Optimum number of board directors?


2

I'm in the process of incorporating a C corp in Delaware and my lawyer is asking me how many directors I want to appoint. He suggests 3 is a good number. Based on some of your experiences, what numbers have you seen out there? Can you suggest advantages v. disadvantages of one number over another?

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asked Feb 23 '10 at 08:32
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Newyuppie
441 points

3 Answers


6

Three is the magic number. You want it to be small, since you want the fewest obstacles to making a decision, and you want it to be an odd number so that there are no ties. Right now, you'll want the board members to be "yes men" who will vote the way you ask them to. This makes meetings shorter and everything easier as you are starting out. Later, if you get funding, your VC will take one of the board seats, you'll have one, and your VC will want to approve the third seat (usually some third party that you both respect).

Remember that your board's purpose is to make decisions, not to give you advice. You should create a separate advisory board with as many people as you want on it, but they won't sit on your official board. Often, you will ask your advisory board members for their thoughts on an issue and implement their advice without ever convening an official board meeting. But when you do need a board meeting (say, to grant equity to an early employee), you'll want the official board to "rubber stamp" your decision.

answered Feb 23 '10 at 12:05
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Michael Trafton
3,141 points

2

In general, it's best to have an odd number of directors. That way, any deadlocks can be broken.

In terms of total number, 5-7 is what I am used to seeing. Three is fine to start out with but as you build the company, you want to have a diverse set of people that can help you out and three is just not enough.

The more board members you have, the harder it can be to get consensus so that's a disadvantage over a lower number.

answered Feb 23 '10 at 08:55
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Jarie Bolander
11,421 points

1

Odd # is the right answer.

We went with five. Two selected by founders, two selected by investors, and the fifth selected by the first four.

So far, both the founders and investors like this.

answered Feb 23 '10 at 13:45
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Warren E. Hart
2,181 points

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