May 13, 2009
Loyalty and Honest Conversation
Posted by Lyman Johnson

Gordon notes that Andrew Gold and I have, in our respective articles, explored the unappreciated breadth of loyalty.  Ron then raises a question about the limits of a particular director's moral conscience in light of the duty of loyalty.  I will respond briefly to the substance of the question posed by Ron but I think, in fact, he implicitly touches on an even more intriguing question:  how to have honest conversation when legal duty and heartfelt moral/religious belief co-exist.

As to substance, it seems unlikely that a board would face liability for voting, as a board, not to pursue a particular business option.  In that case at least a majority of the various directors evidently had (business) reasons beyond that of the lone moral-objector director for not acting.  And if the board did approve the action but the objector voted against it, he was simply outvoted.  But as to the individual director himself, he, like other directors, is supposed to act for the good of the company.  He may object to action A on personal moral grounds and advocate action B, or simply non-A, instead.  If he does so because he honestly believes that is best for the company over the long-term, then he is fine. If, however, he honestly believes that action A is best for the company but he objects then I think he may have a potential problem.  Section 2.01 of the ALI Principles addresses this at length and notes that a range of nonmonetary factors can be weighed by a director and those factors need not have a majority of societal support if they are "emerging" or have "significant" (as I recall) societal support.  Probably highly idiosyncratic beliefs would not meet that test but anything within the "significant" rubric would be fine.   Again, this would not ultimately matter unless a majority went along for those idiosyncratic reasons, as opposed to acting either way for other business reasons.  Commendably in Ron's hypo, the objector raised his religious objection openly.  That is the interesting part to me.

Noah Feldman in his 2005 book Divided By God, deftly responds at the end of that splendid book to Stanley Fish's assertion that religious arguments are "conversation stoppers."  Feldman notes that there are ways to extend and advance an argument when a religious ground for a position is raised.  For example, in Ron's hypo, although there are many possible responses by the other directors to the objector's assertion that he is likely to vote against action A on religious grounds, how about the following response by another director:

"Joe, I am not sure I follow how voting against action A serves to advance the interests of the company.  Can you elaborate?"

Here we have a director who understands that a colleague has taken a risk and spoken honestly about something important to the speaker.  Honoring that, the second director respectfully engages the colleague as fully human and as a person with a moral dimension.  He also is seeking further information for his own consideration.  Who doesn't value understanding the views of those we work with who have shown good judgment before but who now take a view we are not following?  Such conversational approaches serve to "open up" not shut down dialogue.  We all do this every day as we navigate our various relationships and, for those of us who are professors, as we teach.  There are techniques for stopping conversation and those for moving it along.  There is no reason why people of faith should not be required to give an account of how their faith leads them to arrive at a point of view with implications for the company.  One cannot just play the religion card as a trump even though, for the believer, the conviction is authoritative.  One should articulate and try to connect the business position taken to one's underlying belief.

At the same time, some genuine respect and engagement by others when that is done also is needed.  The best conversations often ensue, in all settings, when someone does what isn't easy:  speaks from the heart about something rather than using cant or the usual tropes.  So, religious and moral talk is risky for both the speaker and the listeners but there is a huge payoff if we avoid the usual move of silence or ridicule we see in the larger arena.  Presumably in smaller settings a spirit of trust and candor can facilitate such talk.  Not easy, but easier than in the public square.  That is why in the piece Gordon cited that I wrote, I call the corporate boardroom a "safe place" for such discourse.  If we can get over the skittishness about religious talk in various voluntary associations maybe we can improve as a country in the public venues, where we badly need more civil discourse.

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