Why did you write this book?
Years ago, I spent part of one summer reading through a huge stack of casebooks to see if I should add any topics to the supplements that I’d created for my Business Associations course.
To me, none of those books focused enough on recent and exciting developments in the relative rights and responsibilities of directors, officers, shareholders, and stakeholders (such as a company’s customers, employees, and suppliers).
At the same time, I thought that combining a traditional casebook with aspects of a guidebook, workbook, and sourcebook would be useful not only to law and business students, but also to executives and shareholders and their counsel.
The book, which I believe was the very first casebook on the law of corporate governance, was published in 2010; and the second edition, in 2013.
What approach does the book take?
From the beginning, and more in each successive edition, the book identifies hundreds of practical issues facing boards, and emphasizes specific processes and careful drafting to resolve, minimize, or even preclude problems and potential personal liability.
Some of those concerns aren’t complex or esoteric, but still worth addressing in advance.
For example: should a board have a blanket rule that (or even a procedure for determining when) directors can’t take notes during board meetings, or must shred their notes before leaving the boardroom? Creating that policy during a crisis would certainly look suspicious.
This isn’t an algebra book, with numerical answers in the back. There probably can’t be a one-size-fits-all answer to most of its questions, but talking through how to answer them should give any board the opportunity to refine and clarify its own processes, and to bring up related issues for discussion.
Of particular relevance to shareholders and stakeholders, and their advocates and activists, are the materials concerning mechanisms for introducing and implementing ESG (environmental, social and governance) initiatives, like enhancing board diversity and advancing shareholder proposals.
Why did you change the book’s title for this edition?
I added the word, “Provisions” to reflect an even greater emphasis on the use and techniques of drafting, particularly for elements of a company’s articles of incorporation, bylaws, committee charters, and governance guidelines. As in the second edition, there’s a checklist summarizing considerations for drafting those core corporate documents.
The book and its new online supplement (because there’s now more content than can easily fit between two covers) include, separated graphically from other text, illustrative composite provisions based on those in the governance documents of major corporations.
What else has been added?
Citations to hundreds of legal decisions, as well as discussions of: the new outspokenness of CEOs on social justice concerns; the board’s responsibility for cybersecurity and compliance; “executive sessions” of the board; developing rules of conduct for board and shareholder meetings; emergency bylaws; advisory boards; advisory directors, emeritus directors, honorary directors, board observers, and “executive chairs”’; the “financial literacy” requirement for directors; disclosure to, and voting by, shareholders on executive compensation arrangements; “refreshing” the board through age and term limits for directors; and bylaw provisions relating to forum selection, fee-shifting, and mandatory arbitration.
Discussions of virtual meetings, and of “social enterprises” such as benefit corporations and Certified B Corporations, have been updated. And, there are more detailed references to the specific governance practices required by the NYSE and Nasdaq exchanges, as well as to those preferred by institutional investors like TIAA and CalPERS, and by proxy advisors like ISS and Glass Lewis.
I’ve also indicated ten good reasons why (although it sounds intrusive) boards might want to bar their directors from dating each other.
Law and business students, practitioners, and executives should find of special interest the appendices, which include a detailed discussion of how to present “actionable” advice to decision-makers, a list of recommended reading for new and current directors, and a completely updated list of governance-related Web sites.
How would you sum up the book’s evolution, over twelve years and three editions?
I think it’s become steadily clearer to everyone, both inside and outside the boardroom, that the art and science of being a successful director require an ongoing commitment to institutional and personal education.
Today, the roles and decision-making responsibilities of directors are more complex than ever before.
Amid public and private pressures for greater transparency and accountability, directors must harmonize, or at least balance, the interests of different groups of shareholders and of stakeholders. They oversee the company’s compliance with increasingly complex and connected levels of state and federal statutes, regulations, and court decisions, and with the requirements of stock exchanges.
As a result, boards are devoting even more attention to “on-boarding” presentations for their new directors, and to continuing education programs for all of their members. (One appendix contains a variety of suggestions for constructing these.)
In their personal reading, many directors, potential directors, shareholders, and stakeholders and their counsel are seeking accessible and action-oriented materials to help them participate effectively in resolving the latest issues in the systems, structures, and strategies of corporate governance.
I designed and developed Corporate Governance: Principles, Practices and Provisions not just for the law school classroom but also as a practical resource for all of those readers. I hope that everyone finds it useful.