Handbook for Directors of Financial Institutions
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Handbook for Directors of Financial Institutions

Edited by Benton E. Gup

Offers advice from existing directors, scholars and regulators about what good directors need to know. The Handbook for Directors of Financial Institutions offers the practitioner and the scholar a comprehensive guide to what it takes to survive and thrive as a director of a financial institution. The authors comprise current directors of banks, credit unions, insurance companies and other organizations, bank regulators, lawyers and academics. They provide unique insights and advice about corporate social responsibility, legal risks, starting a new bank, D & O insurance, sub prime lending, Islamic banking, and other timely issues.
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Chapter 8: Advice for New Directors

Benton E. Gup, David L. Bickelhaupt and Irv Burling


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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