Trey Muldrow Discusses Due Diligence Issues for Board Nominees
Akin Gump corporate partner Trey Muldrow is quoted in the Agenda magazine article “Tips on Due Diligence Before Joining a Board,” discussing what candidates for a position on a corporate board should do prior to accepting a position.
Muldrow recommends that candidates ask the nominating and governance committee chair to share “what’s going on in the company” that hasn’t been disclosed to the public. While that may lead to the prospect having to sign a confidentiality agreement, the article states, he or she should probably sign it rather than not get the information being sought.
In addition to conducting a search for public records of litigation on one’s own, Muldrow cites three main legal considerations to check:
- Have there been any recent internal investigations of the company concerning managers or board members and, if so, what were the findings?
- What are the most significant, urgent changes that shareholders are demanding to see happen now?
- Finally, and perhaps the most challenging, will the current makeup of the board be able to govern managers to execute the company’s strategic plan?
Once all of these issues have been resolved, Muldrow tells the publication, board prospects should find out if there are any meaningful existing business relationships between the management team and the board. While the New York Stock Exchange and Nasdaq have requirements governing independence of board members, companies continue to have some discretion.
Muldrow has written previously about this topic. In 2011, he penned the article “Due Diligence Considerations for Nominees” for Thomson Reuters Accelus.