There hasn’t been any debate over “what is the appropriate board size” for years – not since companies that had too many directors (eg. 20) reduced their board size, primarily through attrition. Many boards trimmed down to a range of 9-13 directors (see our “Board Composition” Practice Area).
I found it interesting that Eddie Bauer has announced that it’s reducing the size of its board from ten to seven. This change is primarily a cost-cutting measure as the company is also cutting the compensation of its remaining directors. On its face, this makes sense when you’re cutting employees and undertaking other cost-savings measures.
On the other hand, boards are under pressure to be more actively involved in overseeing the company and many have enhanced committee duties. In fact, I imagine that many boards will be adding members to better manage risk and perhaps be needed to sit on new risk management committees. So I’m not suggesting that cutting board compensation is not a good idea, but I do wonder whether cutting the board’s size is appropriate.
Tune in March 4th for our webcast – “How Boards Should Manage Risk” – and learn more about one of the hottest topics out there today.
Dividend Reduction or Elimination
In this podcast, Ben Preston of Womble Carlyle explains what actions companies should consider when reducing/eliminating their dividends, including:
– What factors should management and the board consider before cutting a dividend?
– What board actions, including resolutions, are required to cut a dividend?
– What type of other shareholder or employee communications may be necessary?
Khuzami Named Enforcement Chief – and a Corp Fin Director Poll
Yesterday, the SEC named former federal prosecutor Robert Khuzami as the new Director of the Division of Enforcement as previously reported.
Next up? A new Director of Corporation Finance…please cast your vote for who’d you like to see in that position (here is a video for those not familiar with the “Man from Glad”):
– Broc Romanek