Basically, Bob did well in establishing advisory board, including CEO, COO, and financial expertise and Marketing expertise, who have the family-owned background or service industry background. Also, there was one female member who would be able to help the company better understand the female customers or help the female family member to involve in the family business. With the development of company, Bob added new members to the board according to the business needs. This is another good point.
But it seems not a systematized situation. Perhaps several things could be improved. One is that Bob should add an attorney to the board to deal with legal issues to avoid potential risks if there was no law department (From the case, we don’t know whether there was or not).Second thing is that there wasn’t criterion or rules to select or change members of board. Also, there weren’t specific document of rules, terms or duties. It may be work in short –term. However, in long-term run, criterion and rules should be needed. * Who should set dividends in order to avoid conflicts of interest? Create a specific policy and method of making dividend decisions. Should non-employee family members be represented in this process?
The company’s board of directors is responsible for determining a dividend policy and declaring dividends. In this case, Bob and Rex should decide dividends, but they should get advice from financial planner and advisory board and communicate well with family members.
Method of making dividend decisions may include following key points: * One mission statement makes family members know clear about mission. Business, core value, objective, rules of governance and family involvement should be known to all family members. * One specific strategic plan helps family members understand what’s company’s long-term goal and short-term goal; how company...