from Second Quarter 2010
Corporate Board Member
by John R. Engen
For the multitaskers of the world—and let’s be honest, the term applies to most of us—the anytime, anywhere availability afforded by BlackBerrys, iPhones, and other electronic communications gizmos is a blessing. For boards gathered to discuss pressing business, however, it’s mostly a curse.
Marilyn R. Seymann, 67, CEO of the Bruce T. Halle Family Foundation in Scottsdale, Arizona, and a board member of Maximus, a Reston, Virginia, government-services corporation, and State Farm Bank, among other companies, tells of one fellow director who sets out his BlackBerry on his board book during meetings. “When it vibrates, he leaves the room,” says Seymann. “He’s a great director and has a lot of influence. But there’s no question his BlackBerry is a distraction.”
At least that director steps away from the meeting. More common is the director who silently engages in the “BlackBerry prayer”—shoulders hunched, eyes downcast, fingers dancing—physically there, but temporarily oblivious to the discussion at hand while he reads e-mail and text messages and taps out his own. Though no one is keeping tabs, anecdotal evidence suggests that the number of board members rat-tat-tatting away at meetings is soaring. The same is true of conferences—and the habit isn’t limited to directors.
Been to a gathering of legal professionals lately?
“People tend to get so focused on their BlackBerry that they lose track of what’s going on in the meeting,” says Charles M. Elson, 49, director of the University of Delaware’s corporate governance center and a board member at HealthSouth Corp., a Birmingham, Alabama-based health-care provider. “It’s bad form— rude and disruptive.”
This is about more than etiquette. Directors attend board and committee meetings to safeguard shareholders’ interests. Failure to properly police communications technology in the boardroom could lead to bad decisions, and possibly a shareholder suit. BlackBerry activity isn’t recorded in the minutes, but an enterprising plaintiffs’ lawyer could subpoena cell-phone records to see how attentive board members were when they reached the decision his client objects to.
“If those records show you were on your BlackBerry for 80% of the time while the matter was under consideration, they’d have a pretty good case to say you weren’t paying sufficient attention,” says David R. Beatty, 67, head of the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management and chairman of Toronto-based Inmet Mining Corp. That could be construed as a violation of good faith and might also invalidate the directors’ and officers’ liability coverage.
F. Daniel Siciliano, faculty director of Stanford University’s Rock Center for Corporate Governance, tells what a deposition might sound like: “The records show you sent or opened 78 e-mails during the meeting when you were discussing the CEO’s compensation package. Where did you hold the BlackBerry—above or below the table? Below? Oh, so you were trying to hide the fact that you were completely distracted from fellow directors?”
Thomas J. Kelly Jr., a partner who specializes in white-collar crime for the Washington, D.C., law firm of Venable LLP, says it’s easy for lawyers to retrieve electronic records when investigating legal cases: “Those BlackBerrys have hard drives on them, and all of them can be downloaded as evidence.” And lest you think that simply throwing the device in the nearest river could solve the problem, many systems also store data on outside servers. “We’ve gone in and retrieved all the information on the servers to produce documents,” Kelly says.
Continued...