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Follow-on question: do the shareholders usually have the power to redraw the board? Say you own 60% of the company but only 1 of 3 board seats -- could you over

Follow-on question: do the shareholders usually have the power to redraw the board? Say you own 60% of the company but only 1 of 3 board seats -- could you overrule the board members or fire them if you felt it necessary? Does the board ultimately answer to the shareholders? I imagine that this equity and board seat distribution could easily happen with a solo founder.

cfield 11y ago
Yes, the board is elected by the stockholders. Absent an alternative structure, default corporate laws provide for the directors of a company with only one class of common stock to be elected by majority vote of the stockholders. However, there are all sorts of alternative structures that can alter this default. For example, it is common in a VC-backed company that preferred stockholders are given the right to designate a specified number of board members. The right is usually laid out in the company's certificate of incorporation or a voting agreement among the stockholders. Source: I am a startup attorney.
- wodzu 11y ago
  Do they get paid by shares or salary? I mean is it a viable alternative to having a "job"? I see many people around sitting on multiple boards of companies.
  - lmm 11y ago
    It's not a full-time job by any means. It's often semi-retired people in their '50s or so.
  - dudurocha 11y ago
    If you are a investor in the company you usally don't get paid, just your trip expenses. If you are an external member, somebody strategic to the company, you get paid either by meeting or some shares. Usually all board members in public companies are paid with cash.
solve 11y ago
No. VCs always get preemption rights, and always refuse to give up their board seats once they get them. Replying to the OP a few threads up: > I assume events (key hires, acquisitions, investments) are brought to the board for a vote, and need to pass with a majority. There's an extremely common founder misconception that board seats are required for investors to be able to have a say in whether acquisitions and investments happen. But it's not true! The normal pre-emption rights that every investor gets are what's used for these cases. Board seats are not required for this and unrelated to this.

cfield 11y ago

Yes, the board is elected by the stockholders. Absent an alternative structure, default corporate laws provide for the directors of a company with only one class of common stock to be elected by majority vote of the stockholders. However, there are all sorts of alternative structures that can alter this default. For example, it is common in a VC-backed company that preferred stockholders are given the right to designate a specified number of board members. The right is usually laid out in the company's certificate of incorporation or a voting agreement among the stockholders. Source: I am a startup attorney.

wodzu 11y ago
Do they get paid by shares or salary? I mean is it a viable alternative to having a "job"? I see many people around sitting on multiple boards of companies.
- lmm 11y ago
  It's not a full-time job by any means. It's often semi-retired people in their '50s or so.
- dudurocha 11y ago
  If you are a investor in the company you usally don't get paid, just your trip expenses. If you are an external member, somebody strategic to the company, you get paid either by meeting or some shares. Usually all board members in public companies are paid with cash.

solve 11y ago

No. VCs always get preemption rights, and always refuse to give up their board seats once they get them. Replying to the OP a few threads up: > I assume events (key hires, acquisitions, investments) are brought to the board for a vote, and need to pass with a majority. There's an extremely common founder misconception that board seats are required for investors to be able to have a say in whether acquisitions and investments happen. But it's not true! The normal pre-emption rights that every investor gets are what's used for these cases. Board seats are not required for this and unrelated to this.