What exactly is a director supposed to be doing?

• Author: Chia, Douglas K.
• Position: ROAD TO XL * WHAT CHANGED

Help Wanted: Public company board member. Job Description: Evolving and open-ended. Expectations: Wide-ranging and subject to change.

We already talk a lot about the role of the board. We talk about the fiduciary duties and the business judgment rule. There is robust case law in this area. And there are already people much smarter than me who have taken a pretty good stab at defining the role of the board. Being the good lawyer that I am, I sat down and did some serious legal research into this--by doing a bunch of Google searches.

Here is something that was written in 1971: Directors "serve as a source of advice and counsel, serve as some sort of discipline, and act in crisis situations" [Directors: Myth and Reality by Myles L. Mace, Harvard Business School Press, 1971].

Here is something that was written in 1992: Directors "set strategy, corporate policies, overall direction, mission, vision" [The Corporate Board: Confronting the Paradoxes by Ada Demb and F. Friedrich Neubauer, Oxford University Press, 1992],

Of course, I had to consult with the ultimate legal authority--Wikipedia. Its entry for "Board of Directors" notes that the director's role is:

* governing the organization by establishing broad policies and setting out strategic objectives;

* selecting, appointing, supporting and reviewing the performance of the CEO;

* terminating the CEO;

* ensuring the availability of adequate financial resources;

* approving annual budgets;

* accounting to the stakeholders for the organization's performance;

* setting the salaries, compensation and benefits of senior management;

And here's something I found at a site called "Free Advice" [http://business-law.freeadvice.com]: the role of the board is "governing the organization by establishing its mission, policies and objectives; selecting, appointing, supporting and reviewing the officers; approving annual budgets; and accounting to the shareholders for the corporation's performance."

So, you notice some similarities and some differences. What probably matters more than what is published on the subject is what people who are actually in the game think--investors, CEOs, general counsels, corporate secretaries, other thought leaders, and the directors themselves. But, I've found that when you ask these people, "What exactly is a board member supposed to be doing in that job?" you get a huge range of responses.

On the one extreme, you have directors who see themselves in the very traditional role--"noses in, fingers out." Deferential to management. For these people, they see their...