Amanda Gerut, Agenda, April 1, 2019
Leaks of information about CEO hires, potential acquisitions and boardroom deliberations about executives accused of misconduct have become an increasingly acute concern as more activists, first-time directors and directors with varying business backgrounds join boards.
The spread of confidential information about boardroom discussions is an evergreen source of disquiet among directors. But as more boards contend with messy, difficult issues about company culture, for instance, dissent and rifts can sometimes lead to directors’ turning to outside sources to influence decisions. Staying abreast of group dynamics such as distinct majorities and minorities in votes, directors who feel their views aren’t being heard and general board dysfunction that can breed an environment in which directors might turn to the press or social media to air their views is important in maintaining an open — but confidential — atmosphere.
Meanwhile, the issue of information seeping out before a board has decided to formally communicate remains a frustration for directors.
Most boardrooms, like a therapist’s office or a confessional, are considered “sacrosanct,” says Davia Temin, president and CEO of reputation, risk and crisis management firm Temin and Company. However, that confidentiality can break down in certain situations. For instance, leaks can occur when a director tries to influence a board decision and isn’t successful. In frustration, a director might turn to the press to put external pressure on the board to get directors to vote a certain way. Activist investors may feel an allegiance to their firm or other outside parties, or founders could disagree with other board members and leak information to try to sway investors to their side. Confidentiality can also break down in a crisis, Temin says.
Still, “even in this world of social media and transparency, boardroom deliberations really do need to be opaque,” she says. […read more]