When to fold 'em: there are times when the best thing a director can do is stay out of the way ... or take a hike.

• Author: Sutton, Gary
• Position: SUTTON'S LAWS

TOO MANY DIRECTORS stay too long.

I'm into a second three-year term on a public board, and will not stand for re-election. While Ernst & Young and the SEC say I'm an outsider, I disagree. After six years, I feel like an insider, regardless of legal definitions, and it's healthier if somebody with a fresh set of eyeballs and apprehensions steps up.

How's the business doing? When I joined, this outfit was private, had missed a couple payrolls, and was losing money. Today it's way beyond a billion-dollar market cap and sits atop hundreds of millions in cash with zero debt. Its share of market is growing. The market itself is growing. Earnings go up 25% every quarter and the cash beats that. Why leave?

Maybe somebody new will spot a potential problem that I can't see, being so relaxed by quarter after quarter of double-digit growth, year after year. And there's another reason. It gets boring.

There are times and situations when the best thing a director can do is stay out of the way--not out of touch but observant, questioning yet passive. Any director who becomes so thrilled by great performance that he or she finds ways to spend even more time getting involved is a bad director, one who needs more success elsewhere. Verify results, sure. Meddle, not.

This business sailed through SOX without a hitch, files early, and has been ranked as a top company (under some criteria) by every major business publication. So it's time I leave and let someone new ask their dumb questions, since once in a while those dumb questions uncover something fundamentally wrong.

I'm leaving another board at the same time, but that one's private and the reasons are different. It's a startup, almost reaching a positive cash flow, and has a unique technology that...