Monday, August 16, 2004

How many Boards does a director serve on? Too often the answer is too many!

Forbes has an interesting, albeit short, article that identifies 12 people who are on the boards of five or more S&P 500 firms.

Why might this be a problem? Board Members are supposed to oversee the firm's management and look out for shareholders' interests. Being on several boards can take up much time. As the article reports: "Just showing up takes 180-200 hours a year [per company]--that's just your basic work, not a company crisis.' "

Moreover, there is always the potential conflict of interest issue as well. How so? Suppose that you serve on the board of XYZ and ABC firms. What if XYZ wants to buy out ABC, or enter into a long term agreement with ABC. How can you fairly represent each firm's shareholders?

Serving on multiple boards has been a hot topic in recent years and Forbes is quick to point out that fewer directors are serving on a large number of boards.


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