I’ve watched with interest as the J. C. Penney board of directors soap opera has played out in the media over the past few days. Maybe you have, too. (Here’s today’s New York Times account.) In addition to entertaining you, this saga hopefully also made you thankful that your board is not that dysfunctional. Few situations are as stressful as a General Counsel trying to navigate a sticky board dispute.

I have been around long enough to know that media accounts can be skewed, and I tend to read them with skepticism. However, one quote caught my eye. The Chairman of J. C. Penney’s board, Thomas Engibous stated in a company-issued press release that director William Ackerman’s public comments were “misleading, inaccurate and counterproductive.” I don’t pretend to know enough about the facts to judge whether the “misleading” and “inaccurate” characterizations are correct. It does seem to me, however, that “counterproductive” is a fair assessment.

That got me thinking about how a General Counsel can try to minimize counterproductive board behavior, which crops up more often than you might wish, though it’s typically far more innocuous than the J. C. Penney situation. Your primary tool is regular board training on the nuts and bolts of director conduct and governance rules. Over the years, I’ve been surprised by how often even the most experienced directors need a little reminder.

Suggested Training Topics

Most Boards long ago accepted the need for regular training, so you probably already have that built into your annual board calendar. Chances are that the time allocated to training is dominated by company-specific and industry-specific issues. To head off “counterproductive” director behavior, be sure also to weave in refreshers on topics like:

  • Public communications (existing policies and the impact of social media)
  • Confidentiality requirements
  • Insider trading policies, tipping behaviors and potential consequences
  • Conflicts of interest and related person transactions
  • Independence requirements and potential gray areas
  • Risk management and oversight
  • Crisis management (cyber security and management succession, for example)
  • General compliance and governance frameworks

Almost all directors are conscientious and want to do what’s best for the company. Regular refreshers on the basics will help them in that effort.