Edited by Benton E. Gup
Benton E. Gup, David L. Bickelhaupt, and Irv Burling This chapter consists of three parts. Part 1, by Benton Gup, provides an overview of the composition of boards of directors. It also contains the results of a survey of directors and oﬃcers that asked for their advice for new directors. Part 2, by David L. Bickelhaupt, presents ten things that he learned while serving on various boards. In Part 3, Irv Burling discusses how to create a sustainable future in the ﬁnancial services business. Part 1 An overview of boards of directors, and the results of a survey Benton E. Gup Board size and insiders The size and composition of boards of directors has changed over time. A study by Lehn et al. (2003) examined the boards of 81 publicly traded nonﬁnancial US ﬁrms that survived over the period 1935 to 2000.1 As shown in Table 8.1, they found that both the average board size and the percentage of insiders has declined over time. ExxonMobil further illustrates the point that board size and composition within a ﬁrm can vary over time. ExxonMobil’s “Board size will be within the limits prescribed by ExxonMobil’s By-Laws, which currently provide that the Board may have no fewer than 10 and no more than 19 members. Normally, the Board intends to have approximately 11 to 13 members with two to three employee directors and nine to ten non-employee directors.”2 In 2007, the board had 12 members including two employee directors (16.7 per...
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