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CEOs are almost always on the board. So are founders. They own a huge stake of the company. Board representation is how their interests as owners are maintaine
by harryh 10y ago
CEOs are almost always on the board.
So are founders. They own a huge stake of the company. Board representation is how their interests as owners are maintained.
Why would that be sketchy?
- Retric 10y agoThe primary value of boards is a sanity check for the top layer of management. As an investor you want a board looking after the investors interests. You can find plenty of company's that where gutted by overly permissive boards handing out ridiculous compensation packages for example. PS: You can compare the performance of public companies with various board makeups, it's not a meaningless topic.
- harryh 10y agoThe purpose of a board is to look out for owner's interests. That is not exactly the same thing as investor's interests. That is why boards aren't made up of just investors.
- Retric 10y agoI never said that was their purpose, just what you want as an investor. You can have a board focusing on balancing public good with profit, if that's what the companies charter says. But, that's probably not a great investment.
- harryh 10y agoI can certainly see how investors might only want investors on the board! Screw the other owners! That would be sketchy!
- Retric 10y agoYou can find stations that break down like this: CEO and CXX of company A is on company B's board. CEO and CXX of company B is on company C's board. CEO and CXX of company C is on company A's board. Now, no direct conflict of interest, but you can see the issue. Especially when CEO of company A also sit's on company A's board. So, yea on it's own the co-founders on the board is not a big thing. But, looking into the board should be part of due diligence. PS: You can also see issues when VC's make up the majority of the board, but that's less common with public companies. (Let's buy up little company X that my firm invested in.)