"It is pretty clear to me to whom the board is accountable: the shareholders."—J. W. Penland
"When the board deviates from long- and short-term shareholder interests as it has recently done in some instances, it creates a vacuum that no other part of the corporation can fill."—Allan Page
"There is no definitive answer to the question of how any given board balances the needs of various classes of shareholders, employees, vendors, etc."—Amy Savin
"The board should be guided by the company's stated mission."—C. J. Cullinane
These comments, along with other very thoughtful responses, suggest a wide divergence of views on the role of the board in the life cycle of a corporate entity. Interestingly, those who teach corporate law suggest that board accountabilities are subject to very broad interpretation. Lynn Stout, for example, points out that "... corporate law grants directors a wide range of protection from liability for decisions that sacrifice shareholders' immediate financial interests while serving the interests of other corporate 'stakeholders.'" Margaret Blair states, "To generate wealth for shareholders, corporate managers and directors must first be accountable to and for the satisfaction of customers, the loyalty and opportunities for growth of employees [and others] ..."
How does this play out in the consideration of bids for a company from a premium bidder whose interests may not coincide with those of employees, customers, or the public, as opposed to a substantially lower bid from a company whose interests are more closely aligned with the seller's and its various constituencies? Some of you opted to sell to the high bidder; some did not.
Ian Taylor had what is perhaps the most creative approach to the dilemma. "Several years ago ... as a board we sat and discussed this very issue... [and decided that] the board should be prepared to sell to a lower bidder ... But the discount should be set by a third party [group board or non-execs] because we do have a responsibility to shareholders to get the best price."
In the experience I related, the board decided that the 20 percent discount involved in the sale to the desired bidder was just too much. Influenced in part by large shareholders, the board accepted the higher bid. Was it the right thing to do? Would the approach of Ian Taylor's board been more acceptable? Are long- and short-term interests of shareholders synonymous at the moment of truth of the sale of an entity they own? What do you think?