Board Development

when a small company should build a board

06 Mar How to Know When a Small Company Should Build a Board

During his time as CEO of Hollywood Fashion Secret, Matthew Goldberg tripled his company’s revenue in five years, “The reason I wanted a board for our company is it gave me an instant access to 80-100 years of experience around the table in specific functional areas to accelerate our business through our learning curve.” Small companies, or companies with less than $50M in revenue, can benefit greatly by having a board. A combination of two or three of the following issues drive the formation of a board: 1. Owner or operator turns investor The founder of the company would like to retire, but...

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board development risk

30 Aug R-I-S-K is a four-letter word for small to midsize companies

This article was originally posted on the Star Tribune's website. If you would like to read it there, please follow this link: R-I-S-K is a four-letter word for small to midsize companies. Most large companies have a risk department in one form or another. This is most often the chief risk officer (CRO). According to Wikipedia, a CRO of a corporation “is the executive accountable for enabling the efficient and effective governance of significant risks, and related opportunities, to a business and its various segments. Risks are commonly categorized as strategic, reputational, operational, financial or compliance-related. CROs are accountable to both the executive...

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18 Feb Board of Directors Search Firm Shares Tip About How Governance is Not Management

Cardinal Board Services is a board of directors search firm that helps boards in multiple ways. This week we would like to share an important rule for a board member to remember by Ken Dayton, the former CEO and Chairman of Dayton Hudson (the predecessor to Target Corporation) and uncle to the current Governor of Minnesota Mark Dayton. In 2001 Dayton published Governance is Governance, a timeless piece on the importance of good governance in both the profit and non-profit sector.  He provides very clear and understandable of what the right relationship is between the CEO and the Chairman of the...

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31 Oct Brutally Honest Conversation about Board Diversity with Board Members

This week I had two interesting conversations that with current board members about: 1. Board Diversity 2. Value of a highly functional board of directors The board diversity conversation happened ironically after a board meeting that I attended.  One of the company executives that was in attendance at the board meeting also joined us for lunch after the meeting was over.  During lunch the discussion turned to the bank board he serves as Chairman on.  A comment was made by Rick (Chairman of the bank) made the statement the he took my advice.  It always surprises me when someone says this in a public...

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15 Oct Building a Board of Directors

Over 20 years ago I formed my first company.  It was an imposing task as I had never formed a corporation or built a board of directors. I hired a lawyer and spent a significant amount of time and money "doing it right."  It was a good learning experience.  I wish someone had told me it did not have to be that difficult.  Since then I have formed two additional companies and they were much easier to do. In the recent article by George Deeb about how to build a board of directors or a board of advisors  the value of a board far...

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board of directors table

17 Sep 5 Areas Every Board Member Should Focus On

Joining a board can be a rewarding experience, both personally and professionally. Sitting on a board is a great way to use your skills in other areas and share your experience. While you are on a board you may wear many hats. In order to be an effective board member it’s important to remember what to focus on in order to make your role in the meetings as productive as they can be.  Here are five areas every board member should focus on:  The organization:  It is crucial to familiarize yourself with the company and industry before you join the board. Learn more about the company’s mission statement,...

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16 Sep Authors Write Different Ending for Amazon’s Board of Directors

In a recent letter by Authors United to the Amazon board of directors requested to challenge CEO Jeff Bezos to stop the “sanctioning” of Hachette author’s books. In the letter it states that the sanctions include “refusing pre-orders, delaying shipping, reducing discounting and using pop-up windows to cover authors’ pages.” The group charges that this has driven down sales by nearly 90%. Over 1,000 authors signed the letter in an attempt for the board of directors to amend the current company policies that are in place. The letter was first published in the New York Times. Amazon’s current board members include...

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04 Sep The Science Behind Board Compensation

When it comes to compensation for Boards almost anything goes.  The variance of the amount of compensation a company gives range from $0 to $500,000+.  Not only the amount of money paid annually, also the way boards are compensated. Here are a few examples showing the range of compensation: Monthly retainer of $500 Annual payment based upon how much dividend the company gave to the shareholders Annual retainer, per meeting fee, fee for committee work, annual stock grants and annual use of company products Annual retainer, cash payment at the end of every meeting and one time use of the company jet Compensation plans of public companies tend...

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03 Sep The Real Value of a Board of Advisors Role and Search

Often the term Board of Directors (BOD) gets confused with Board of Advisors (BOA) or just plain Board.  A Board of Directors is a very specific entity.  It has two main purposes: To Hire and Fire the CEO To approve corporate strategy Those are very direct and simple purposes, but in reality they are very complex and all encompassing.  Often companies have a Board of Directors in title, but by definition they would be unable to execute either purpose.   The CEO or an investor in the company owns enough shares in the company that the board is more advising than directing. A Board of...

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15 Aug Private Equity vs. Traditional CEO

Mike Lorelli is a very accomplished Board of Director Member, Chairman and CEO.  He has very good insight into how CEO's manage depending on who the owner of the business is! Below is his viewpoints about private equity vs. traditional CEO's. A heads-up to directors: Sure, private equity and public company chief executives carry some of the same DNA and title, yet the operating and expectation differences can be huge—and capable of creating a fireball. Shareholder vs. Shareholders Not having the ongoing management of shareholders is a plus for the private equity (PE) CEO— no public earnings releases, analyst conference calls, important shareholder...

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