[jankcorn]

Having had interactions with board members at 2 Fortune500 companies I worked for, I have pretty much lost faith in the "board members reflect the shareholders and manage the executive team" model.

In one case, the board member said that the only material about the company they were ever given was carefully constructed/managed by the CEO/executive team and was not detailed enough to support any critical analysis of executive team decisions.

In all cases, the board members seemed to feel that they were there merely for "helpful advice" rather than "proactive intervention" and the only decision that was clearly in their domain was "replace the CEO", which is pretty grand step.

The directors I have known were all quite competent, sincere people, but knew that their continued presence on the board was predicated on being just a sounding board for the CEO and/or Chairman.

In addition, I was told that, in the US, conflict of interest and other legal liability for directors is now so intricate and severe, that it was no longer possible to hire directors that were competent in the field and not yet fully retired (so hiring directors in the 45-65 age range is impossible, a bit of a problem for high tech!) For those among us who think that steep liability for directors is a good thing, I have a question: would you take that job, when you are just paid a fixed, modest sum for board appearances (perhaps $50-100k/year, total)?

In any case, I don't know how to get "responsibility" and "authority" tightly connected at the top of any modern company. (The only exception I know of is when the company is still run by the founders)

If anyone has ideas, I would love to hear them.

[pas]

for the uninitiated, could you list a few examples when board members (directors) were held responsible? famous court cases?

[jankcorn]

The biggest case I know about is Enron. IMO, it seems like they are obviously liable, but I expect they were pretty strongly manipulated by the CEO:

    https://www.govinfo.gov/content/pkg/CPRT-107SPRT80393/pdf/CPRT-107SPRT80393.pdf

I personally have not looked into this very much, but the difficulty of recruiting active, competent members for the board of directors was mentioned often by 2 directors I knew.

edit: Thinking more about this, I think that the difficulty recruiting directors with related competence came from a fear of Sarbanes-Oxley laws and “imputed” conflict of interest complaints for the prospective director. In practice, SOX could be really difficult.