Be a Corporate Director Without Undue Risks

If you are a corporate director of a large, middle-sized or tiny corporation, you have serious personal liability.
In order to reduce the potential disaster, follow rules which should become second-nature to you. Even if your are on the board of a tiny family business, you still don't avoid legal and financial disaster. Plaintiffs can pierce the "corporate veil" to get at you personally.

What general complaints beset a corporate director?

  • Environmentalism problems of corporation are being disregarded.
  • The board allows the CEO unconscionable income.
  • Too much executive income is permitted by the board.
  • The board undertakes too little of its rightful legal responsibility.
  • Individual directors don't own enough company stock.
  • Directors are too cozy with management or have family/business links to company.
  • Not enough outsiders are on the board.
Potential personal risks of a corporate director
If you are the director of a public corporation take a look at your stockholder list. Each and every name on it can be a potential lawsuit that can ruin your reputation and deplete your pocketbook. The company doesn't even have to be publicly owned. The suit can come from a government agency or by customers of the company.

Furthermore, insurance is not the solution. Your company may not be large enough to buy it. But even if you do have insurance, it will not cover you against alleged fraud or unethical behavior. Or anti-trust and SEC charges. Nor will it cover you from alleged slander and libel that you had had no idea you were committing.

Further problems if company is publicly owned
Wall Street analysts micro-manage the value of your company's stock. Especially when the vast majority have never had any real business experience that would permit them to operate a push cart sensibly?

Directorship UPDATES

  • Be well-prepared in accordance with assignments and questions to be asked.
  • Have time to visit company plants, offices and stores of company.
  • You can offset the way Wall Street analysts will try to micro-manage your business.