This is indeed a joint project with Sharon Ni about this new phenomena that Justin just told you about, which is we're seeing more and more companies adding directors with specific types of expertise. We having a company with the cyber director, with the DI director, with the climate director. Here's what you have to say about this new and we think important phenomena. I'll start with the 1 minute cliff notes version. Okay. So the first thing that we try to do is just to provide some evidence beyond the anecdote. We go over the proxy statements of all the S&P 500 over the last six years to document just how big the change has been. We see indeed that companies are disclosing much more prominently their director skill sets, putting heavier emphasis on directors expertise, and we're seeing beyond their disclosure that the companies are adding these directors with specific types of expertise. For example, we see a 20 fold increase in the number of cyber directors just over the last couple of years. So is that a good thing or a bad thing? This is the second part of the paper. It's a low review paper, so we have a normative element to it, and we try to assess the pros and cons of this change. It's intuitive to think about it to think about board expertise as kind of an an alloy good. What can be bad about adding new types of expertise to your boardroom. But we try to highlight based on the literature and group decision making, based mostly on interviews that we conducted with board nomination committee chairs and their research consultants, the several drawbacks of this trend. And the bottom line is that, when you try to address first order problems such as pollution or user privacy or diversity and inclusion, when you try to address it by focusing on a specific trade by a specific individual, it's not necessarily productive. It's sometimes counterproductive. It may hurt the effectiveness of board discussions on other topics, and in some cases, under some conditions, it actually hurts the effectiveness of the boards on that specific topic. So if you're nominating a director who is a diversity expert, or is a cyber expert. It wouldn't necessarily improve the company performance on the diversity or a cyber may actually hurt it. This brings us to the third set of insights, which is, again, low review paper policy implications. What does it mean regarding the scope and type of legal intervention that is needed, if at all, what does it mean regarding how the judges right here in Delaware will assess director liability going forward, would it change, and so on and so forth. So that's the paper in a nutshell. Now, before we fill in the details, let me give you some background, just a couple of minutes, but really literally a couple of minutes because We're having here an audience with specific expertise in this topic. The starting point is that boards matter in advising and monitoring management. And the question is, when will boards be effective in their roles. When we corporate legal scholars approach this question, we usually focus on directors incentives, meaning we usually count how many directors are independent, or we count whether the roles of the chairman and the CO are separated or not, as we just heard. But I think everybody in this room realizes that even a board full of independent directors will not necessarily be effective in monitoring and advising management. Because even if you are the most motivated director, you have to have some skills and experience in order to know what questions to ask or process certain answers or anticipate future problems that warrant or on the power point presentation that you just received. Expertise matters. It's not just incentives, and now the real question is, what types of expertise do we need in boardrooms. In the past, we used to think about directors as kind of the former CEOs, generalists. Maybe we used to think of financial expertise. But the ESG movement that we've been hearing about and we will continue to hear about has been changing that as well. There are certain very recent papers documenting the increased responsibility and accountability of boards in ESG. Boards are incorporating ESG factors when they design executive pay. Boards are restructuring, rewriting the charters of their committees to allocate specific ESG responsibilities to specific committees. And what we add to the literature is that in the last couple of years, it has also started to affect board composition, meaning affect what individuals companies are selecting to be on the board to begin with. And we start a paper by documenting several vectors, several forces from the outside that push companies to add directors with specific types of expertise. The first conduit here is regulation. In 2022, the SEC proposes a new cybersecurity disclosure rules, which would have required companies to disclose whether they have cyber experts on the board or not. Second, cont institutional investors, whether the, you know, largest asset managers and their voting policies, we want more climate expertise on the board, like the voting rationales that we just heard about or socially minded specific campaigns by activists, certain activists. A third conduct, which is, I think the most counterintuitive is litigation and derivative settlements, as in the case of Boeing following the 7307 Max debacle. So for those of you not stepped in corporate law in the end of 2021, it became a huge corporate law case about directors oversight duties. The scope of director oversight duties. It settled for the largest settlement ever in such cases, $240 million. But for our purposes here in this discussion, it's much more interesting to note that the settlement included the provision where Boeing committed to add a director with aviation expertise next year and two more directors with product safety expertise within the next three years. So I want to stress just how unique that is because even for us like corporate lawyers, when we think about settlements that include a commitment of the company to change its boards, it's usually about adding independence. You're going to have to add more independent directors, you're going to have to make sure that the audit committee comprised just of independent directors or whatever. And now we're seeing a requirement as part of the settlement that the company will add specific types of expertise to the boards. And again, this makes it for us. This is the only legal paper here in this conference, right? This is a legal issue. If we're seeing the regulator, the SCC, if we're seeing the courts making all these decisions based on some assumptions on whether it would be good or bad to have specific types of expertise on the boards. It's on us as legal academics to try to understand what does it mean? What do companies actually do on the ground, whether it's good or not to have specific types of expertise, under what conditions is it good or not, and so on. This is where our independent study comes in. Again, we went through all the proxy statements of the S&P 500 companies from 2016, 2022. We also did a sample 100 companies from the S&P 600 just to check small cap versus large cap, and we sped through the disclosure to find out what they say about the director skill sets and experience. Now, not to anticipate the future discussion too much, but At the beginning, it was hard because there is no standard, there is no benchmark, there is no way for companies to disclose their directors skill sets, and so we had to sift through different components of the proxy statements. But as time in 2022, by then, most companies are already adapting what you see here, which is a skill matrix where we have the individual directors as the columns and the specific skills as the rows. And for us when building the dataset, this is like a one stop shop. These are the interesting findings from that dataset. First, maybe the clearest finding is that companies are much more heavily putting much more emphasis on telling the public, what are the types of expertise that they have on the board room. The best way to illustrate it is what I just told you, which is more and more companies are voluntarily adapting these image based formats for disclosing director's expertise, which makes it much more easy for investors, for academics to decipher the types of expertise that we have on the board, like the adoption of skill metrics jump from 14% in 2016 to 66% in 2022, and it continued to jump 2023 as well. Aside from disclosing more, we see that they're also adding more roles to the skill metrics in the sense of if I would be a company that discloses a skill metric in 2014, you would see me put on the skill metrics like finance, legal, marketing, leadership, maybe in 2024, I'm putting their climate DI, cyber. We're disclosing also the ESG types expertise. Aside from finding that companies are disclosing more, we're seeing that companies are also adding more directors with the specific types of expertise, as you can see from the graph here, starting very low, jumping very quickly, especially most of the jump came over the last couple of years, we're seeing a 20 fold, ten fold, 30 fold increase in the cyber director or diversity directors and so on. But it's precisely when we started collecting the data and we saw this jump, it gave us pause. We were skeptical a little bit because we know just how glacial ball turnover can be. It's slow, right? Well, if you look for example, at cyber, we're jumping 202019-723 in 2022. Where did all these experts director, A of Sadden came from? Okay? So we did a deep dive to try to understand what's going on here, and we saw that there are several forces working together. Some of the change that we document is not a change in expertise. It's a change in disclosure. In the sense that if I'm a veteran director and I was on the board in 2019, maybe I had cyber expertise already in 2019, but nobody in the company was thinking that it's important for investors to know whether someone on the board had the cyber expertise in 2019, they started disclosing cyber expertise only in 2022. And so in our dataset, we will only see it then. So that's a limitation of our dataset, right? Some of the jump is due to veteran directors acquiring these types of expertise. I'm a veteran director. I was on the board in 2019. I didn't have cyber expertise, but then sometimes maybe in 2021, the company decided that they're sending us on a weekend on a two day cyber training program or whatever. And now we're checking the cyber expertise box. And another part and not insignificant part is, of course, companies adding from the outside specific experts in cyber or DEI or climate or the other rubrics. Okay? So we then try to figure out a little bit more how much of it is due to changing in disclosure, how much if it is due to changes in expertise. And so we read through the bios, the biographies of all the 723 directors who are listed as cyber. And we saw that only the minority here, are listing cyber as one of their core expertise in their bios. What does it tell us? It tell us that for the majority who don't list cyber as part of their bias, they have some experience probably discussing cyber issues, but it's not part of the core strength. That's not why they're on the board. They're not cyber experts in the ordinary language sense of the world. This brings us for as lawyers, this is the holy grail for us because there's a policy implication here. The policy implication here is that the state the core state of director expertise disclosure is not ideal. There's no benchmark, there's no comparability between company. There's no definition. The way that it works is that each company sends directors a certain form. Check the box, you're checking the box in 2020, you're checking just two boxes, and then you're seeing that your other fellow directors checked more boxes than you. So you don't want to be below average. So there's a ratcheting up effect of expertise. So this is something that you need to think about. And indeed, I think the fun part of the paper is that we have several examples of directors, we heard before about needing to look at the individual director level. We have examples of directors who are serving on multiple boards. In one board, this director is an expert in cyber in another, he is not, and so on and so forth. Okay. And finally, there are also some findings about the differences between large and small CAP but I'll skip over in the interest of time, and just keep them for now. Okay, so I'll move kind of quickly to the advantages of disadvantages. Again, the advantages are intuitive, right? We keep hearing about EG. Companies and especially boards are facing increased societal demands, increased scope of responsibilities. And so why not introduce more skills, more experience in these issues that are now on the agenda and that weren't on the agenda like four or five years ago. But what I wanted to do here is I wanted to highlight the more counterintuitive drawbacks, potential drawbacks of this trend. First and most basically, we have to understand that when there's a sudden uptick in the demand for directors with expertise in cyber or DI or climate, it doesn't mean that the supply immediately increases to meet the demand. The pool of quality candidates to serve on boards of large companies who are also experts in climate change or cyber is very limited, is more limited than you think is more limited than IPO. Okay. And so when companies are pushed to add directors with that specific types of expertise, it could very well be that companies are compromising their director selection process or the director on boarding process, right? They might select directors with less than ideal interpersonal skill, less than ideal understanding of the core business over boarded or busy. We can sort it out later. And so this could lead to problems at the most basic level. So even if you added someone with an expertise in climate, and that someone she improved the quality of bore discussions over climate issues. But you selected from a limited pool of candidates, it may reduce the effectiveness of board discussions on other issues, and in fact, it may reduce the effectiveness of board discussions on that specific issue. And that is because of something that I think almost all of our interview is said to us in the interviews unprompted independently, and there is a concern that the psychologists call authority bias, which is once you put someone on the board who is considered to be the cyber expert or the diversity expert. Then the other members, all of a sudden overly differ to their perception to the positions of the perceived expert on the board. There's also the issue of board size or whether boards grow beyond their optimal size because we're seeing indications that companies usually when they are pushed to add the specific expertise directors, they just add directors instead of replace all directors. So this could push boards beyond their optimal size. And again, we don't Well, we don't mean to say that we have kind of the magic number of what the optimal board size should be. But the reason that we worried here is that that's not an organic reconfiguration, kind of a bottom up firm by firm reconfiguration that every firm chooses. Many of these changes are kind of reactions to external pressures to add specific types of expertise from litigation or from institutional investors or from regulation. Right? Another drawback is that not so much in this conference, but in previous conference as previous series, we've been hearing so much about the pushes to promote racial and gender diversity in boardrooms. To the extent that you care about these efforts, you might be worried about this new trend because, again, the point about the limited pool of candidates. If the pool of candidates of directors who are also cyber experts is tilted, doesn't have a lot of individuals from underrepresented groups. The fact that you're going to this pool to add your new directors may hinder the efforts to promote under represented groups in your boardroom. There's also the issue of bad washing similar to what we're hearing before, which is to say if companies are facing pressures to treat their workers better, to treat user privacy better, to treat the environment better. You can either change your actual behavior or you can change your appearances and checking a box in a skill matrix is kind an easy solution. Again, the reason that we worried here. I think this might be general to all the drawbacks that I'm listing here. It's not like we're saying that adding specific types of expertise is necessarily bad. We're saying that it's a very firm specific decision, and we have two reasons to worry. One reason is that it's usually a reaction to external pressure instead of organic reconfiguration. The second reason is that the state the director expertise disclosure is a cheap talk environment, which is more open to manipulation, and we worry that the combination of these factors will make it so that the disadvantages of adding specific types of expertise may outweigh the advantages of adding specific types of expertise. And this is what brings us to the policy implications. First and most basically, this goes against what legal professors usually like to do, but maybe the implication is that there is no need for legal intervention in the types of expertise that companies have on their boardrooms. In the sense that it's very company specific, not all additions of expertise are created equal. Some types of expertise add value on a certain circumstances, but not in others. To the extent there is some sort of legal intervention. We think that it shouldn't be in the form of nudging company to add specific traits, but rather making sure that the quality of director expertise disclosure is better and we provide some concrete proposals to that effect in the paper. As for courts, I won't elaborate too much seeing a kind of a glazed look in the eyes of the finance speaker around here. As for of course, there are some lessons to what we're describing here or kind of trying to predict how judges will evaluate these types of new expertise in the board rooms. If there's a cyber attack, there's a director of duty case, it comes to the boards. Will they evaluate the liability of this director who's an expert differently than the other directors who are not experts, whether they will evaluate the behavior of the board collectively or individually based on separate directors and so and so forth. Again, there's some discussions on that in the paper. And I guess that's that. I will now hand it over to someone who is much more expert than I am on this topic. Thanks, Bob. That was great. I want to introduce Bob McCormick from PJT Camber view to be the discussion on this paper. And Bob is also a member of the Weinberg Center Advisory Board. Thank you, Justin. Everyone. So if you're wondering why I don't have a PowerPoint presentation, you can either chalk it up to my attempt to limit PowerPoint fatigue or my laziness. So it's a pleasure to be here. I'm, I guess, maybe the specialty discussant because I don't have the tremendous academic credentials of you all, so please bear with me. I'm really excited about this paper, so how excited I was during Irene's presentation. So there are certain aspects of governance that as a practitioner, I've been dealing with the last 27 years or so when I had my first proxy season, which ages you like in dogs lives, which is why I look so haggard. I thought this paper was really fascinating because it's an issue that is so current. I was at the CII conference and ICGN conference last week and there was a panel on this very issue. In fact, there was a gentleman from MSCI showing a study that said that companies with specialty directors actually have less experience boards with less expertise. Basically, dovetailing exactly with what Roy was finding out. And I think this is sort of become the latest issue for Shares to look at. If independence is sort of the issue from 20 years ago, director expertise is the new board independence. We sort of resolve the independence issue. We resolve the business, the number of board seats, attendance, and now investors are looking really closely at board experience. And They've done this for a lot of reasons, and I think Rice Paper does an amazing job of explaining the importance of boards, their role in why regulators and courts in society rely on them so much. And I think one piece maybe a theme through my comments will be about the importance of investors and maybe that's an dtapped area, you could use as an additional aspect to focus on because I think having been an investor and having seen how investors can be more timely in their reaction to trends, they're the ones who can really push companies in a certain direction and are really looking closely at these issues. I really driven board matrices. I mean that was not a company decided. Disclosure. That was really investors pushing for that. If you look at the way activist investors, they really target companies and they look at the directors with the least experience in the industry, and that's a big hook for them, particularly with the big index funds. I said passive funds, but they don't being called passive because on governance and ESG, they anything but passive. I think if you look at how we've grown from independence, if you look at description of board independence from 20 years ago, sounds like the beginning of a joke. You could say a priest, an architect, a grammar school principal and actor walking into a board room. Well, that was a board room 20 years ago, of a major public corporation. Now, that fit every independent standard, but were they really independent from the CEO, whose daughter, by the way, was student at the grammar school where that director was a principal. So now looking at board independence, it's the one area of corporate governance where companies have done way beyond that Shrill has ever asked, right? Now we generally only have one insider on the board. And I find that curious. Maybe as a subject of a different paper started for the aside, but I just find it fascinating that's one investors aren't even asking for that and companies have already gone much, much beyond that. Um, a separate issue is independence from whom because you have often the CEO serve at lesser time frame than their directors. So are we saying independence from the directors from the CEO or from the company itself. So those are kind of other aspects that I think pique my curiosity when reading the paper. But I think some of my main takeaways and humbly suggestions for Roy is to add investor interest as another component of what you're looking at. Particularly on the impact on shared returns or even stakeholder returns, a little less on the societal because I think the investors are in the best position to evaluate boards. They're the ones who do this routinely at every annual meeting. They're constantly engaged with the companies and they're position to push companies to say, right, you have a great board matrix. It seems like everyone has manager experience. Everyone has international experience, they study abroad in junior year, or what was the actual experience that they had? I think that's where investors are trying to struggle with is, what is the actual experience that you're claiming you have? And I think while the judiciary reaction, which is important, it's probably only going to be implicated every rarely when there's actual court case, right? So their ability to sort of in the rear situation where they like the Boeing situation, where they're promoting a certain director. That is going to happen as frequently as investors looking at directors every time there's an annual meeting. So I think having that investor perspective and just in mind, with the paper may actually help the more practical implementation of some of these ideas, and our recognition that investors themselves are struggling with is a specialty director, really, what we need. Or we're better off having a generalist who has some experience, but actually has a broader set of tools. And the SEC you probably saw last week in the new roles on ESG disclosure decided against having an ESG expert, right? So I think this is an issue that is very timely and that Shirl themselves in struggle with as well as regulators. I think on the performance, I'd be very curious to see if companies with some specialist directors or specialist committee as some Charl proposals are actually pushing, how they perform? Do they outperform their pairs? Do they underperform, or is there no real impact? Because I think that'd be a strong indication for shareholders as to which way we go. Shareholders will definitely look at academic studies when they examine the right board structure, classified boards, poison pills. So data on this issue, I think would be really helpful as well. Um, And particularly on the impact of the matrices, investors have been pushing for more information, and they always fall into the trap of be careful what you wish for 94 pages for report. Well, some of these proxy statements are 150 pages. The CDNA alone are 55 pages, right? So we're always asking for more data, but it's really what does the quality of the data. And I think that's where the board matrix can help. I've learned over the years is companies actually have an internal board matrix, which is much more detailed and actually provides more information about skills gaps and what they need. Maybe that's something you can ask for not to load up more work on your plate, but that could be even fuller picture of what they're looking for and how they use that and maybe what they really think about the board skills. You sit a couple of great examples of companies that have DT and Fordvn Darden that have adjusted some of how they basically rank, so to speak, or rate the expertise. Honeywell is another good example. They have basically three levels of expertise when they rate the board members. They call it technical expertise, managerial expertise and working knowledge, which allows directors to if they have some experience, it's not just yes and no. They can rate how deep their knowledge is. I think that can be helpful It's a bit more honest, frankly, and they also define what each of those means. I won't go into those, but it helps investors understand well, when they say managerial, what is the actual background for that. Some companies list as the directors just to list their top three skills. It forces them to put their best foot forward, so to speak. And you know, from your talkative corporate secretaries, sometimes they feel an obligation to ensure that there's an equality, either in frankly, just length of bios or number of expertise checks because you don't want one or two people who are real outliers. It's not just the directors who may be ratcheting things up, it's also the corporate secretaries. Um, So on the authority by. I thought it was fascinating because I think that is a overstated concern. You have financial experts on board, you have attorneys, you have accountants, you have people with market experience. One could say those are also potentially subject to authority by. So I don't think that's as big a concern as some may. The board dynamics of adding a new director, what does that mean? You often see in a proxy contest, well, that's going to change the whole board collegiality and the directors are all about board collegiality. Then you talk to directors and you're like, Well, board collegiality is overdone. We want people to ask a difficult question, who aren't going to agree on everything. So the concern about a specialty director negatively impacting that board dynamics, I think is also overstated. Maybe one aspect that you could delve into a little bit more companies with robust director evaluation processes that show, do they do this internally? Do they do this externally? A lot of companies I do internally every year and then externally every three years. It's interesting almost every board survey says, you see the director themselves say, Well, I'm doing a good job, but then one third of the board isn't doing their job. It can be effective way to get to some of the very same issues, is the board effective? Do we have the right experience, and do we need to fill any gaps? When you talk to corporate secretaries, they're almost constantly searching for new board members. It's actually ongoing process. And part of the challenge is finding the right individuals. And I I'm maybe challenging on one item of if you're adding new specific directors, I think that presents an opportunity to potentially broaden the diversity, rather than, you know, yeah. I think one of the things I've seen from Sherows is, let's push for board tenure or term limits because it forces turnover, which then promotes the opportunity to actually hire appoint a new diverse director because if no one retires, then it's hard to increase the board diversity. And then one just last plug for ES versus ESG. That term has become such a third rail, and I think if you could tease out the G from the EMS, treat them differently. I think that could be helpful and maybe avoid I don't know, some aspects from certain people who maybe are really critical of the ESG term. Overall, great paper. Thank you. So, can I just quick, okay. So two quick thoughts before we open it up for discussion, and if we don't have enough have many more thoughts. One thing that you said about be careful what you wish for. This is something that we saw in the data. You're actually thinking about a photo up paper on that, and that's the ratcheting up effect of skill matrices. Which is originally, we adopted the skill metrics to make the information about director skill sets, much more comprehensible to directors. Then the effects that you're seeing, you hear it from the directors themselves. The effect that you're seeing of the skill metrics is almost like perk disclosure or CEO disclosure, which is there's much more comparability now, and you don't want to be the director which is below average in the number of boxes that they check, and that creates an inflation in the number of boxes that people check, which makes the director expertise disclosure much less informative to investors. That's one thing. On the authority bias, we shared your suspicion, Also, we pushed back in interviews. The way that it was explained to us, I think it's intuitive, but I will be interested to hear what you're seeing. Of course, there's always concern of authority by also not just among directors themselves, but from the officers from the managers, and so on. The way that they told us that is that If I'm thinking to myself, I'm an Alpha director or whatever, and somebody is coming to me with financial expertise or marketing expertise, I have my strong opinions on that as well. But if there's an issue that I think as a 70 year old grumpy director, I think is not that important. No, I am as a grumpy director, I think that DI is not that important. I think that climate change is not that important. And then but I know that it's now on my agenda, and now they're bringing someone who is the expert on that topic. I feel much more relaxed. I don't need to educate myself on this new topic that I don't know much about that I don't feel comfortable with, and then it's much easier for me to defer on this topic that I don't like to begin with. So that's the issue on the authority bus. I think you're right about the follow up. These are another follow up papers. I think we actually closed the paper with close calling on people to conduct these studies because most of these changes are just from the last couple of years. So we checked from 2016. Most of the jump is from the last couple of years. I mean, in our dataset 2021, 2022. And I think that now has now it's starting the time where you can do these studies where you try to link, you have a directors with companies with climate directors on the board. Do they take advantage of green investment opportunities? Are they embroiled less in event driven litigation over climate things and stuff like that? Yeah. I'll do it. Okay. First off, I think you sold yourself a little short when you said the finance people's eyes were glossing over. I think we were all more fascinating. I don't have any idea? That was amazing because you weren't showing us for robustness test eight? No, I model extension five. So this was fascinating. You guys were the talk There you go. Yeah. I guess I have a question. You know, as we think about these expertise sets, they seem to augment the core ones, like finance law, you know, the ones you want typically. Is there a concern in addition of just proliferation of what things we need expertise on? Like you've had DEI ESG. And cyber. What about AI? And what about, is there a risk that there's just too many skill sets that we are looking for expertise. Absolutely. Tison, it's all about the AI expertise. And I think it also relates to one of the things that Bob said right toward the end, which is they behave differently than other types of expertise. It would be much easier for you to gauge or to define or to disclose whether the director has legal expertise or whether the director has financial expertise. Doesn't mean accounting or not accounting financial expertise or non accounting type financial expertise and so on and so forth. And in that case, I was grouping here together for the sake of the presentation all these types, but they behave differently. Cyber expertise, it's much easier for you to know and to break whether I have some experience discussing kind of managerial expertise, whether I have technical expertise in cyber or not, but companies are also disclosing general EG expertise. What does it mean to be a general expert in ESG or inclusion expertise. Doesn't behave the same way, can be couched the same way, can't be measured in the same way. And I think the more these kind of things will happen if the AI biased and so on and so forth. The more companies will go different routes, which is, I'm going back to generalist. I'm having training sessions. I'm making sure that they are educated on AI because all my directors need to be educated in some sort of a level on AI. Maybe if Cyber is so important to our company or AI is so important to our company, then I can bring in an outside advisor maybe even just for the board. Maybe this will be just the board's advisor on cyber or maybe just the board's advisor on AI, but instead of putting them inside the board, which is making the board kind of bloated or do some X team model of the board. We'll have a core board, like six individuals or whatever, and then we'll have an X team board, like a 12 individuals with some specific types of expertise. I imagine that changes like that will be coming in the next five years or so. I think that that does make a difference. I think that's a really good solution because I'm concerned about the disclosures of the skill sets with the proliferation of potential fraud and other types of liability. You're talking about director liability if you're supposed to be the ESG expert on the board. You're talking about the securities law liability. Yeah. Which is the company is disclosing something, either inflating its capability or omitting something. Absolutely. Why didn't you catch it in time? Exactly the director you know it's going to hit your DNO. Yeah. Yeah. Yeah. It could very well be actually, this is one area in Delaware law where there is surprisingly little guidance in corporate law literature. There's one case from 20 years ago of Justice Jacobs in MA MNA context where he says that this one director you had financial expertise So you had to know that the controlling shareholder is stealing horses in the price. All the others are not liable, but you are subject to liability because you have this greater expertise. So yeah, another kind of rarely? I agree. Going forward. I agree. I agree. So it also could be empirical problem, but I'm just curious to know because we assign expertise, do we also assign potential responsibilities? Suppose I'm appointed cybersecurity director on a board and later my firm has a data breach. Would I become unmarketable afterwards while everybody else remain intact. You're talking about kind of the labor market reputation. Exactly. Without the designation, probably, everybody assume one over end responsibility, but because I'm the design. Candidate. So it could be I assume 90% of responsibility. Do we observe such a trend in the director market? So two quick thoughts on that from a legal perspective, The way that they assign responsibilities is to committees and subcommittees rather than to individuals. So there will be a committee that will be assigned like the responsibilities over cyber, and maybe the cyber expert director will probably will sit on that committee. That's one thought. And the other thought is that if you're a director if you're a director candidate who has cyber expertise, I wouldn't worry about your labor market opportunities for the next 20 years. You all said, don't worry. Don't worry about it. You will be overboard very quickly. I commit investors will hold the committee members responsible to look at the charter and then say, the governance committee failed to have enough diversity. Yeah, there was a restatement, so we'll look at the audit committee. We have time for one more question. It's rather quick comment rather than the question. I think it's really useful discussion. There is a paper written by a group of finance scholars, Michelle Laurie. Many of people here know about her. She's organizing the Drexel corporate governance conference. What they find is if companies disclose director skills in image based forms. Then that can help them gather investor support. Especially against the company's directors, they can more convincingly get the support from institutional investors. I'm not sure whether that's the intended effect or how do you view what they fund? Yeah, we saw this working paper and we cite it several occasions in the paper. I think it's connected to something again, something that we end the paper with, which kind of directions where are we going here. There's also from a legal perspective, kind of a universal proxy rule, which is it used to be that you either vote on a complete slate by the incumbents or complete slate by the insurgents. And now that investors can vote can pick and choose specific directors that also increases by many folds the demand to know specific things about that specific directors and their specific skill sets. So I think it's also part of the reason why you are moving towards disclosing it in a much more comprehensible, digestible way for investors and the stuff that Bob mentioned about, we want to know more about the way that they evaluate internity. I think this will also be the thing that we'll start seeing going forward. Okay. Thanks. I think there are more discussions need to tons of them. Thank you. Time this session. We can go further short break. That's right.
2024 Corporate Governance Symposium - Post Lunch Session, Paper 2 (March 15, 2024)
From Nicole Rich April 23, 2024
10 plays
10
0 comments
0
You unliked the media.
"Specialist Directors." A winner of the Weinberg/IRRCi Best Paper Award.
In collaboration with the European Corporate Governance Institute (ECGI), the John L. Weinberg Center for Corporate Governance and the Department of Finance at the Lerner College of Business and Economics at the University of Delaware hosted its 2024 annual corporate governance symposium. The winners of the 2024 John L. Weinberg/IRRCi $10,000 Research Paper Award competition were announced during the program.
The papers included in the Symposium collectively addressed new developments and critical issues within the area of corporate governance.
The Symposium also included the presentation by the one of the authors of the paper selected as the winner of ACC/Weinberg Center Carl Liggio Memorial Award.
- Tags
- Department Name
- John L Weinberg Center for Corporate Governance
- Date Established
- March 15, 2024
- Appears In
Link to Media Page
Loading
Add a comment