How Do I Remove a Board Member?

Firing a Board of Directors Member
Firing a Board of Directors Member. Ghislain & Marie David de Lossy/Getty Images

Your board of directors is, next to the top administrative assistants to the executives, the most important group in your business. You have selected a great team of board members, but things change.

Why Would You Want to Remove a Board Member?

You may find yourself in the uncomfortable position of having to remove a director from your board of directors. This circumstance might happen for one of several reasons:

  • The director has a continuing conflict of interest that cannot be reconciled or is failing in his/her fiduciary responsibilities
  • The board member has crossed ethical borders, with potential lawsuits for sexual harassment or fraudulent activities.
  • The director is ineffective, not able to do the job, not participating appropriately in board discussions or committee assignments.
  • The director is not interacting well with others (the kind way of saying that this person is difficult to deal with).

Alternatives for Terminating a Board Member

Some ways to terminate board members include:

Term limits for board members: Most corporations set terms for directors, usually rotating terms, in which one or more directors rotates off the board. A typical arrangement might be for an initial three-year term, with two three-year re-appointments. So, at the end of nine years, the individual must step down from the board.

If the person is a valuable member of the board, a temporary non-board position might be found for a year. If you want to remove the board member, the end of the term might be a time to do this.

Discuss a leave of absence: Sometimes health or other personal concerns can affect a board member's performance.

Some time off to deal with these concerns might solve the problem. In some cases, you may find that the board member is ready to leave, or you may be able to persuade him or her not to come back.

Hold a personal intervention: The most difficult way to remove a director is to have a personal discussion with that individual and suggest that he or she needs to leave the board. The board chairman and the chief executive, and maybe the board attorney might need to be part of that discussion.

As a Last Resort, Consider Impeachment

Your corporation's bylaws should include a method for formally removing a board member for egregious acts, failure to fulfill duties ‚Äčor conflict of interest. The vote to impeach should be by a 2/3 majority.

Consult Your Attorney

Whatever you decide to do about a board member situation, your attorney should be part of the discussion. Having your company attorney in the discussion can avoid additional unpleasantness and possible lawsuits.

Some more advice:

  • Take your time. Rushing the process can cause hurt feelings and more issues later.
  • Choose allies carefully. You will need some allies on the board, in case of a vote. Make sure you know which side everyone is on.
  • Afterwards, make changes carefully. Do you need to replace this board member? Ask the board to consider what can be done differently to avoid this type of issue in future.