Determining Executive Compensation:
The salary and bonus for the CEO (and COO) should be reviewed by a committee (or the entire Board).
Setting Goals: The Board should
help the firm set specific targets and goals and make sure the firm stays committed to achieving these by tracking specific
milestones. The Board has a fiduciary responsibility to the shareholders.
Navigating the External Environment:
The Board should provide insight on the external environment within which the firm operates. This insight can include identification
of senior hires, acquisition targets, new customers, and eventual exit strategies. (Note: not Marketing!).
Succession Planning: The Board
should play an active role in planning for succession of key senior managers, especially the CEO and COO. Private Company
Board should discuss exit strategies for the founder.
Providing a Reality Check for the
CEO: The most important role of a Board is to provide honest feedback to the CEO on corporate strategy, leadership, and
management. A strategy-focused organization will achieve success! Success is not only financial metrics, but includes community,
· Strategy/Vision is the CEO’s Job, but the Board Reviews/Discusses
· Board should have “hire and fire” CEO responsibility
(not my idea)
· Tough times show how good a Board is
· Board members should be fans of the business
· Put hard issues on the table, but don’t toss a bomb
into the meeting
· Pay the independent Board members with cash/stock options
to align their interest to the company’s interest (e.g. usual range is 0.25 to 0.50% of available stock – e.g.
w/500,000 shares, pay with options for 1,250 – 2,500 shares)
· Treat Board with Respect (e.g. always have an agenda in
advance, pick up lunch, send car, pay parking, have someone meet them, etc.)
website is www.nacdonline.org for the National Association of
& McNichols, Inc. – P.O. Box 2226 – Middleburg, VA
20117 – (703) 477-7158