(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? Corporate Secretaries’ Perspectives on the Board Member’s Job Description.)

Currently senior vice president, corporate secretary, and general counsel of Abercrombie & Fitch Co., Robert Bostrom has spent the past three decades working in the corporate legal field. Prior to joining Abercrombie & Fitch in January 2014, Bostrom served as co-chairman of the Financial Regulatory and Compliance Group at Greenberg Traurig LLP, an international law firm. He served as co-head of the Financial Institutions and Funds sector and partner of Dentons U.S. LLP from 2011 to 2012 and as executive vice president, corporate secretary, and general counsel of The Federal Home Loan Mortgage Corporation (Freddie Mac) from February 1, 2006, to July 29, 2011. Previously, he was head of the Financial Institutions practice and managing partner of Winston & Strawn’s New York office and was executive vice president for Legal, Regulatory, and Compliance at National Westminster Bancorp (NatWest), a large retail bank in the late 1990s.

As part of our Job Description of a Corporate Director series, The Conference Board asked him about his view of the corporate director job through the eyes of a corporate secretary:

As a corporate secretary and/or general counsel, how do you see the job of a corporate director in today’s business environment?

It varies. There’s no “one size fits all.” But there are two big variables: the size of the company [by revenue, market capitalization and number of employees] and the state of the company, whether it is performing well financially and not in the midst of a corporate crisis, in the middle of a business transformation or corporate crisis or struggling and on the verge of bankruptcy.

The job of a corporate director is much more involved, complicated, and challenging than ever before. There is the huge role institutional investors are playing. Whether it’s BlackRock and Vanguard advocating for board refreshment and diversity, and ESG, or New York City Comptroller Scott Stringer’s Boardroom Accountability 2.0 [on behalf of the NYC Pension Funds] calling for more disclosure of director attributes and skills, these are things directors never had to face before.

Multiple stakeholders want a voice on everything and engagement is key. That’s made the job much different than before. Traditionally, we thought the job of the corporate director was one where directors are overseeing strategy, risk management, culture, the CEO’s job and financials. Now, it is much more.

What lessons can boards learn from company failures and crises?

Failure of boards and companies in responding to a crisis can result in shareholders, creditors, employees, suppliers, and customers all acting irrationally. What are the proactive actions for boards that should be in place?

• As an initial matter, fostering an ethical and compliant culture, ensuring a robust ERM process, and finally, a crisis management plan.
• A predetermined list of advisors who know the company, and immediate fact-finding. A careful, truthful, deliberate response is necessary no matter how painful. In particular, you need independent counsel.
• Anticipating that conflicts can and will develop between board counsel and company counsel. Preparing to work together and partner can be challenging.
• From a governance perspective, the board should decide ahead of time what its role will be – how involved it will be. I believe that in this environment a board, or a board committee, must be intimately and actively involved with management. Communications and information flow to the board is critical. There can be no surprises.

How fair is it for investors to say the board had poor oversight when there is a crisis?

Unfortunately, in many instances this may be true. If you look back at the independent investigation reports of corporate crises, from Enron, MCI WorldCom, Lehman Brothers, and MF Global, to Volkswagen, Wells Fargo and progeny, fault has been attributed to the board. The board is responsible for management’s actions in its oversight role. Now, boards like to do strategy because everyone on the board considers themselves an expert on strategy. And besides, it’s more interesting and it’s intuitive. However, they don’t like doing that “other stuff”. But, it’s all that “other stuff” that is critical to strategy. Things like risk management, compliance, ethics, crisis management and culture may not be as interesting. And, as a director, you have to do a lot more work to understand them. These have become critically important roles for boards as recently pointed out in the National Association of Corporate Directors’ (NACD) Blue Ribbon Report: Culture as a Corporate Asset.

What role does the general counsel/corporate secretary play in the job of a corporate director?

What distinguishes corporate secretaries from other stakeholders is that they are the most objective person in the boardroom. The general counsel and corporate secretary shouldn’t have a piece of the action or skin in the game. They should be a source of fact-finding and an independent objective voice in the room. They should help make sure the directors get the right information and ask the right questions to act consistently with their fiduciary duties.

Have you experienced any issues with asymmetric information risk among the boards you have worked with?

A perfect recent example of asymmetric information risk was what happened at Wells Fargo. It’s both explicit and implicit. Clearly, the board didn’t know the right information regarding the incentive-compensation system and employee attrition and terminations. Did the board even know that 5,000 people were fired? Other than the compensation committee, did the board ask about attrition during this time? Implicitly, the board should have known that aiming for eight products per customer was a challenging objective that might have encouraged inappropriate behavior.

How would you describe the importance of directors needing to supplement the information they receive from management?

In a lot of the panels I have been on, I’ve heard a lot of directors say that as part of their preparation for meetings they look at competitors recent 10-Qs and releases, as well as analyst reports. That’s one example of directors needing to supplement the information they receive from the company and how they get outside information. At the same time, they need to get information from organizations like the NACD, The Society for Corporate Governance about best practices, emerging issues, and how to do their jobs. Also, I think history has shown there may be those dysfunctional circumstances when they have to get independent information because they might not trust what management has given them.

Regarding shareholder engagement, how important is it for directors to give direct access to shareholders on a regular basis?

Just like I said earlier, it depends on the performance of the company. For a company that is doing it right, it is not so relevant because they are already communicating with their shareholders and have built a relationship of transparency and communication. What’s happening in this new era is that it’s becoming increasingly important and expected that there will be access to directors. And if there is any disruption at a company, shareholder engagement becomes even more important.

Some investors are pushing for a board matrix to record the attributes of directors. In your experience, do you believe directors are open to this? If not, why? If so, how do you see them using such a tool?

It raises a number of challenges. I think, in general, boards are not very enthusiastic about providing a detailed list of individual director attributes and skills on a regular basis. Who makes determinations about which boxes to check for each director? The directors may feel it is an unfair and arbitrary process. Internally, they are OK with using a board matrix as a tool.

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.