The chair of a public university board was concerned about one trustee’s silence during meetings. He thought it was inconsistent with the trustee’s fiduciary duty. The trustee explained she felt restricted by the state’s sunshine laws, which risked news coverage of her comments negatively impacting her business.
State sunshine laws open public institutions’ meetings and records to anyone who wishes to see them. Most people agree with the principle, and most boards, consistent with their fiduciary duty of obedience, scrupulously comply. Many trustees have never worked in such an open environment. Having both sides of a controversial issue monitor your discussion, knowing that any messaging between meetings may be subject to public review, and seeing the differences between your view of a meeting and the press account, can be highly disconcerting.
Obedience is but one of the three fiduciary duties, however. The other duties of care and loyalty require a prudent person to apply their skills and diligence so as to make decisions that are, above all, in the best interest of the institution.
If having an audience suppresses free discussion at a meeting, the result will not reflect the collective wisdom of the board and may not yield the best possible outcome for the institution. The proverbial “dumb question” that changes everything may never get asked. A trustee may hesitate to offer a different view so as not to risk the appearance of a divided board—yet the very absence of discussion can undermine confidence in the board among observers. Every trustee must speak up at least once per board meeting and even more often on controversial issues, especially given the small size of most public boards.
Sunshine laws can also limit alternative solutions available to the board. This is particularly apparent in executive searches when potential candidates stay away rather than risk jeopardizing their current job by indicating interest in another.
To address such dilemmas, the board with the silent member held an open discussion of how sunshine laws and fiduciary duty interact— why the laws are important, how they match the board’s values, and the discomfort they potentially create for individual trustees and for the board as a whole. Goals of the discussion included: confirming the importance of full participation; establishing acceptance of dissenting opinions; recognizing how authentic deliberation among trustees can help the board and its observers better understand the complexities of an issue; and identifying new strategies to make wise, legally compliant decisions in the best interest of the institution.
In a recent Trusteeship article, Richard Chait identified 10 qualities of a healthy board culture, including distributed influence, collective wisdom, constructive dissent, transparency, clear expectations, respect, and trust. A board with these qualities can find a healthy resolution to the sunshine/fiduciary dilemma. Here are some options that can help boards improve in these areas:
1. Encourage quiet trustees to share their views. Draw each other out in discussion, especially when views differ.
2. Ensure that the relevant facts regarding the issue at hand are on the table.
3. Place a controversial matter in the context of a bigger picture, such as the mission.
4. Periodically summarize the discussion so far and ask for alternative views.
5. Welcome questions and dissent as learning opportunities.
The true cost of failing to ensure that both legal transparency and fiduciary duty are fully expressed in board operations is incalculable. Violations of the law usually make the news. Second-best decisions and loss of board credibility are much less obvious but can be even more damaging.
Given today’s challenges, most boards are spending less time on transactional matters and reviewing the past, and more time on strategic issues and on working with the president to chart the future. Boards are very likely to address matters of great significance at every meeting. Both the need for and the expectations of their good judgment are high. Building a culture that enables trustees to fulfill all of their fiduciary responsibilities in compliance with open meetings and records laws is a sound investment of time and thought.
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