A new study based on interviews with corporate directors from Steven Boivie, Michael C. Withers, Scott D. Graffin, Kevin G. Corley shows that they do not think their job is not oversight of management but support. In our view, the only way to fix this is to implement proxy access and majority vote requirements so directors have a more direct connection to investors.
[D]irectors generally said they viewed their jobs as primarily supporting managers, not monitoring them. In fact, we were surprised by just how uniform this sentiment was among directors, regardless of demographics like gender or time spent on a board. In practice, this means they rarely seek to vote down management decisions. Rather, directors seek to become partners with executives and provide input and improve decision-making.
Many directors said that the best way to protect shareholder value or help their company thrive was by collaborating with the chief executive officer. “To be a board of directors, in my mind, you’ve (got) to understand where management is coming from,” one of our interviewees said. “But your job is to ask a lot of questions and focus what they are telling you and not to step into the role of management.”
When we asked about monitoring the work of CEOs and other executives, most of the directors said it wasn’t possible to do this effectively – even if they wanted to. Our interviewees said this is because of the simple fact that CEOs know a lot more about their company than the directors do. When we pushed directors on this point, they confessed that they do not even want to monitor the CEO.
We interpreted their view as basically: Either trust the chief executive officer and give him or her your total support, or fire the CEO and hire someone you can trust. “You don’t go back to … the CEO, and say, ‘You know what, that strategy is wrong. We’d like you to do this strategy.’ That’s not what you’re paying him for,” one director told us. “You’re paying him to make the decisions. And if he is consistently making wrong decisions, you find somebody else to make the decisions.” [Emphasis added]Corporate Directors Don’t See Stopping Wayward CEOs As Their Job – Texas A&M Today