BusinessPostCorner.com
No Result
View All Result
Thursday, May 22, 2025
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources
BusinessPostCorner.com
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources
No Result
View All Result
BusinessPostCorner.com
No Result
View All Result

Think Twice Before Becoming An Overlapping Board Member

August 17, 2023
in Management
Reading Time: 3 mins read
A A
0
Think Twice Before Becoming An Overlapping Board Member
ShareShareShareShareShare

With overlapping boards, doubling the service doesn’t always mean doubling the fun.

getty

Serving as a corporate director can be fun, rewarding and intellectually stimulating. For the individual board member, it provides an opportunity to leverage expertise and wisdom, and can serve as a useful entree to career-expanding relationships.

And sometimes directors can “double their fun” through simultaneous board service on companies that might share similar interests, strategies or perspectives. This can leverage skill sets, and can also lead to meaningful efficiencies, information flow and coordination between the companies. That’s why the use of such “overlapping board” structures can make a great deal of sense from governance and strategy perspectives.

Except, of course, when it doesn’t. And that’s happening more often than not these days with the dramatically increased level of antitrust enforcement from the Department of Justice (DOJ) and the Federal Trade Commission (FTC).

Under the Biden Administration, these enforcement agencies have been especially aggressive in challenging overlapping directorships when they exist between competing companies. The agencies interpret applicable laws to prohibit these kinds of overlapping directorships because of their potential to harm competition in the shared industry sector. Their specific concerns are with how overlapping directorships can facilitate the exchange of confidential and competitively sensitive information between the allegedly competing companies, with potential harm to consumers.

In fact, over the last two years, the DOJ and FTC have publicly announced several resolutions requiring the unwinding of such board arrangements. Two of these occurred within the last few days, with press releases announcing the elimination of cross directors in two different overlapping board arrangements. One of these arrangements involved companies the FTC claimed to be direct competitors in the production and sale of natural gas in a large natural gas-producing region. The other recent arrangement involved the resignation of two directors who the DOJ alleged served on the boards of two social network companies that connect users, businesses and other neighborhood stakeholders.

The challenge for current and potential directors is one of advance diligence; how best to identify the potential antitrust risk before agreeing to participate in an overlapping board relationship. After all, many of these relationships serve valid and important business reasons, in which the linkage between boards provides substantial commercial benefit.

The key question is whether the companies proposing the overlapping board relationship are likely to be considered competitors by the government. That can be a far more nuanced question than may first meet the eye, as competition can be considered to exist at multiple different levels of a company’s business operations, such as individual product or service lines, research and development, and even the recruitment of employees.

Cross-directorships arrangements are a not-uncommon governance model, and often present themselves as benign and practical in terms of nature and risk. That can lead to the temptation for both potential cross directors, corporate leaders and governance advisors either to miss the issue entirely, to downplay its significance, or to apply their own competitive analysis to particular arrangements, without consulting antitrust experts.

As simple as the concept of competition may seem at the surface, it can be a whole lot more nuanced when viewed through economic and antitrust lenses. And if nothing else, the antitrust laws are complex and their application often depends on case law. A CEO or board member’s evaluation of competition or individual court decisions may not be accurate.

There’s no question that overlapping board arrangements can make a great deal of business sense. There’s also no question that when such arrangements involve competing companies, the federal antitrust enforcement agencies are likely to be interested. And that’s the conundrum for those who have the desire, the capacity, and the skills to serve in these arrangements.

Cross-directorship service opportunities don’t always come with antitrust compliance assurances. Oftentimes, it will be up to the proposed cross director to take the initiative on potential risk by asking corporate counsel-not just an executive or governance advisor. That’s not only a fair and legitimate question to ask, it’s also the smart one.

Because while there’s some truth to the old saw about “all publicity is good publicity,” it doesn’t necessarily apply to press releases from the antitrust enforcement agencies.

Michael Peregrine thanks his partner, Stephen Wu, for his assistance in preparing this post.

Credit: Source link

ShareTweetSendPinShare
Previous Post

Iowa school used ChatGPT to ban 19 library books

Next Post

Tax Fraud Blotter: Enough to give you a headache

Next Post
Tax Fraud Blotter: Enough to give you a headache

Tax Fraud Blotter: Enough to give you a headache

At Google I/O, Gemini Diffusion’s speed and coding skills hint at the next phase of the AI model wars

At Google I/O, Gemini Diffusion’s speed and coding skills hint at the next phase of the AI model wars

May 21, 2025
South Korea FSC Implements Strict KYC for Crypto Exchanges, Allows Selling of Crypto From June

South Korea FSC Implements Strict KYC for Crypto Exchanges, Allows Selling of Crypto From June

May 21, 2025
Jamie Dimon plays down successor talk even as three leading candidates emerge to be next JPMorgan CEO

Jamie Dimon plays down successor talk even as three leading candidates emerge to be next JPMorgan CEO

May 20, 2025
Ripple CEO Slams Sen. Lummis After Canceled Talks – B Circle Bid Looms

Ripple CEO Slams Sen. Lummis After Canceled Talks – $5B Circle Bid Looms

May 20, 2025
The content demand engine that every business needs but no one uses, from Morning Brew’s CEO

The content demand engine that every business needs but no one uses, from Morning Brew’s CEO

May 21, 2025
I-9 Compliance: What You Need to Know in 2025

I-9 Compliance: What You Need to Know in 2025

May 16, 2025
BusinessPostCorner.com

BusinessPostCorner.com is an online news portal that aims to share the latest news about following topics: Accounting, Tax, Business, Finance, Crypto, Management, Human resources and Marketing. Feel free to get in touch with us!

Recent News

Ethereum Rally Is Just Getting Started – Could a K Breakout Be Closer Than We Realize?

Ethereum Rally Is Just Getting Started – Could a $10K Breakout Be Closer Than We Realize?

May 22, 2025
Stocks swing to a flat close as bond yields spike on U.S. debt worries

Stocks swing to a flat close as bond yields spike on U.S. debt worries

May 22, 2025

Our Newsletter!

Loading
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2023 businesspostcorner.com - All Rights Reserved!

No Result
View All Result
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources

© 2023 businesspostcorner.com - All Rights Reserved!