WHO SHOULD SERVE ON THE BOARD WHEN TIMES GET TOUGH? To emerge unscathed from the turbulence, you need the right directors--and they should know how to help your company.

• Author: Brownstein, Howard Brod

Even on a "clear day," the fiduciary duties of board members can be demanding, depending upon the size and industry of the company and its complexity in general. Add to that the requirements of regulatory compliance where relevant, including legal and exchange regulations applicable to publicly traded companies with their cycle of Ks and Qs, the protection of material nonpublic information and the demands of shareholder engagement.

However, when times get tough, board duties can change and increase substantially. Board and committee meeting length and frequency can increase dramatically, and the nature and seriousness of management activities that boards must oversee can transform completely. As my late grandmother used to say, "Until there's a problem, there's no problem. But once there's a problem, there maybe a lot of problems!"

Two experts and I explored in detail the changes in demands upon directors in a bumpy landscape for boards and companies.

* Deborah Hicks Midanek, a longtime turnaround and restructuring expert who has served as chair, lead director and committee chair for 23 public and private companies.

* Steven A. Seiden, who heads a prominent executive recruiting firm that specializes in recruiting board members for "sensitive situations," including activism, distress and other disruptive issues.

WHAT SHOULD BOARDS DO WHEN COMPANIES FACE DISTRESS?

Howard Brod Brownstein: Hopefully, the board will have been monitoring company performance, including projected performance, continually and, therefore, the distress should not be a surprise. A board's response may include engaging a turnaround professional, creating a special board committee to work more closely with management, determining whether the company's counsel can provide the support the company may need (including exploring bankruptcy or non-bankruptcy alternatives if necessary) and reviewing board and committee composition.

Deborah Hicks Midanek: One mission-critical area on which to focus is cash management. Boards rarely know much about the inflows and outflows of cash, and it is an area that is often not actively managed with an eye on conserving cash. Employees are accustomed to keeping good relations with vendors via prompt payment. Thus, the board must be sure that management creates a detailed cash flow analysis, including all demands on cash. That can then be used to develop a rolling cash flow forecast, which, in turn, gives all a better idea of how much time they have to work with. This will help to inform...