In his latest column for Reuters’ Practical Law, Senior M&A Partner Frank Aquila offers key takeaways for boards as they navigate the evolving expectations of stakeholders regarding director qualifications, including:
- the fiduciary duties of Delaware boards with respect to informed board oversight;
- regulator, proxy advisor and institutional investor expectations with respect to director qualifications;
- public messaging on director qualifications and board composition; and
- board processes for evaluating and enhancing director qualifications.
Frank emphasizes the pressure on directors “to check every box on a director skills matrix,” as boards aim to satisfy the duty of oversight of regulators and stakeholders. However, he notes that a board effectively communicating the benefits of its composition, and effectiveness of the team, can often build the needed trust.
“Directors are tasked with and compensated for exercising strategic oversight, and not for implementing operational measures or resolving all potential issues that might arise at a company,” he said. “In exercising oversight, directors can and should rely on the advice of internal and external experts, including members of management and outside advisors.”
Read: “Director Qualifications: Board Considerations”