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Smaller businesses need outside directors.
A few good friends and family members may not be enough to make the most effective board for smaller companies. Give serious thought to retaining (and paying) outside directors
A few years ago, when discussing an assignment with a potential client, who was the sole owner and operator of a substantial firm in a small Ontario city, I asked for a list of his company's directors. Although, he "couldn't quite remember because there are many subsidiary and related companies," he thought that, together with himself, his wife, his son and perhaps his vice president of finance fulfilled these functions.
Having identified the company as a proprietorship, I requested the names of the company's solicitor and accounting partner. The owner answered that in 40 years of operation he had no reason to know them because, as service providers, they dealt with the appropriate functional manager.
I persevered, asking for the names of his business friends, those whom he could approach for advice or whom he could count on for support when business issues presented him with challenges beyond his personal experience. After pondering the question for a while, he finally suggested that the only person he might include would be his bank manager.
My client was not a typical loner, but an outgoing, friendly person whose business required continuous interface with all manner of customers, suppliers and lenders. He also played a prominent role in community affairs.
Within 16 months of our conversation, the bank manager had transferred my client's corporate loans to the bank's special loans squad and a receiver had been appointed.
MANY BOARDS COMPRISED OF "WRONG" PEOPLE
- HARRIS STUDY REVEALS 42% OF OUTSIDE DIRECTORS HAVE BEEN TARGETS OF LAWSUITS
- Press release article from: PR Newswire August 14, 1995 700+ words
...Forty-two percent of outside directors of Fortune 1000 companies...revealed that nine of ten outside directors of publicly-held corporations...surprising level of concern by smaller companies -- both public and private...
- More outside directors are getting their shares.(interview with Paul Gilles of...
- Magazine article from: Business North Carolina December 1, 2000 700+ words
...revenues of $5.9 billion. Do stock grants make sense for those that are smaller? You're going to see the same thing in smaller companies. You take typical directors, normally these would be executives of other companies. They're already fairly well...
- D&O cover key to luring directors.(directors & officers liability insurance)
- Magazine article from: National Underwriter Property & Casualty-Risk & Benefits Management Jones, David C. July 31, 1995 700+ words
...smaller public company's outside directors are often more exposed...anything, more important to outside directors of smaller companies--private and public...that 57 percent of Fortune outside directors feel very informed about...
- Smaller Companies commentary by Standard & Poor's.
- Magazine article from: Investment Adviser March 19, 2007 700+ words
...strongest performing of the IMA's smaller companies sectors and the least strong. The European Smaller Companies sector tops the 28-sector table...cent, closely followed by the UK Smaller Companies sector with a sector average return...
- Gauging 'smaller companies' effect.
- Magazine article from: Investment Adviser March 17, 2008 700+ words
Smaller companies' run of beating larger ones came to an abrupt...investors, but in particular for investors in smaller companies. From the end of the bear market in 2003, smaller companies outperformed the FTSE All-Share index by...
- The role of outside directors in bank acquisitions.
- Magazine article from: Financial Management Subrahmanyam, Vijaya Rangan, Nanda Rosenstein, Stuart September 22, 1997 700+ words
...negatively related to the proportion of outside directors, but positively related to the number...to the proportion of ownership by outside directors, but are associated only with high...shareholder interests. The role of outside directors has been viewed as particularly critical...
- Outside Directors Don't Help Companies in Emerging Economies.
- News wire article from: AScribe Business & Economics News Service March 9, 2004 700+ words
...March 9 (AScribe Newswire) -- Outside directors on corporate boards don't necessarily...examined how companies with and without outside directors performed on several different success...both affiliated and non-affiliated outside directors. Affiliated outside directors ...
- SEC Proposes Simplified Reporting Requirements For Smaller Companies.
- News wire article from: Mondaq Business Briefing August 3, 2007 700+ words
...disclosure and reporting requirements for smaller companies under the Securities Act of 1933...disclosure and reporting requirements for smaller companies to those companies with a public...raising and reporting requirements for smaller companies. Background The SEC has ...
