“Very often it deals with things going on in the world,” he says. “But I also try to go beyond the briefing book.” Because he spends so much time traveling, particularly between India and his homes in New York, Palm Beach and Jackson Hole, Farkas finds it important to make a point of keeping up with the news, fearing he might otherwise miss a pivotal change in a company or industry.
There are, alternatively, experienced board members who believe that directors should not attempt to take on tasks that are more appropriately in the domain of management. Raymond S. Troubh, a lawyer, investment banker and director, notes that directors cannot address every concern. “On an 11-person board, perhaps 60 to 80 percent understand risk,” he estimates. “Boards are not proactive. They question; they push and shove. They try to satisfy themselves that nothing is 1,000 percent certain. But a board is not a strategic think tank. A director should not be the chief strategic planner. Then you’d get into micromanaging, and that’s not the function of a board.”
Payson agrees, adding, “Big-name directors are very busy.” Because they do not have a great deal of time, they have to rely on the management’s assessment of the company’s risks.
Despite attempts to unearth and defuse the risks of the companies they guide, many directors are discouraged, and some are forswearing board service altogether. Carm Santoro of San Diego and Park City, Utah, has served on dozens of boards in the electronics industry since 1980. He refuses to join any more. “The board is in a catch-22 situation,” Santoro explains. “If a board member is going to legitimately advise, counsel and correct management, the time involved is huge. I’ve been sued nine times in my career as a director. Is this worth it?”
Stewart Kampel is a former New York Times editor. stewartkampel@yahoo.com Illustration by Kevin Spaulding
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