THE chairman of the board looked at me condescendingly and said, “Don’t let yourself get too excited about that, Richard. We will just have two wait and see. These things are never certain.” I was slightly shocked at his response to my question about a potential large order, particularly since it was included in our sales forecast.
The rest of the board lowered their eyes, seemingly slightly embarrassed. I had been a supporter and shareholder of the business for a long time, and recently it had become apparent that it was not performing well. So I had joined the board and this was my first meeting. It was immediately apparent that one problem was that the chairman considered himself the intelligent dictator and stifled any discussion or debate about important issues.
He would have separate meetings with the chief executive and basically impose his own beliefs and strategy. Consequently the rest of the board, even though quite talented, had very little input and were a wasted resource. At that first meeting, I felt so uncomfortable that I decided not to struggle with the chairman, but to resign and work behind the scenes. Later, with the support of other shareholders, he was removed, or should I say, he “resigned”, allowing the board to be much more effective. Funnily enough, I bumped into him recently at a corporate event and, while he was polite to me, he had an unusual way of expressing his feelings: he assaulted me with a handshake! Luring me in with fairly soft initial contact he suddenly switched to some vice-like mode and by the time my hand escaped my fingers were throbbing like they do on the Flintstones. And all the while he had a smile on his face. I was too surprised to say anything, so no one else was aware of our little episode. Later, on parting, I had to shake hands with him again. This time, I was ready for him and pulled free just in time, which is a curious art I never thought I would need to learn. At least, not with my hands.
Unfortunately, the role of chairman is often underestimated for small companies. Quite often, particularly with those listed on the junior stock market, Aim, the City is quite content to have the token grey-haired ex-army officer with a little bit of accounting experience. They feel that such a person is very good at maintaining good corporate behaviour. Myself, I find such people can be way out of their depth and obsessed with minutia. I feel far more comfortable having someone with genuine industry or business experience. And I’m also a big fan of the chair having some skin in the game. I get nervous when any key executive is reluctant to take at least some of their pay or bonus in company shares or options. There are far too many professional part-time directors, earning a tidy living by just turning up at meetings. To me, ineffective boards are more of a worry than the odd crushing handshake.
Richard Farleigh has operated as a business angel for many years, backing more early-stage companies than anyone else in the UK.