Fiduciary Duty and the Ex Officio Conundrum in Corporate Governance: The Troublesome Murkiness of the Gubernatorial Trustee's Obligations

36 Pages Posted: 24 Jan 2013 Last revised: 2 Jan 2014

Date Written: January 24, 2013

Abstract

Should governors serve on the boards of incorporated universities as ex officio members? This paper examines the question by considering the experience of Penn State University and analyzes the implications of governors serving on the boards of state-aided corporations through focusing on the fiduciary responsibilities of directors under corporate law. The article concludes that the current statutory framework needs reconsideration and asserts that while there is no question that the state’s public interests should trump an institution’s “private” interests, it is the state that has chartered the corporation for the promotion of a public good (education) and has endowed it with the governor as one of its directors to guard the institution’s best interests. Accordingly, if the ex officio director is in a position where he may not be able to serve the corporation’s interests, the law must mandate that the fiduciary steps aside from the board, as the constant tensions that the current paradigm condones (those between public governance political objectives and private corporate governance principles as defined by centuries of fiduciary law), cannot be sustained.

Keywords: board of directors, board of trustees, corporate governance, fiduciary duty, ex officio, directors, trustees, nonprofit, university governance, corporate law

JEL Classification: G30, G39, K2, K20, K22, K29

Suggested Citation

Ghahramani, Salar, Fiduciary Duty and the Ex Officio Conundrum in Corporate Governance: The Troublesome Murkiness of the Gubernatorial Trustee's Obligations (January 24, 2013). Hastings Business Law Journal, Vol. 10(1), pp.1-35 (2014)., Available at SSRN: https://ssrn.com/abstract=2206652 or http://dx.doi.org/10.2139/ssrn.2206652

Salar Ghahramani (Contact Author)

Penn State University ( email )

Minderbroedersberg 4
Maastricht
Netherlands

HOME PAGE: http://sites.psu.edu/salar

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
194
Abstract Views
1,353
Rank
282,310
PlumX Metrics