Michael W. Peregrine is a partner at McDermott Will & Emery LLP. This post is based on his article, previously published in Forbes.
Sometimes a corporate director who’s the main source of a company’s reputational problems is the last one to recognize it.
That’s why, in order to protect the company from unwanted controversy and reputational harm, boards benefit from discreet tools to remove problematic officers and directors before their terms are up, and without going through a formal removal process. These self-executing tools are intended to resolve concerns without making a bad situation worse for the company, the board, and the implicated director.
Image problems arise from two circumstances that can pop up during a director’s term; the first class, circumstances of the director’s own doing; and the second class circumstances over which the director may not have had any direct responsibility. Once under public discussion, both types risk reputational harm to the company, interference or disruptions to the work of the board, and doubt (fair or unfair) on the fitness of the implicated director to serve.
