Directors are a fundamental part of corporate governance, standing between ownership (the shareholders) and management. and owing fiduciary duties of care and loyalty to the shareholders. It’s not an honorary role.
But what if they are willfully or negligently blind when major problems arise, and don’t even know enough to ask management about them?
“Theranos Directors Missed Red Flags,” The Wall Street Journal, May 31, 2017 B1. Retired Admiral Gary Roughead and former Secretary of State George Shultz apparently failed to ask key questions, or any questions at all. Hard to claim protection of the business judgment rule when you don’t make a judgment.
I thought all I had to do was show up and cash the checks. You mean I needed to understand what the business did? I have no background in this business. What do you mean the insurance may not cover me?