Panel: Will Clarke, Allan Grafman, and James Mitchell
The Cambridge Dictionary defines someone’s “stewardship” of something as “the way in which they control or take care of it.” By this definition, both a director and an officer of a corporation are stewards of that corporation. Their specific “duties,” in the practical sense of the word, however, differ. That is, they perform different functions and have different responsibilities. Stated yet another way: they have different job descriptions.
Yet, at the same time, the legal standard by which their performance is judged is identical: every corporate director and every corporate officer owes their company (stated imprecisely with intention) the fiduciary duties of good faith and care. Directors and officers who do not understand their jobs are, to say the least, not likely to succeed at them. The fact that there is an unavoidable blurring of the line between the two functions does not make things easier. Directors and officers who do not understand their fiduciary duties are, of course, far more likely to breach them. And the consequences of breaching one’s fiduciary duties can be both disastrous for the company and for the director or officer personally.
This episode of Bare Bone Board Basics does two things. First, it dives into the relationship between directors and officers and provides useful guidance on how they can best work together. Second, it provides a 100-foot (as opposed to 500 or 10-foot) overview of fiduciary duties and a practical-what to do / what-not-to-do to minimize the chance of violating them.
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