have to think long and hard about it." As for his N.C. Federal experience, he says, "I wouldn't wish it on my worst enemy."

It's little wonder, then, that directorships, once sought-after plums, are increasingly viewed as hot potatoes. The image of the corporate board as a comfy white men's club where members gather twice a year in a paneled boardroom to puff cigars, rubber-stamp the CEO's decisions and collect generous fees is disappearing. Under increased pressure to uphold shareholders' interests, today's boards are likely to be a savvier and more diverse than yesteryear's, and directors tend to take their duties more seriously. "Fewer members, but a hell of a lot more work," sums up Buck Mickel, CEO of RSI Corp., who sits on the boards of Duke Power Co., NationsBank and five other national companies. And a hell of a lot more risk. As suits against directors climb, some are deciding serving on a board is an honor they'd as soon forgo.

In the past, says Edwin Borden, CEO of Borden Manufacturing in Goldsboro and a director of Jefferson-Pilot Corp., Carolina Power & Light Co., New East Bancorp and Ruddick Corp., "you got the sort of image of people sitting around a beautiful table, having a cup of coffee and a big meal and then leaving. Now you work through lunch, eating a sandwich, if you get to do that at all."

Board members say they're not only working harder but are much better briefed on their companies than in the past. Directors of major companies typically receive detailed data -- sometimes as much as 100 pages of it -- several days before meetings and are expected to come prepared to ask the right questions. Mickel estimates he spends at least twice as much time on board work as he did 20 years ago, when he served on different boards. "Boards are very, very good about giving you the information in advance today," he says. "Twenty years ago, you went to the meeting, and there you got it."

Directors are also getting more involved through more frequent and intense committee meetings. "That's where the real work is done," says James Johnson, former CEO of Coca-Cola Bottling Company Consolidated in Charlotte and a director of that company, Duke Power and Cato Corp. Duke Power's audit committee now meets eight instead of six times a year and has taken on additional functions, including monitoring the company's Nuclear Regulatory Commission ratings.

Vocal shareholders, employees and regulators say the change is long overdue and argue that too many boards are lazy, entrenched allies of management. "Over the years, boards have kind of lost sight of their responsibility," contends Cari Christian, executive director of the United Shareholders Association, a 65,000-member group based in Washington, D.C. "They've become close friends...