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Even outside formal meetings board members typically use their network (connections or board posts in other companies) to push the company's agenda. Which can l
by johannes1234321 6y ago
Even outside formal meetings board members typically use their network (connections or board posts in other companies) to push the company's agenda. Which can lead to business deals or have effect on law or whatever.
- shubb 6y agoThis makes a lot of sense now I think about it, but it does seem like institutionalized corruption? "We have 300K - shall we spend it improving our product or hiring an NED who happens to be VP at a big target enterprise customer?"
- johannes1234321 6y agoWhen (ex-)politicians take a board seat corruption certainly is an issue. (I don't say that it's always a problem, but still a common issue) Within the economy itself board seats are given by the shareholders. Typically to tie investments together. If a fund is investing in company A and B they certainly want cooperation between A and B and place board members with such relations in there. This comes problematic if a strong shareholder uses this to shuffle revenue away from other shareholders into another company where they have a stronger majority (say investment fund F owns 50% of A and 90% of B and then fills A's board in a way to encourage the A company to buy as much consulting from B as possible) There (similar to democracy) minority rights and supervision by authorities like SEC is important. (While there is a school of thought, which argues that the minority shareholders simply should leave and the free market will handle this as an overpaying A won't survive in the market)