Board Problems, from the Warren Tapp book ‘Board Basics’

1. Board’s Power to Remove Directors

A board cannot remove a director; only the shareholders or members have the authority to do so.

– If there’s a serious issue with a director, the Chair should meet with them and suggest they resign if the board has lost confidence in them.

2. Problematic Directors

Common issues with directors include:

– Interfering with management or operational matters.

– Disagreeing with every board decision.

– Breaching confidentiality or undermining the board.

3. Problematic Chairs

Sometimes, the Chair can be the issue. For example:

– They let meetings run without structure or agenda.

– They withhold information from the board.

– They are overly critical of individuals in front of others.

Solution: The board must meet with the Chair, express their lack of confidence, and ask for change. However, the board itself does not have the power to remove the Chair.

4. Problematic CEOs

A CEO who refuses to follow board directions or meet KPIs is another challenge.

Solution: This is easier to resolve, as the board has the power to terminate the CEO’s contract (after obtaining legal advice).

5. Complacency on the Board

Over time, boards can become complacent, especially when:

– The same individuals have been serving for years.

– Directors form a ‘club’ where they agree to ignore key issues.

– There’s a prevailing attitude of ‘if it’s not broken, don’t fix it.’

This reduces the level of scrutiny and effectiveness of the board.

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