Appointing an employee as a director

[marc777]

OT - Want to appoint a senior employee as a director - they want the kudos and a feeling of involvement with the decision making.

Trouble is, I don't want to have to answer to that employee (who will not OWN the business) to each and every decsion me and my buisness partner want to make. I also don't want to have a formal board meeting everytime we want to shoot the breeze, and i don't want them to see our detailed financial statements.

Is there a way round this?

Any suggestions?

Marc

 

[Howard]

I had a pal who was made a non-executive director of the estate agents he worked for.

That way he could tell everyone in the pub "blah blah , im a director of xxxxxx" but in reality it meant very little.

 

[Benzowner]

OT - Want to appoint a senior employee as a director - they want the kudos and a feeling of involvement with the decision making.

Trouble is, I don't want to have to answer to that employee (who will not OWN the business) to each and every decsion me and my buisness partner want to make. I also don't want to have a formal board meeting everytime we want to shoot the breeze, and i don't want them to see our detailed financial statements.

Is there a way round this?

Any suggestions?

Marc

From you words abobve, you do NOT want to appoint him as a general director, so appoint him as say works director. In that way, he will be involved with the works and the financial aspects of the works, costs etc, but will not be involved with the rest of the operation. I assume you are a limited company so have to send your results to companies house etc so he can get hold of that as anyone else can. He will not own any part of the business unless he purchases shares in that business, which you will need to sell him, so don't. Have a talk to your accountant, he should best be able to advise.

Good luck

Geoff
Company Director involving senior worrying

 

[Satch]

You can call him what you want. e.g Director, Sanitary Cleansing Operations, and give him business cards to that effect but as long as he is not formally appointed as a "Director" in terms of the Companies Act he has no right to attend Board Meetings nor have sight of Financial Statements other than by your invitation. If he is a shareholder things are more difficult.

You may want to point out the personal liabilities and risks he assumes these days by being formally appointed as Director of the Company, Executive or Non Executive.

If he is not a mug he will be seeking Directors Indemnity Insurance from the company as well, which costs. General rule is to keep the Board small as possible.

 

[marc777]

The employee wants their name on the headed paper as a direcor.

No intention of selling shares as this is a recipe of rdisaster in my experience.

The accounts at Companies House say nothing really as we are able to file only a balance sheet with a few notes - not possible to determine profitability of the business from those. Like most owner managed businesses most profits get drawn, and so retained reserves are meaningless.

My problem is therefore someone who wants to be a director on the headed paper, who is not going to get shares (could not afford anyway),

 

[Satch]

Form an operating subsidiary, drop his bit of the business into it and let him be a Director of that and that alone?

 

[C240Sport97]

There is NO requirement for a director of a company to also own shares in that company, UNLESS the Articles of Association of the company says so. You can always change your Articles of Association (by holding an AGM/EGM of the shareholders) to allow the appointment of a non-voting director. Remember however that if he is a 'Director', he will have apparent and ostensible authority to bind the company.

Alternatively, you can appoint him Company Secretary, and list that on the headed paper.

There is also NO requirement for directors' names to be listed in headed paper. So, you could simply delete all director names from headed paper, and then each of you can sign your title as Director of some sort.

 

[scruffy]

I would imagine its rare to find someone who wants to be a director for kudos only and would assume they either want to make their CV look better to move on anyway or they want shares.

We had a similar situation, a sales rep wanted to become sales director, we agreed on an informal title only basis, some time later we discovered he was poaching customers and had been setting his own business up in our time, having sacked him for gross misconduct he duly took us to a tribunal and won. Interestingly there's no written guidelines on what constitutes gross misconduct and the tribunal didn't consider his actions to be so and it cost me 3k (which we sent in 1p pieces).

If we had made him a formal director or given him any shares he could have taken us to the cleaners, so be warned.

S - MD

 

[pammy]

OT - Want to appoint a senior employee as a director - they want the kudos and a feeling of involvement with the decision making.

Trouble is, I don't want to have to answer to that employee (who will not OWN the business) to each and every decsion me and my buisness partner want to make. I also don't want to have a formal board meeting everytime we want to shoot the breeze, and i don't want them to see our detailed financial statements.

Is there a way round this?

Any suggestions?

Marc

So why are you doing this? All this reads that it's this employee calling the shots. You mention what he wants and what you don't want but nothing abot what you actually want.

You mention nothing about him being invaluable to your business etc etc - so I wonder why you're even considering it!

Just an observation

 

[mapleleaf]

my thoughts too Pammy.

 

[Bugblatter]

A company I used to work for dealt with this sort of thing by appointing "Associate Directors". A little extra money, better car and a little more street cred.

If he is a senior employee, then he could well have important information/issues for you to consider so it would probably be a good idea to have occasional meetings anyway.

Just make sure he knows who owns the business.

Also make sure he doesn't get into a position where he can cause trouble by saying things about you to your business partner, or vice versa.

Any other employees likely to get cheesed off if you go ahead?

 

[marc777]

Useful feedback all round - thanks for your input.

Just for clarity - the individual is a valued member of the team. Very senior and very qualified for the job. Just does not want to be an owner, but seriously does want to be a director, and be seen to be a directors from the outside world.

I am happy to put them on the headed paper as an ambassador of the business, and carry on doing the job they do.

Everyone on the team would be happy, no politics in that respect. All round would be a good move, BUT, the trouble is, the rights duties and responsibilities of company directors imply that person has to get involved in the day to day decisions. I want then as a direcotr, but I don't want them involved in that decision making process unless I choose. This is my problem.

There doesn't seem to be an answer.

 

[janner]

The employee wants their name on the headed paper as a direcor.

No intention of selling shares as this is a recipe of rdisaster in my experience.

You could make him Director of Spelling.

(I'll get my coat)

 

[marcos]

The employee wants their name on the headed paper as a direcor.

Why? I had an invaluable member of my staff demand a pay rise well over what everyone was getting because she thought we thought she was invaluable. It backfired after she threatened to leave, we let her go and she now earns nearly 15k a year less and has a crap job. We soon found out that no one is irreplaceable and have appointed someone else in her position who is as good as she was, but better looking , and we pay the new lady 10k a year less than the old cow was getting.
It all works out in the end, just do what you think is best, trust your own judgement and don't lose sleep over it mate, it's not worth it