These days, public companies are facing a host of new and complex challenges, including compliance, data security and IT risk, but there are also some issues in the boardroom that never seem to go away. Executive compensation, succession planning and M&As continue to be top of mind for both directors and general counsel in the Fortune 500.

However, each group takes a decisively different approach to managing these issues—and their perspectives and priorities often vary when it comes to the importance of mission-critical business areas.

While succession/leadership transitions are what keep directors up at night, GCs are more concerned with regulatory compliance than any other area of the business, according to a recent FTI/Corporate Board Member survey. Where the two groups' concerns merge again is on the topic of executive compensation and M&A preparedness, areas that take up a great deal of time for both directors and GCs.

To get an inside look at boardroom/GC dynamics and how these two factions can work more collaboratively for the betterment of their respective businesses and careers, InsideCounsel recently spoke with several Fortune 500 board members and executives.

As CFO of food ingredients producer Ingredion, Cheryl Beebe is also an executive member of the board's audit committee and interacts with the compensation and governance committees. She suggests that boards and GCs need to maintain a level of what she calls “appropriate creative tension.”

“Not in a way that is adversarial, but rather in a manner that allows for critical thinking on the board,” explains Beebe, who also holds the title of executive vice president of the $6.5 billion Westchester, Ill.-based company.

“There are certain things we review on an annual basis, such as compliance, ethics, disclosures, etc. so there is consistency and transparency and more of a holistic approach than taking out pieces of the silo,” Beebe says.

Shareholder value

Shareholders are playing an influential role and becoming more proactive in seeking change where they believe there is room for improvement, according to Veta Richardson, president and CEO of the Association of Corporate Counsel (ACC).

“Director independence, executive compensation, corporate social responsibility, reliability of financial reporting and transparency of communications are among the key issues that shareholders are urging boards of directors to focus more attention on,” says Richardson.

Shareholders look at the overall long-term value of the company, according to Patrick McGurn, executive director at Institutional Shareholder Services.

“When shareholders stare at the board member constellation up in the sky, they are looking for sustainable long-term value,” he explains. “The stars that make up that constellation is what connects everything in the business so when they look towards the boardroom, the first strategy to look at is whether the board and the company are moving in the right direction.”

Compensation and M&A garnered the highest percentages on both directors' and GCs' lists of issues requiring the greatest time commitment, according to the FTI study.

“C-suite leaders are turning to precise tracking, evaluation and comparison to best measure their progress or lack thereof. Linking pay with closely measured progress metrics is one example of using benchmarking to advance company goals and increase value for shareholders,” Richardson says.

Shift of power

Historically, if you don't like what management and the board are doing, you “vote with your feet” by selling your shares, explains Christine Edwards, a member of the board of directors at BMO Financial Group, a $15 billion financial services company based in Canada.

“We are seeing a shift of power from the board of directors to those stakeholders and that is no more evident than activists, private equity owners of company stock or even activist investors who are not only reaching out to boards but also to the media on a broader sense to talk about the failures of companies,” Edwards says.

This is where communication and engagement are absolutely critical for the board, “because when you sit down and talk with analysts and investors, it helps the board get a different sense of the board, the company, the management and what's going on. In general, it helps with a self-assessment of the board itself.”

Succession planning and critical talent issues may are also top of mind for both boards and GCs, but there is not enough emphasis on these areas, Edwards adds.

“The average tenure of a public company CEO is five years or less. When you have that short of a tenure… you have to really engage in an ongoing management succession discussion and it's got to be constant,” Edwards explains.

Circle of trust

While the board and GCs may disagree on certain issues, differing interpretations can be even more challenging.

“There needs to be a strong trusted relationship between the GC and the CEO. They are trusted advisors to the board. There needs to be gatekeeping when it comes to compliance to ensure the entity or individuals are not exposed to certain risks,” she explains. “There may be times where there are disagreements and the interpretations may be different.”

For example, from a legal standpoint it may make sense to avoid any risk or have the least amount of risk possible, while from a business perspective there may need to be a slightly higher potential risk threshold.

“The secret of success is to work through those differences of opinions and look at the scenarios of probability. You always have to adhere to the highest ethical standards,” Beebe adds. “I cannot emphasize enough whether you are CEO, CFO or at the bottom of the organization, it is about building trusted relationships and having more than just functional expertise.”

Chairman/CEO: Separate but equal?

The vexing matter of whether to separate the roles of chairman and CEO has been long debated within the global business landscape, and experts maintain there are pros and cons to both arrangements.

“It's easy to say I am for separating the roles, or I am for keeping the role together. There are positives and negatives to both,” says Edwards. “Investors and shareholders need to look to who is the individual that has both of these roles and whether he or she handled those two roles appropriately.”

Most investors view this issue on a case-by-case basis, adds McGurn.

“If the company and the board are performing well, most shareholders will examine the scope of the independent lead director position,” he says. “If the job description and the person filling the role are strong, most investors will view the lead director position as an adequate counterbalance to the combined CEO and chair positions.”

When it comes down to it, there is clearly a delicate balance between the role of the board versus the role of the management. Communication is critical to maintaining not only that stability, but also trust between the two business units.

“You want to strike that balance of the oversight. As GC, there needs to be creative tension as opposed to your job is just to challenge,” adds Beebe. “Sometimes it's not what you said, it's how you said it.”