Question from an Iowa CEO: “We have a member of our board who leaked some private information about a planned real estate acquisition to a spouse. This has created some problems for us in the purchase. How should a board handle a situation such as this?”
The Board Doctor’s response: You are correct in seeking a way to show your board member that he or she made a significant mistake in not honoring the trustee’s obligations to the nonprofit.
Consider these options:
- Ask for resignation from the board. This would be the chair’s job. If you don’t wish to be this forceful in your reaction, strip a board member of an officer’s position or some other duties.
- Give a reminder for the full board with the violator in attendance. The chair can again lead by reinforcing the importance of keeping information such as private business dealings confidential. Such violations are a significant sign of governance problems on a board, including a violation of the duty of care, and you should emphasize the board’s code of ethics if you have one.
- Bring in the board’s attorney. This can be particularly helpful if there are legal consequences in your state for such violations.
- Censure. To do this, the board makes a motion and puts on the official record that it disagrees with the member’s behavior and is unhappy with what the member has done. It is a form of “shaming” a board member.