To be a company director, you need to be over 18, not insane (or at least found to be insane by a judge), and not bankrupt. That’s it. You can sit on a major board of directors, and not know anything about the company, its industry, or even know how to read a financial statement.
When you see an accountant, a doctor, an engineer or a lawyer, that person has a rigorous code of professional practice with which he or she must comply, ongoing professional development obligations, a common body of knowledge as a barrier to entry, a body of peers that oversees any complaints or misconduct, and must pay an annual fee in order to practice.
There are more than 22 million private and 17,000 publicly traded companies in the US. Each of these companies requires a board of directors. If the average board size is nine directors, that means that there are about 150,000 directors of publicly traded companies alone, and several million directors of private companies.
Perhaps we should require more of directors as fiduciaries.
So writes Dr. Richard Leblanc, an Associate Professor, Law, Governance & Ethics at York University. (What Does it Take to Be a Corporate Director?, Governance Gateway Blog, 10/7/2011) His plea is a familiar one that gets run up the flagpole every few years.
Professional qualifications, a code of professional practice, peer review of misconduct, and disclosure of director expertise are all areas that would strengthen the governance of corporations.
Isn’t it time to act on such reasonable advice? In California, you need to be licensed to cut hair or to do manicures. Manicurist must have completed the 10th grade or equivalent. Then they need an equivalent of 100 hours of training and then they need to complete an apprentice program. Cutting hair requires a training program of 1,500 hours and additional measures.
Shouldn’t corporate directors of public companies be required to meet more of a minimal standard than not being judged insane? I hope Leblanc will do more than write about it. Please followup with at least a petition to a stock exchange or government regulatory body.