On Governance is a series of guest blog posts from corporate governance thought leaders. The series, which is curated by the Governance Center research team, is meant to serve as a way to spark discussion on some of the most important corporate governance issues.

(This post is part of The Conference Board Governance Center series on the job description of a corporate director from the perspective of various stakeholders. Quotes from this Q&A is highlighted in Just What Is the Corporate Director’s Job? Delaware Bench and Bar’ s Perspectives on the Board Member’s Job Description.)

Charles M. Elson is the Edgar S. Woolard, Jr., chair in Corporate Governance and the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.  He is also "of counsel" to the law firm of Holland & Knight.  He is presently a member of the Board of Directors of HealthSouth Corporation, a healthcare services provider.  He has served as trustee of the Big Apple Circus, Talladega College, the Tampa Museum of Art, the Tampa Bay Performing Arts Center, and the Delaware Museum of Natural History.  He is presently a trustee of the Hagley Museum and Library, the Delaware Art Museum and the Museum of American Finance.

Elson was also a director of Circon Corporation, a medical products maker; Sunbeam Corporation, the consumer products manufacturer; Nuevo Energy Company, an independent oil and natural gas producer; the Investor Responsibility Research Center, a non-profit corporate governance research organization; Alderwoods Group, an international death care services provider; and AutoZone, Inc., the national automobile parts retailer. 

His fields of expertise include corporations, securities regulation and corporate governance. He served on the National Association of Corporate Directors' Commissions on Director Compensation, Director Professionalism, CEO Succession, Audit Committees, Strategic Planning, Director Evaluation, Risk Governance, Effective Lead Director, and Board Diversity and was a member of its Best Practices Council on Coping with Fraud and Other Illegal Activity.

Elson recently took some time to talk with the author about the job description of a corporate director from the point of view of the Delaware bench and bar. What follows are his thoughts:

As a corporate director, attorney, and head of the Weinberg Center for Corporate Governance, how do you see the job of a corporate director? What are the key attributes and skill set for a perfect corporate director?

The job of a corporate director is very simple. You hire and fire the CEO, and you monitor management. As for the key attributes, they are independence, equity ownership in the company, expertise, courage, and integrity.

What role does Delaware law play for today’s directors and corporate governance? How much should they know about the history of Delaware law and the courts?

Delaware law is critical, especially when you consider most public companies are incorporated in Delaware. Delaware law has a huge influence over the rest of the country. Directors need to be aware of Delaware law because it has influence over how they carry out their responsibilities.

Why is Delaware law so influential?

It has a longstanding regulatory regime. It has a well-drafted code that is updated by the legislature. It has vigorous corporate law, and it has a smart and neutral judiciary.

Do you believe there is an expectations gap between Delaware law and what investors expect of corporate directors? If so, please explain.

I disagree. The chance of liability for directors is slim. Ultimately, liability and best practices merge.

What role should a director play in shareholder engagement? Should there be a formal plan?

It’s sort of like a Congressman. As a director, you must get out there and talk to your constituents. In this case, investors. Imagine if a Congressman didn’t visit his district? Overall, engagement makes you do a better job as a director.

What is the most important factor for directors when interacting with management?

Discretion. You need to engage with management and understand what they are doing. But you can’t run the business. That will destroy their ability to run the company.

What information is the most important for management to share with the board, and how should they share it?

They should share financial information. That is critical. Management must be transparent. When something goes wrong, it should be brought up to the board early. The board could be quite helpful in those situations. However, if management hides something it can make matters worse.

The views presented on the Governance Center Blog are not the official views of The Conference Board or the Governance Center and are not necessarily endorsed by all members, sponsors, advisors, contributors, staff members, or others associated with The Conference Board or the Governance Center.