We continue with our October HorrorFest tribute to the great Val Lewton and his films of mystery, suspense and atmosphere by considering the 1943 production of I Walked with a Zombie, released by RKO in 1943. Its plot follows a nurse who travels to care for the ailing wife of a sugar plantation owner in the Caribbean, where she encounters supernatural phenomena such as voodoo and the walking dead. The movie opens with the nurse, Canadian Betsy Connell, played by Frances Dee, intoning in a voiceover that she “walked with a zombie last night.” I found the film both creepy and disturbing.

CT Liotta, writing in Medium.com, said the movie is “loved by most critics in spite of its failures and gaping plot holes. It works because it is about mood and atmosphere rather than horror itself. It’s about voodoo, mental illness and alcoholism. It may even be about zombies. Like many Lewton films, it’s never quite made clear. Most of all, I Walked with a Zombie is an exercise in misdirection, including the title itself. Audiences expecting to see hordes of brain-eating zombies on the march have an entirely different experience.” The ending was just as eerie as the rest of the film with Liotta stating, “As the movie ends, we’re never sure whether the forces that lead to discord and death are spiritual or human, whether the moon reflecting upon the water is beautiful, or whether it takes its gleam from millions of tiny dead bodies and is the glitter of putrescence. What’s beautiful and benign can seem eerie, and those things that cause us great concern can, in the end, be benign.”

The eeriness of this film, coupled with the clear Jane Eyre antecedent, seems a good way to introduce today’s topic of the role of the Board of Directors to oversee the compliance function. In an area of inquiry entitled “Oversight,” the Evaluation of Corporate Compliance Programs, 2019, the Department of Justice (DOJ) asked three basic questions.

  1. What compliance expertise has been available on the Board of Directors?
  2. Have the Board of Directors held executive or private sessions with the compliance function?
  3. What types of information has the Board of Directors examined in their exercise of oversight in the area in which the misconduct occurred?

To facilitate the answers to these questions, let’s consider a list of 20 questions to reflect the oversight role of directors. These are questions the Board should ask of both senior management and the Board itself. The questions are not intended to be an exact checklist, but rather a way to provide insight and stimulate discussion on the topic of compliance. The questions provide directors with a basis for critically assessing the answers they get and digging deeper as necessary. Although the questions apply to most medium to large organizations, the answers will vary according to the size, complexity and sophistication of each individual organization.

Part I: Understanding the Role and Value of the Compliance Committee

  1. What are the Compliance Committee’s responsibilities and what value does it bring to the Board?
  2. How can the Compliance Committee help the Board enhance its relationship with management?
  3. What is the role of the Compliance Committee?

Part II: Building an Effective Compliance Committee

  1. What skill sets does the Compliance Committee require?
  2. Who should sit on the Compliance Committee?
  3. Who should chair the Compliance Committee?

Part III: Directed to the Board

  1. What is the Compliance Committee’s role in building an effective compliance program within the company? How can the Compliance Committee assess potential members and senior leaders of the company’s compliance program?
  2. How long should directors serve on the Compliance Committee?
  3. How can the Compliance Committee assist directors in retiring from the Board?

Part IV: Enhancing the Board’s Performance Effectiveness

  1. How can the Compliance Committee assist in director development?
  2. How can the Compliance Committee help the Board chair sharpen the Board’s overall performance focus?
  3. What is the Compliance Committee’s role in Board evaluation and feedback?
  4. What should the Compliance Committee do if a director is not performing or not interacting effectively with other directors?
  5. Should the Compliance Committee have a role in chair succession?
  6. How can the Compliance Committee help the Board keep its mandates, policies and practices up-to-date? 

Part V: Merging Roles of the Compliance Committee

  1. How can the Compliance Committee and the Board act as a ‘second set of eyes’?
  2. How can the Compliance Committee enhance the Board’s relationship with institutional shareholders and other stakeholders?
  3. What is the Compliance Committee role in Chief Compliance Officer (CCO) succession?
  4. What role can the Compliance Committee play in preparing for a crisis, such as the discovery of a sign of a significant compliance violation?
  5. How can the Compliance Committee help the Board in deciding CCO pay, bonus and resources made available to the corporate compliance function?

With the recent Delaware Supreme Court decision in In Re: Clovis Oncology, the role of the Board of Directors has become more fully defined in a compliance regime. These questions can help a Board to begin to fulfill that obligation.

Finally, for those of you who might not have heard, the Houston Astros beat the New York Yankees last night, 8-3 and are now up 3-1 in the American League Championship Series. I hope you will join my next week when the Astros host the Washington Nationals in the World Series.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2019