Bank Directors Seminar, Coeur d'Alene, ID, September 15-17, 2019

his resignation or refusal to stand for reelection must be filed as an exhibit. The resigning director must also be provided with a copy of the disclosure on or before the day it is filed and have the opportunity to state whether he agrees with the statement filed as an amendment within two days after receipt by the company. The SEC has enforced this disclosure obligation with administrative charges. Strategies To Prevent Director Misconduct As discussed above, identifying norms of behaviors that are acceptable in the boardroom is an important part of developing and maintaining a well-functioning board culture. In addition, boards can take steps to help prevent director misconduct, including by: zz Periodically discussing issues of board culture and expectations about the conduct that supports board culture in board meetings. zz Ensuring that the Director Code of Conduct and/or Corporate Governance Guidelines address issues related to board culture. zz Conducting individual director evaluations in which expectations about director conduct can be underscored and emerging issues can be addressed before they become significant. zz Reminding directors of confidentiality requirements and other key policies (and some boards have directors to affirm in writing that they have read and understood company and board policies). zz Including board culture as an item to be assessed in the annual board evaluation.

zz Periodically reviewing company and board policies with directors in the board meeting

zz Assessing director candidates for re-nomination carefully by reviewing:

{{ how they have handled board disagreements in the past; {{ whether they abide by company and board policies;

{{ whether they uphold their fiduciary duties; and

{{ their commitment to confidentiality.

zz Encouraging the independent chair or lead independent director or another strong independent director to talk with individual directors about problematic behaviors when they arise. zz Discussing at the Governance Committee how the board would address various forms of director misconduct should it arise.

zz Discussing with counsel what options may be available to address director misconduct.

Addressing Director Misconduct The board has a limited set of options for addressing director misconduct. The appropriate approach to handling director misconduct depends on the nature of the conduct at issue, the director’s motivations and his willingness to be influenced to change his behavior. Failing to properly respond to director misconduct can have significant consequences for the board and the company. Depending on the circumstances, a board’s failure to address misconduct could be viewed as

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