OPERATOR’S MANUAL
Why the Hell Does My Board Act Like That?
The tension between CEOs and their boards is real, but it doesn’t have to be fatal
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The phone rang at the appointed hour. My client, a software company CEO, was calling for his regular session. I picked up the phone:
“Hello”
“Why the hell does my board act like that?”
“Good morning, James,” I answered, and we both laughed.
We talked through the upcoming financing. Some investors — folks who came into the company only in its last round — were already jockeying around terms and prices of the upcoming round. Some of the other directors — investors who’d been with the company since the beginning — were also beginning to draw a hard line around terms they would find acceptable.
In a sense, while they were all directors, as investors, they were beginning to play a game of chicken with the company’s financing — each holding fast to a position deemed best for the shareholders they represent, and yet, as the negotiations would tick on, the company’s ability to raise the needed funds could be jeopardized.
After the session, I asked if I could quote him.
“Sure,” he wrote. “Just let me know if I ever end up there with an actual video recording of me calling [the board member] a ‘fuckhead.’ It’s not that I’d be bothered by that. It’s just that I’d want to make sure I sent the link to all my friends.”
A year ago, I was sitting in the CEO’s office at a company on whose board I served. The recently elected chair and the CEO were screaming at each other, and, as usual, I found myself trying to meditate.
What is it that makes the relationship between board members, investors, and management so tricky?
“What you don’t understand,” said the chair, rising from his chair and trying to tower over the seated CEO, “is that you’re here,” and he held out his right hand, palm down, “and the board is here,” and he moved his left hand on top of the right, again palm down, “and I’m here,” and he placed his right hand over the left.
