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What it’s like to be on the board of a Fortune 500 company

jayshah.me

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Re: What it’s like to be on the board of a Fortune 500 company

#21

Post by jldugger »

ilamont wrote: post #2

And if a board member isn’t performing well, we get rid of them. I’ve been on boards where the SEC is in there. I’ve been on boards where the Department of Justice is involved. You don’t want that. You destroy companies when you do that. You destroy shareholder value. So what you try to do as board is make sure people are above board. You guard against anything that hurts the companies from an outside perspective. It…

NPR's Planet Money looked at this topic a few years ago: https://www.npr.org/sections/money/2014/12/30/374011462/epis...

Their finding was that the board of directors is a difficult thing to change from the outside -- in typical corporate bylaws, the board typically approves who's on or not on the ballot. It seems likely, given the number of people on multiple boards, that there's a mutual back-scratching system in place.

And even if it's just one board a retired accountant serves on, the salary averages around $250k. It sounds like a cushy gig, and anyone who rocks the boat risks the CEO voting their shares (and the company's) to fire that director.

Re: What it’s like to be on the board of a Fortune 500 company

#22

Post by rb808 »

TheAdamAndChe wrote: post #17
chiph wrote: post #15

What I didn't hear was anything about the customers. You may have heard the old saying about relationships: "If Momma ain't happy - ain't nobody happy". I think the same thing goes for a firm's relationship with their customers. If the customer isn't happy, there's no repeat sales and no positive word-of-mouth advertising, leading to decreased sales and revenue, leading to reduced shareholder value.

They didn't mention customer satisfaction because it's not always a priority, shareholder value is. A fantastic example of this is Comcast. It is regularly voted America's most hated corporation in the country, yet because of its unique leverage in the areas that it operates, this poor customer satisfaction rating just doesn't matter. They're still able to satisfy the shareholders.

Incidentally I love comcast. 150mbps cable, cheap price, no outages, free hbo, X1 remote rocks. Pricing is a bit annoying (paying extra for HD) but is a great product. Just thought I'd mention it because it gets too much hate.

Re: What it’s like to be on the board of a Fortune 500 company

#24

Post by Animats »

This guy must have been on the boards of companies that weren't in too much trouble. When the ship is sinking, being a director can become a full time job for a while. If the ship sinks without heavy board involvement trying to prevent it, the board members were negligent.

Re: What it’s like to be on the board of a Fortune 500 company

#25

Post by forapurpose »

function_seven wrote: post #14
wiz21c wrote: post #10

>>> Well the first responsibility is to ensure the company is being run in the best interest of shareholders Do me a favor and tell me that best interests are something else than money, please...

I hope it isn't. My 401(k) won't provide for my retirement using Good Feelings. The best interest of the shareholders is running a profitable enterprise.

Shareholders live in the world that the company creates. For example if the company contributes to global warming, it doesn't affect the stock price but it does affect the shareholders.

Money and markets are great tools, but they aren't gods; they aren't the answer to all questions.

Re: What it’s like to be on the board of a Fortune 500 company

#26

Post by ghostbrainalpha »

rb808 wrote: post #22
TheAdamAndChe wrote: post #17

Earlier quoted context omitted.

They didn't mention customer satisfaction because it's not always a priority, shareholder value is. A fantastic example of this is Comcast. It is regularly voted America's most hated corporation in the country, yet because of its unique leverage in the areas that it operates, this poor customer satisfaction rating just doesn't matter. They're still able to satisfy the shareholders.

Incidentally I love comcast. 150mbps cable, cheap price, no outages, free hbo, X1 remote rocks. Pricing is a bit annoying (paying extra for HD) but is a great product. Just thought I'd mention it because it gets too much hate.

Never move. You are on a magical island... or the eye of the storm.

Re: What it’s like to be on the board of a Fortune 500 company

#27

Post by whack »

chiph wrote: post #15

What I didn't hear was anything about the customers. You may have heard the old saying about relationships: "If Momma ain't happy - ain't nobody happy". I think the same thing goes for a firm's relationship with their customers. If the customer isn't happy, there's no repeat sales and no positive word-of-mouth advertising, leading to decreased sales and revenue, leading to reduced shareholder value.

You can say the same thing about 10 different factors.

"If the employees aren't happy, nothing is going to get done."

"If your suppliers aren't happy, you aren't going to have anything to build your product with"

"If the government isn't happy, they are going to shut you down"

In the abstract, they are all important. Practically, if you try to focus on everything at once, you aren't going to get anything done. One of the most important skills in any job is figuring out which areas to focus on, and the answer to this is always going to differ depending on your specific circumstances.

Re: What it’s like to be on the board of a Fortune 500 company

#28

Post by enraged_camel »

whack wrote: post #27
chiph wrote: post #15

What I didn't hear was anything about the customers. You may have heard the old saying about relationships: "If Momma ain't happy - ain't nobody happy". I think the same thing goes for a firm's relationship with their customers. If the customer isn't happy, there's no repeat sales and no positive word-of-mouth advertising, leading to decreased sales and revenue, leading to reduced shareholder value.

You can say the same thing about 10 different factors. "If the employees aren't happy, nothing is going to get done." "If your suppliers aren't happy, you aren't going to have anything to build your product with" "If the government isn't happy, they are going to shut you down" In the abstract, they are all important. Practically, if you try to focus on everything at once, you aren't going to get anything done. One of…

No, not really. Your source of revenue is by far the most important thing to focus on. If you treat your clients well, you can charge a premium, and the additional revenue means you can pay your employees more and have more leverage when talking to suppliers.

Re: What it’s like to be on the board of a Fortune 500 company

#29

Post by forapurpose »

The story depicts a lovely bohemenie and spirit of agreeableness; it sounds like it's almost enforced:

> You need to have a cohesive thought process to move the company forward.

> if a board member isn’t performing well, we get rid of them

> [I’ve] sat on boards with some amazing people who have done some amazing things in the world.

What a wonderful club. It doesn't sound like one conducive to dissenting opinions and disagreement. With so much at stake - so many jobs, so much money, and such an impact on communities - it seems that harmony would take a back seat to asking difficult, challenging, critical questions. The interviewee doesn't mention any of that happening. Also:

> Each year, all of our names are put up for voting by the shareholders. Shareholders say yes or no and vote [to keep the director]. If the shareholders vote yes, we have automatically put our name in for resignation and the board determines if they are going to accept [the resignation].

Shareholders almost never vote no. Effectively, the system above means that the board determines its own members. Again, the board member who challenges consensus or engages in threatening oversight might not last long (or be invited to join another board).

It confirms other things I've read about boards, but certainly someone knows more than I do ...

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