Mae Kuykendall:
... it is reasonably common to name representative (a/k/a constituent or nominee) directors to corporate boards. Even though directors have been chosen to represent special shareholder interests, Delaware cases and commentators speak of "undivided loyalty." For example, parent corporations place officers on the boards of majority owned subsidiaries, venture capitalists have seats, hedge funds wage proxy contests to get nominees elected, and the government appoints representatives to boards when it deals with troubled companies. Despite the necessary and understood loyalty of these nominees to their sponsors, corporate rhetoric goes so far as referring to the biblical admonition against serving two masters (Cy comments, "New Testament 'God and Mammon' - hardly an apt parallel"). The conventional statement in the Corporate Directors Guidebook is that a director should keep all nonpublic corporate information confidential, overlooking materiality and the common expressed or implied consent in sharing information with the sponsor in the representative situation. Cy has written about this in a useful Insights article. It seems fair to call the conceptual divide between what is known and approved regarding representative directors, and the absence of doctrinal revision to acknowledge the role differences implicated by the practice, a corporate law anomaly.
I agree that there is a gap between practice and doctrine. Indeed, I'm debating writing on this issue. before doing so, however, I need to figure out if I have anything to say in addition to what Norman Veasey and Christine DiGuglielmo said in their excellent article How Many Masters Can a Director Serve? A Look at the Tensions Facing Constituency Directors. They do a great job of canvassing the area.
