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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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12 Aug Board Members Fumble to Firing of CEO of Private Family Business and Everyone Suffers

Most people who serve on a board of directors feel that they are anonymous and like to keep it that way.  The recent story that will not go away about the company, Market Basket, is the firing of the CEO with 49.5% ownership of the company.  It goes to show you that being diligent about decisions made at the board of directors level have far reaching affects on not just shareholders and the CEO but customers and employees as well and, in this case, the Governor of Massachusetts who stuck his nose in the squabble. WCVB-TV in Boston reports "Three members of Market...

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06 Aug Tips for Joining a Board of Directors

This week the Harvard Business Review published a blog post about joining a board. I recommend starting with non-profit board that needs real board members vs. people who will be on a board if they donate to the cause.  After your initial non-profit board of directors experience, look for an industry association board.  Finally a small private company and/or a larger significant non-profit board will help you serve with influential people that will recommend you to companies. In the HBR article it says "Many senior managers desire — and are qualified — to join a board. And many companies around the world would greatly...

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05 Aug Family Owned Company Troubles By Poorly Constructed Board of Directors

This week grocery store chain Market Basket fired long time CEO Arthur T Demoulas by the board of directors much to the dismay of the employees. Here is an example of a poorly constructed board of directors.  Since Market Basket is a private company there are no rules on the number of truly "independent" board members there are . One side could, as it appears, have "stacked" the board with followers of the chairman of the board.   A truly independent director primary responsibility is to represent the stakeholders in the company.  This includes shareholders, customers, suppliers, employees and the community....

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01 Aug Target Board of Directors Chose a New CEO – The Hardest Decision for any Board

Yesterday Target announced they have hired Brian Cornell from Pepsi as their new CEO.  This is the second hardest activity that a board of directors must do for a public or private company.   The first was to fire it’s long time CEO Greg Steinhafel.  Target board of directos had to fire Steinhafel because of two significant problems under his watch.  The huge security breach in late 2013 and the poor performance of the company’s expansion into Canada.  The board of directors took quite a bit of heat on waiting so long to fire the underperforming CEO.  Institutional Shareholder Services (ISS)...

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31 Jul The Ideal Age for Your Next Board Members

As you know there is no perfect age that a board member should be to contribute the company’s board.  There is an ideal age, however, for recruiting your next board member. The ideal age, in my opinion, is 45-60 years old (plus or minus 5 years depending on circumstances).  This is for a new board members who you would hope would spend years on the board supporting the company. The primary reason a person over the age of 45 is experience.  Having decades of experience in operating businesses gives a board member wisdom that can be used to help the company grow....

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30 Jul Which Type of Company Board Do You Have?

In looking at a variety of company's boards for analysis there seems to be four distinct types with multiple variations. The first one is “The Turnaround.”  This is a company who is really struggling and is in a state of pivoting.  Often times new capital comes into the company and as a condition to get the capital a board must be formed.  New investors want experienced board members to be the overseers of management to help them get going in the right direction while ensuring that appropriate actions are taken to preserve the investments made.  This board position is much like being...

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25 Jul Building the Board of Directors

The board's role The role of the board is something that we might be forgiven for thinking requires little discussion. After all, every company has one. Because the structure is very predictable, the roles and responsibilities of the board members appear to be defined as much by tradition as by conscious decision. But taking a seat on the board requires more than just agreeing to show up at a certain time and place. It requires a dramatic shift in perspective from any other role associated with running a company. Board members are charged with the unique role of placing themselves at a...

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23 Jul Why You Need to Use a Recruiter for Your Next Board of Director/Advisor

The majority of the time a company's board either asks their current board members or CEO who do they know for the upcoming new board position the company will be pursuing.  This limits the company, plain and simple. When a company hires a new VP of Manufacturing or CFO they generally look at who in the company can fulfill the role first.  If someone is not qualified to help take the company to the next level then it is natural for the company to look outside the organization and hire a recruiter to look at the whole market. When it comes to the...

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22 Jul The Differences Between Serving on Public and Private Company Board of Directors

Most every person who serves on a public board also serves on a private company board, but not the other way around. In discussing the differences with individuals who have done both they say it is similar to the differences of doing cross country skiing and cross country running.  Similar ideas but you use different muscles. The biggest difference around these two centers are information disclosure.  With the laws that are in place for public companies (Sarbanes-Oxley) there must be full disclosure around the financial numbers, how they were derived along with transparency of relationships with both people and companies.  A public...

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