Editor's Note: Trading in Textbooks for Newspapers
By Charles Elson

I think that a few words of introduction and guidance are in order. I have been a regular contributor and, more importantly, a reader and devotee of Directors & Boards for the past 25 years. I firmly believe that this publication has been, is now, and will continue to be the thought leader in contemporary corporate governance theory and practice for our country’s best directors. I am proud and honored to be engaged as executive editor-at-large for my favorite publication (though I am still a little unsure of what such a lofty title really stands for).

I do have a significant and relevant warning for the readers of this column. At heart, I am an investor advocate. I have always firmly believed that we, as corporate directors, have as our primary obligation the objective of preserving and enhancing shareholder value. The investors entrusted their hard-earned funds with us, and our fundamental responsibility is to wisely steward and enhance the value of what they have invested. Today’s shareholders are not titans of Wall Street, but the millions of hard-working men and women who invest for their well-deserved retirements. If we don’t steward wisely, they will take their capital elsewhere, and the good things that we can accomplish with their funds will never occur.

This is not to say that we should ignore the interests of the other stakeholders in our companies, because to do so ultimately would ensure no return for the businesses or our shareholders who committed their precious capital to us. Instead, we must always be mindful of those in and out of our organizations who create value for our investors.

But we must never lose sight of who elects us and to whom we are morally and legally obligated. The shareholders come first, and every difficult decision we make must start with the simple but important question, “How does this enhance our company’s and shareholders’ long-term interests?” That is our role and fundamental responsibility.

I hope that this column will serve two purposes. First, sometimes, I would like to challenge you — not because I wish to receive angry letters, but instead to make you reflect. Nothing is worse in our business than the slavish devotion to dogma. Business is an ever-evolving and changing organism. We cannot react to turbulent times with the same old response. We must challenge and be challenged. You and I may not always agree, but at the very least this column should encourage reflection. Of course, as an academic, that is my job. Second, I hope it will inspire you to approach your job with enthusiasm and creativity. We have great responsibilities, but much potential to do good.

We are in the midst of one of the greatest economic and societal crises that any of us has ever faced. The business world may never be the same. I am reminded of a story my grandfather told me many years ago. He, Charles Goodman, entered the Harvard Business School in the fall of 1928. He worked on Wall Street for the summer of 1929. Then came The Crash. After Christmas break, he returned to Harvard in January 1930. He told us his professors called all of the students into an auditorium upon the start of the new semester. They announced that in the past two months, the world had changed dramatically and irrevocably. The cases that the students would traditionally have been reading would be discarded, and their final semester would be taught out of the newspapers. As a child, I could not imagine such a thing — now I can. In the next several months, you and I will be rethinking director dogma, as we together approach the strange but relevant realities we now must face. While I cannot promise you a smooth ride, I can assure you that it will be challenging, interesting, and to all of us rewarding. I look forward to our dialogue.

2020 Annual Report

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