How to Remove Board Members
There are several reasons why CEO’s would like to shed a board member or two at times. There are 3 primary reasons:
- The person is disruptive to the effectiveness of the board
- The person has served to long on the board
- The person no longer brings the value needed to the board
How you got in this situation is somewhat irrelevant and should be looked at as an opportunity to fix it once and for all.
These issues can be avoided through the use of your board by-laws. If you don’t have by-laws then putting some in place is imperative to address this and other situations such as term limits, compensation, board member expectations, scheduled meetings, etc.
If the by-laws you have do not address board termination then the first order of business is to get them in place (maybe along with other key items that could be missing). This may not be an quick fix as to change the by-laws you will need a majority vote on the board and your problem board members may be reluctant to quickly change. In this situation I would recommend a couple of strategies. The first is to have a very direct conversation with the person or persons you want to replace and tell them in as a positive way as possible what you would like to do (replace them) that may be enough. If there is push back then explain the business reasons of why a change is best for the company (try to not make it personal about them or you). If the direct approach is going to be a challenge then you may want to add a couple of new board members to the board and garner enough votes to change the by-laws.
In changing the by-laws here are several non threatening ways to get board members of the board:
- Have an age limit when a board member must tender their resignation (70 or 75 is typical)
- Have term limits and length of board service. Some public companies are going to annual term limits so everyone on the board needs to be re-elected every year.
- Once the board member has a change of employment (fired, new company, retired, etc) they must tender their resignation.
In all cases there are exceptions where you do not have to accept the board members resignation.