“More of an Art Than a Science” (Foreword to the book “The Art of Director Excellence”)

Abstract

Board directors are tasked with performing a job that has existed for centuries with-out definition, other than the abstract concept of fulfilling“fiduciary duties,”and for which there are no proven methods that, even when applied with precision, will al-ways lead to the intended outcomes. Instead, directors must rely on applying what common law refers to as“business judgment,”based on their own expertise and experience, to fact patterns where the same decisions made in analogous situations may lead to strikingly different outcomes. Directors have a duty to monitor management’s compliance with an ever-expanding set of requirements and responsibilities, but they must do so relying primarily—sometimes exclusively—on information provided by the very management they are monitoring. This means that even a well-qualified board with strong leadership that follows best practices can make decisions that end in failure or fail to take actions to forestall crises.

Keywords: corporate, board, directors, governance, ESG