Oversight to avoid an oversight.

• Author: Rock, Robert H.
• Position: Letter From The Chairman

AS DIRECTORS take on responsibilities once left to management, the line between corporate oversight and operational management has become blurred. Audit committees often find themselves knee-deep in operational detail, compensation committees spend countless hours with outside consultants designing pay programs, and nominating and governance committees are rolling up their sleeves to set up processes that ensure compliance with new regulations. Increasingly, board members are being required to perform duties that were deemed to be within management's purview up until last year's reforms.

Some CEOs believe their boards have crossed the line and are trespassing into management's turf. But with today's heightened scrutiny, boards need to step on management's toes now and then.

Some board members are complaining they are now caught up in "doing" versus "overseeing." One of the hazards of conscientious corporate governance is that the board will drift into operational management; however, corporate oversight from 30,000 feet is much more dangerous.

Both individually and collectively, directors must delve deep to understand the implications of major business decisions. Seeking this understanding should not result in micromanaging. A director's involvement starts with participating in setting the board's agenda and demanding more detailed and more timely board materials, and it continues with active interaction with management during board meetings and candid...