Luis Villa <luis@...> writes:

> tl;dr: the board did not effectively perform one of their most important
> roles (managing the ED); the board (and board candidates) should be talking
> about how they will fix that.

I think one of the key takeaways from this affair is that people should be 
careful about talking the law. There are bright line rules 
written in statute and then there are "duties" (duties of loyalty, duties of 
care). In this case, it appears that the bright line rule of law (absolute 
right of directors to inspect corporate books and records) was probably 
violated while more tenuous legal rules were given heavier weight. I'm also 
not sure that a few board members discussing something together unofficially 
without the entire board is a "conspiracy" as Denny described it, although 
I suppose that opens up a grey area about whether that's some sort of 
official meeting and the rights of board members to know about 
corporate business.

As far as I'm aware, there aren't too many bright line rules regarding abstract 
duties, although some statutes provide some good guidelines (e.g., Uniform 
Prudent Investor Act). After spending several years as a fiduciary for a 
couple different nonprofits and reviewing directors & officer's liability 
insurance as a regulator, I've found that it's no joke that the business 
judgment rule provides significant protection for board members from liability. 
Board members should be thinking more about right and wrong and what makes 
sense rather than abstract legal notions.

Any good legal opinion should be written and cite specific statutes and case 
law. And finding a case where a jury found someone, somewhere, in some specific 
situation was found to be liable for doing or not doing something is not 
necessarily persuasive.

I winced a bit when I saw a while back that Anne/Risker responded to a request 
for more details on the Executive Director's performance by saying that such 
information was basically sacrosant and something to the effect of how it might 
even be protected by some sort of UN human rights law. Maybe she knows something
 more than me, and certainly it is typical for these to be kept private, but 
 many, many Americans have their performance evaluations subject to public 
 scrutiny. See [ 
 Accessing personnel records: A balancing act between privacy, public’s right 
 to know] (2015) for some examples. It is true that California is 
 aggressive about employee rights; when I was looking at actuarial analyses for 
 employer's liability, California received a multiplicative factor of 3 versus 
 the rest of the country.

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