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Wherefore art thou board member?

Entrepreneur, Oct, 2003 by Jennifer Pellet

Once a cushy job, serving on boards is now fraught with risks and is more time-consuming than ever. Shareholder lawsuits are on the rise, and directors can be held personally liable and financially responsible for court costs as welt as cash settlements and judgments, factor in more stringent oversight requirements that have board members serving up to 200 hours annually, and the job starts to seem like more bauble than it's worth.

How does a small company woo top notch talent to its boards? A rock solid directors and officers (D&O) insurance policy and an open attitude help reassure potential candidates, says Bruce E. Beebe, editor of Directorship, a newsletter published by executive search and management consulting firm The Directorship Search Group in Greenwich. Connecticut.

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"Today, board candidates do a lot Inure digging to find out if there are hidden hazards," Beebe asserts. "They want to show the [D&O] policy to their lawyers and to know more about the corporate culture, the other directors and the external auditor. So a young company can provide a copy of their D&O policy and say 'We, understand that you may want to meet our directors, auditors or other people, and we will make that happen."

While company stock and stock options can also act as a lure, Beebe urges entrepreneurs to seek directors motivated by the intellectual challenge of being part of a growing company--and not by a potential windfall. "Money should not be a prime motivator for board service," he says. "If it is, then you have the wrong person."

JENNIFER PELLET (jpellet5@aol.com) is a freelance writer in New York City specializing in business and finance.

Business Services Industry

Wherefore art thou board member?

Entrepreneur, Oct, 2003 by Jennifer Pellet

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