Warren Buffett’s ‘10 Commandments’ for Board Leaders

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Warren Buffett is perhaps the most recognized name in the history of American corporate governance. As the leader of Berkshire Hathaway, a multinational conglomerate holding company, Buffett has become one of the most accomplished businesspersons of all time. Because of his immense success, Buffett’s advice carries with it great weight and authority. He has authored several books and publications and is known among journalists for his quotable quips and reasonable advice for investors.

Recently, a George Washington University professor named Lawrence Cunningham compiled a list of Buffett’s most important guidelines for corporate directors, which was published in the latest edition of NACD’s Directorship magazine. You can read a condensed and edited version of that article here. These “ten commandments” for business leaders, as Cunningham calls them, are what Buffett cites for his vast amount of boardroom triumphs.
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Understanding the Types of Shareholder Lawsuits

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Boards exist to protect shareholders based on the fiduciary duties of care, loyalty, and good faith. If shareholders feel that those duties have not been met by a board or board member, they can take legal action against them. The “business judgment rule” protects boards and board members from lawsuits for simply making bad choices. As LegalMatch shares, “The business judgment rule requires that courts defer to the board of directors in business matters. The only exception to the business judgment rule is if shareholders can show that the board of directors engaged in fraud, illegal activities, or were grossly negligent while managing the corporation.” In other words, boards are afforded the right to make bad business choices as long as there is evidence they were acting in good faith. If shareholders do believe that the board or a board member has engaged in one of those wrongful practices, they have two options for types of lawsuits: a direct lawsuit (also called shareholder class action lawsuit) or a derivative lawsuit.
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Directorpoint Wins Awards From FinancesOnline

screen-shot-2017-06-28-at-4-23-58-pmFinancesOnline, a popular review platform for software and B2B services, recently published a detailed review of Directorpoint‘s board software product. They highlighted Directorpoint’s ease-of-use, useful features for board productivity, and dedication to security as well as how Directorpoint simplifies the entire board experience.

In addition to this review, Directorpoint is proud to have received two awards of distinction from FinancesOnline: the Great User Experience Award and the Rising Star Award. Furthermore, FinancesOnline reviewed Directorpoint’s mentions across various social media channels in order to measure user satisfaction and were only able to locate positive comments and reviews.

At Directorpoint, we work hard every day to ensure that our users have an outstanding experience using our board software. Our intuitive platform helps launch the boardroom experience into the modern age–while streamlining meeting preparation and overall communication. Many thanks to FinancesOnline for recognizing our efforts!

Taking an Unpopular Stand as a Board Member

Individuality concept, birds on a wire

Disagreement is a natural part of the boardroom process. In fact, it’s an integral element in decision-making. Diversity of thought helps board members analyze their options from varying angles, which ultimately helps them make better choices as a collective. From time to time, however, you may find yourself as the odd man out. First and foremost, don’t worry; it’s OK to take an unpopular stand, but there is a more effective way to way to do it. Here are our suggestions:

  1. Don’t go silent.

For many directors who realize they’ve adopted an unpopular stance, the choice to go silent makes the most sense. While you may believe that you’re being a better group member by bowing out of discussion, you could actually be doing a disservice to your board. Keep in mind that your opinion has equal value in the board setting, and you may be looking at a problem from a truly unique angle that others need to hear.
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Navigating Corporate Bankruptcy on a Board of Directors

Side view of a businessman shading his eyes with his hand looking at falling diagram. Economic and financial crisis. Stock market selloff.

Because board members have a financial duty to their shareholders, the time may come when an insolvent organization must consider the option of bankruptcy in order to protect those investors’ interests. In many states, creditors are also designated as stakeholders and must be considered, too. Depending on the type of bankruptcy that is filed, board members may continue to operate in their directorial positions.

As an organization approaches the position of insolvency, board members must consider the options in front of them. According to the Houston Chronicle, “Conducting a thorough financial review and seeking professional help are now the primary concerns. Directors should avoid resigning because those who quit rather than engage themselves in the bankruptcy proceedings are generally viewed as being in derogation of duty.” In other words, board members shouldn’t jump ship during the company’s moment of greatest need.
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Where Do Boards Go for Training?

board member training

Serving on a board of directors means a lot of learning on the go, but that doesn’t mean there aren’t resources for boards that want to improve. Whether they’re sought out individually or as a team, board member training options can provide directors with even more specialization and confidence in their leadership abilities.

  1. If you’re a first time board member, look for guidance.

Being a first time board member can be an intimidating experience. You’re learning the ins and outs of corporate governance as well as the basics of parliamentary procedure all while guiding an organization. Walking into a director’s role without any formal training isn’t impossible, but it’s not an easy task either. Whether you’re joining a local nonprofit board or the board for a large corporation, there are tools that can help you become better prepared. For nonprofit members, you can easily find free online training courses like the ones at nonprofitready.org. For-profit board members can attend in-person training events with outstanding organizations like the National Association for Corporate Directors, which offers a 3-day course specifically for new directors.
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Directorpoint Gets a New Look!

screen-shot-2017-06-06-at-3-38-02-pmAt Directorpoint, we’re dedicated to providing boards with a software product that will change the way they make decisions for the better. Every day, our hardworking staff strives to give our clients the best experience possible—whether it’s using our intuitive software or receiving support from our outstanding customer service team. We believe part of that great experience also means interacting with an attractive and forward-thinking brand.

That’s why we’ve decided to freshen up the look of the Directorpoint identity!

Don’t worry, though. This doesn’t mean that your familiarity with Directorpoint’s product will change. We’re simply updating our logo and website to ensure that the look and feel of Directorpoint reflects our focus on the future. You’ll still be logging into a product that’s ease-of-use is unparalleled.

In the coming days, Directorpoint’s communications will look a bit different. We hope that you’ll enjoy the aesthetics of our little makeover. We’re really proud to bring you a better and brighter Directorpoint!

The Pros and Cons of Going Public

Going public IPO

If you’re a board member for a large or fast growing company, there may come a time when you and your colleagues will be asked to determine whether that company should “go public.” Investopedia explains, “Going public refers to a private company’s initial public offering (IPO), thus becoming a publicly traded and owned entity. Businesses usually go public to raise capital in hopes of expanding.” Companies that decide to go public are not only faced with enormous opportunities to grow their organization, they also have to deal with the downsides or challenges associated with the transition.

According to a survey by The Next Million, these are some of the major challenges of going public:
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What Is an External Auditor? (And When Do Boards Need One?)

Close-up Of Businessman Checking Invoice With Calculator At Desk

When it comes to reviewing a company’s financial status, every organization needs a good auditor. Auditors cull through in-depth accounting information in order to ensure that the reporting is a true representation of the company’s financial position. Auditors also assess things such as risk in order to help guide organizations to a healthier and more prosperous financial future.

Internal audits happen frequently within an organization. Companies utilize their own hired talent to review the work of others or the overall validity of the company’s financial reporting. As the Association of Certified Fraud Examiners explains it, “The internal audit function helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. The scope of internal auditing is broad and may involve the efficiency of operations, IT controls, the reliability of financial reporting, deterring and detecting fraud, and compliance with laws and regulations.”
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What Should You Do After Every Board Meeting?

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Your latest board meeting has just ended, but that doesn’t mean your responsibilities are over until the next gathering. In fact, there are several tactics that should be employed after every single meeting to ensure that your board is functioning as effectively as possible.

  1. Send a survey.

Send a brief survey after every single meeting. This 3-5 question survey should ask directors to rate their experience of the board meeting. Use this opportunity to determine whether board members feel that the agenda was adequately covered and if they have suggestions for future meetings. It’s important to send the survey shortly after the meeting while the details are still fresh on directors’ minds. (A yearly, more in-depth survey is also a boardroom must.)

  1. Distribute the minutes.

It’s important that board directors can quickly and easily review the meeting minutes for accuracy. Board software simplifies this process in a big way and encourages more involvement from directors. Create a clear process for editing the minutes, so board members can follow the time frame.
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