Activating a Rubber Stamp Board

Mr. Justin Robertson has kindly asked me to speak on the topic “Activating a Rubber Stamp Board” at EBRD’s annual Nominee Directors meeting in London on 8th October.

I was thinking of writing a no-nonsense guide on presenting yourself as a minority shareholder representative or an Independent Director at a rubber stamp board.

Due to time constraints, I could not present the entire document, so here’s what I wrote down for all of you.

This is what you must do and what you absolutely must not do:

Do:

Ask questions that go to the heart of the problem.

“What specific metrics will we deploy to gauge the success of this decision?”

“Does it fit in with our long-term business strategy?”

“Where are the risks?”

“Did other methods cross our minds? If so, what were they?”

Make suggestions for improvement: State your concerns in an “I” form, such as “I’m worried about…” or “I want to understand…”

Support your reasoning with facts and evidence, not just chat with no substance behind it.

Keep the focus on what we all have in common: Everybody wants the business to succeed.

Present constructive proposals: It’s no use to highlight drawbacks.

Forge contacts: Get to know other board members outside of formal meetings.

Keep yourself well-informed: Keep up with the state of the industry, company performance, and relevant regulations.

Don’t:

Don’t confront: Avoid aggressive language or personal insults.

Don’t rubber stamp: Approve decisions only after you have considered them thoroughly and know exactly what they are.

Don’t be passive: Silence is often taken as agreement.

Don’t fail to check for psychological biases: Realize that you and others might have biases.

Don’t neglect your fiduciary duty: The company and all its shareholders are your top priority.

Don’t hesitate to seek advice from external sources. It is proper to do so when you lack expertise in a particular area.

Do not forget the big picture: Consider how your decision will fit into the broader pattern of the company's strategy and its position within society.

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In conclusion, you’re not there to be popular. You’re there to ensure that the board makes sound decisions that benefit the company, not any clique.

Keep on your toes, and don’t be deterred. Spread responsibility around: Enlist support from colleagues who share the same concerns; convince everybody else of your way of thinking.

No matter what happens, never let yourself be railroaded.

Above all, be prepared, be persistent, and don’t be afraid to upset people a little now and then by doing your duty.

Finally, if you consistently find yourself outvoted or ignored, record your misgivings and consider seeking legal advice. Your position involves legal responsibilities. You need to look after your own interests and those of those you represent.