Comments on: Board of Directors: The Chairman

By: Jeff Clavier

Jeff Clavier — Fri, 14 Jul 2006 19:33:20 +0000

If the Chairman is an independent director, and puts in the time commitment that it takes to truly support the CEO and the team (one day a week-ish ?), then yes that contribution can be extremely positive.

By: Max Bleyleben

Max Bleyleben — Fri, 14 Jul 2006 13:49:14 +0000

Good description of how a chairman can help, but I confess that (at least in Europe) I’ve rarely seen a chairman that sufficiently disciplined and process-oriented to run a board as effectively as you describe. So the actual benefits of having a chairman, especially in growth companies, are typically less obvious. Perhaps we need to wait for a larger class of experienced Directors/chairmen.

By: Tom Evslin

Tom Evslin — Fri, 14 Jul 2006 06:06:46 +0000

In most of my startups, I’ve had both roles.

Nevertheless, I agree with you guys: once there are any outside investors, the role should be split (If I funded my own startup, will keep both roles until outside money comes in).

If possible, independent investor or advisor capitalist should be the chairman. VCs have a responsibility to their LPs which may conflict with chairman’s role.

By: Rob

Rob — Fri, 14 Jul 2006 06:05:56 +0000

Garett, i completely agree with Dave’s comment above.

The ideal Chair candidate is an independent director, although i have worked with a couple of great chairman that were from the VC ranks. They happened to be very seasoned and had the time to devote to the job. You can’t be a good Chair and be on a bunch of boards, unless everything is running great and there aren’t big challenges, which doesn’t happen very often, even in great companies.

More then any other quality, they could put themselves above the fray and work for the best interests of all the different constituencies. This takes talent, maturity and considerable innerpersonal skill.

By: Garett Wiley

Garett Wiley — Fri, 14 Jul 2006 05:06:08 +0000

I confess that I don’t find this idea controversial at all (I am an entrepreneur.) I think it would be interesting to generate some commentary on who, exactly, should be Chairman in an early stage company. Clearly, Sarbanes-Oxley and other developments are leading early stage companies to separate the Chairmain and CEO role. A good practice, certainly, for a variety of functional and corporate governance reasons as outlined in your post. However, more importantly, should the Chairmain role go to a venture investor or to one of the independent directors? Why and why not?

By: Lucinda

Lucinda — Fri, 14 Jul 2006 04:06:22 +0000

awesome, incredibly useful post. in my last company i had a relationship with my chairman that was similar to what you describe, although without the formality. it worked extraordiarly well and probaly would have been even better with the structure you define here.
i am now chairman for another start-up and i’ll be talking with the ceo about using this approach. i wish i’d had this kind of structure the first time i was a ceo – instead i had the founder as chairman, which was really in title only.
thanks!

By: Dave Jilk

Dave Jilk — Fri, 14 Jul 2006 03:55:47 +0000

I’d claim that the Chairman is ideally an independent director, rather than a major investor. Given that the purpose of the role is to facilitate the board’s activities, having a Chairman who may have a separate agenda from the CEO will make the board and board meetings even more political than they need to be. Particularly in a VC-funded company with more than one VC, I would think it would almost have to be an independent.

By: Peter Cranstone

Peter Cranstone — Thu, 13 Jul 2006 23:11:36 +0000

Excellent post. I had this situation at my last startup. It worked very well up to a point. I also look at part of the job of the entire Board is to help make the CEO successful, however he shouldn’t interfer in the strategic direction of the company. That’s the CEO’s job.

By: Bjorn Ruwald

Bjorn Ruwald — Thu, 13 Jul 2006 22:16:00 +0000

Separating the Chairman of the BoD is a very good idea, in fact, I think it is a necessity to good corporate governance.

In Denmark (and–as far as I know–most EU countries) is it illegal to be both the CEO and the Chairman of the same company–these two roles are required to be separated by law. The reason for this is, of course, to prevent conflicts of interests and other types of abuse, especially of the shareholders of the company.