When to walk away: and, yes, when to accept a board invitation.

• Author: Sutton, Gary
• Position: ENDNOTE

TOO MANY FOLKS ask how they can get on a board. That proves they're disqualified. A board seat is work. It's not so prestigious as often assumed. And even with D&O insurance, there are personal liabilities if your carrier decides you were negligent when something goes wrong and you get that opportunity to meet the plaintiff's lawyer.

Sooner or later, something always goes wrong.

So let's talk first about how to leave a board.

I'm expert. This year I'm departing four boards and sleeping better. I remain on five boards, so I still roll out of bed at dark o'clock many mornings.

You should leave any board if your company:

* Underperformed competitors for five years in a row.

* Is in danger of failure and you disagree with the approved solution.

* Goes ahead with a "bet the business" acquisition which you fought.

* Evolved into an area that you no longer understand.

How to leave depends on which of these occurred.

If competitors did better than your business in each of the last five years, tell the head of the nominating committee that you will not stand for re-election six months ahead of time. This gives them time to find and recruit a replacement, if they choose. It also gets you away from that embarrassment. And you should be embarrassed.

If the outfit morphed into something that's far outside your experience, again, tell the nominating committee to include you out of the nominated list six months early. This happens and there's no embarrassment. Let a better-versed director replace you and contribute.

[ILLUSTRATION OMITTED]

You should quit immediately if the other directors approved a huge and strategic change that you strongly oppose. Should their dramatic change succeed, you'd be a diminished voice in the boardroom forever. And if it doesn't work, there's a chance the creditors will invite you back onto a new board, if they attempt to salvage it.

Ditto for a survival plan that you fought. This assumes you proposed some kind of "Plan B," as you're obligated to, instead of just objecting to their plan. Besides, if bankruptcy is a reasonable outcome, any public company where you serve as an executive or director may be obligated to report that financial black spot behind your name in their proxy for years. That's a nice little public resume line, eh?

After you leave, stay out of touch. It's unavoidable that you'll run into executives or directors and chat from time to time. Talk sports. Discuss the weather changes. Politics are okay. But...