The Buck Stops With the Board: The Full-Time Job Of A Company Director

by Mark Friedman  on Monday, Jul. 2, 2012 12:00 am  

A wave of new regulations is making board services more of a full-time proposition. (Photo by Shutterstock)

Still, the board is responsible for the company, said Jay Lorsch, a professor at Harvard Business School who studies corporate boards and teaches a course for board members of publicly traded companies.

“It doesn’t mean, as a practical matter, they can do everything,” he said. “[But] they’re supposed to be in charge of the whole operation.”

Getting Picked

The typical process of being named to a company board goes like this, Lorsch said:

The board nominates potential members and the shareholders then vote on those nominations. A board member might personally know the nominee or at least know of his or her reputation.

But some people find their way onto boards by a more circuitous route. For example, Dennis Foster of Cle Elum, Wash., landed on the board of Windstream Corp. of Little Rock after a series of transactions. Foster was the CEO of 360º Communications Co., which Alltel Corp. of Little Rock bought in 1998. That put him on the board of Alltel, and when Alltel spun off Windstream in 2005, he was placed on its board, where he remains.

“I think being a CEO of a company is good preparation,” Foster said. “You’ve gone through the different chairs and jobs to be a CEO and had a good amount of experience.”

In some cases, being named to a board might be a result of family ties to the company. Deltic Timber Corp. of El Dorado put the Rev. Christoph Keller III on the board in 1996 because his uncle, the late Charles Murphy Jr., helped build Murphy Oil of El Dorado, which was the parent company of Deltic before it was spun off as its own company. He is the director of the Institute for Theological Studies at St. Margaret’s in Little Rock.

Keller said he brought his “advanced training in theology, which is something you don’t see on boards.”

That comes in handy for ethical issues, he said. And having family ties to the company is also a plus, giving him a sense of ownership and stewardship of the company, he said.

Time Commitment

Serving on a company’s board is not intended to be a drop-in part-time job.

 

 

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