Am I entitled to time on the board's agenda?

April 2011

"Yesterday, I sat through an eight-hour board meeting where management delivered a series of informative, high-quality presentations, with not a spare minute for open-ended discussions. As an outside director, I happen to think we have some huge problems with our product strategy that the board should discuss. How can I get time on the agenda to raise these issues?"

Mike: Don't be so polite. As a director, you're entitled to interrupt management presentations to ask questions and voice concerns about company strategy. In fact, that's your job.

You're also entitled to talk with the chairman (or whoever sets the agenda) about getting air time at the next meeting. You might also ask the CEO to set up a meeting with his product strategy people to discuss the problems you see. There's a good chance they share your concerns and will welcome board-level support.

Can I fire a disruptive director?

February 2011

"I recruited a top lawyer as a board member recently, and it was a terrible mistake. He fights with everybody, his advice is useless, and he drank way too much at our holiday party. He's supposed to serve a three-year term, but is there any way I can get rid of him sooner?"

Mike: You can, but be careful. Start by finding out how your other directors feel about their lawyer colleague. If they agree that he's a trouble-maker, then have a private talk with him. Explain that you don't think the chemistry is working out and suggest that he resign his board seat. If he refuses--and he might, if he's prone to "fight with everybody"--then you'll have to go back to the board and ask them to fire him. (That's why it's important to get buy-in from your other board members before you take any action.)

However, be sure you listen carefully to what the rest of the board says. They may tell you that he's a little rough around the edges--that's not unusual with litigators--but still makes a valuable contribution. Perhaps he's a valuable source of referrals, or he understands intellectual property issues better than anyone else. And they may even tell you that he challenges your perspective on the business, which they feel is necessary. He probably didn't become a "top lawyer" by being a jerk.

What can I do if the board is oblivious?

August 2010

"I'm a major shareholder in a privately-held company whose board members seem oblivious to our CEO's lack of focus, which has led inevitably to cash-flow problems--which the board also ignores. Advice?"

Mike: This seems like odd behavior for a whole board, and I wonder if you're missing something. Many start-up companies run very lean on cash, and they sometimes zig-zag all over the map in pursuit of new opportunities. This drives traditional, conservative managers nuts--but it's usually a sensible strategy to maximize growth and return on investment. I suggest you have a chat with your fellow board members: You may find that they're aware of the situation and are carrying out the wishes of the shareholders they represent.

However, if your fellow directors really are clueless, remember that as a major shareholder you have a voice in electing the board. Before the next election, you should work to nominate a few new members who are more on the ball.

Is an advisory board member liable for damages?

January 2010

"I'm on the advisory board of a startup, and I get paid a few dollars a year for occasional meetings and phone consultations. I know the company provides errors and omissions insurance for the regular board of directors. Is this something I should insist on?"

Mike: Even if the company implements an idea of yours that harms someone, you and your fellow advisory board members have no authority to make corporate decisions. That's something only the directors and officers of the company can do, so they're the only people with any legal or financial exposure. You're in the clear.