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Commander
03-21-2002, 12:15 AM
How many of you guys have boards of directors for your companies? If you have a board how did you choose the members? What do they have their backgrounds in? What do they do for a living? How do you know them? What does each member actually do?

Thank you.

rodfather
03-21-2002, 08:39 AM
From experience, most companies that have a Board of Directors are large firms (multi million and billion dollar firms). I'm not sure you will find many of those type companies on LS.

And I do know if a company has a Board of Directors, its members are not usually in that line of work directly, but in a related one. An example would be United Airlines which I know has a Board of Directors. Some of their BOD members are executives with Hertz Rent-A-Car, Marriott Hotels, etc., and other related industries.

John Allin
03-21-2002, 08:47 AM
Such Directors are usually individuals with varied business backgrounds who are selected for their ability to assist the CEO in guiding the Company in it's growth quest. They are often paid an honorarium either in cash or stock options, and expenses for Board Meetings are usually paid for by the Company. Their input and guidance can be valuable if the Board is effective and not figureheads. The CEO usually keeps them abreast of developments within the organization that affect its business plan.

Often the Board is comprised of individuals that have an ownership percentage of the company (in the form of an investment in stock or start up), but that isn't always the case. However, if the Board is made of primarily stockholders, then they have a vested interest in the profitability and success of the Company they are guiding, and will then take a more active roll in the oversight of the running of the Company. In such cases, the CEO is usually part of the Board and often the Board President.

LawnLad
03-21-2002, 09:02 AM
A Board of Directors is different than a Board of Advisors, which many small businesses have where ownership is tightly held.

A Board of Advisors is just as the name suggests. They do not vote on decisions placed before them in any formal way and have no legal impact on the business. Rather, it's a group of advisors that the owner has assembled, typically 3 to 5 people (such as other business owners from other industries, accountant, lawyer, etc). Meetings are held regularly with an agenda to discuss the progross of the company towards its stated goals.

The company picks up meeting expenses and might pay a stipend to each director if the company can afford it. Early on in the company's development an advisor might be willing to give some of his time to help the company out. As well, the company may need to carry liability insurance to protect the board of advisors from any potential lawsuits - basically insulates them from the company activities since they are affliated to some degree and make suggestions on how the company handles certain things.

bruces
03-21-2002, 10:15 AM
Most small privately held companies do not have any outside directors. The board of directors of most of our clients is made up of the owners, the owners' spouse, children that are involved in the business, or key employees.

I am sure some companies have outside directors, but probably 99% of our clients have the same owners, officers, and board members.

And yes, almost any corporation has "directors" as mandated by state law. The fact is, these directors are the owners in most cases.

Commander
03-21-2002, 11:10 PM
The reason I ask was because somebody said kind of jokingly a while back that they wanted to be on my board of directors in the future. This guy is an EXTREMELY good business man. I just wanted to get some more information on what he was referring too. Thank you, your posts were most informative.