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Feedback: Putting a Price Tag on the Board

Ernesto Poza's column "A Burst of Fresh Air" (Oct./Nov. 2007) intrigued me. I run my family business, which is owned largely by my father. As I look to establish our next board, I wonder if there is a rule of thumb for compensation to board members? I expect that the board will meet quarterly.


Managing Director

Spectra Symbol Corp., Salt Lake City

Ernesto Poza responds: Here's a formula I often use. Take your total CEO compensation and divide it by 250 (working days), then multiply it by 4 (quarterly meetings) and divide by 2 (half-day meetings). Then divide that amount so 40%-50% is paid based on their attending quarterly meetings (a reminder to members to read your financial statements and documents before the meeting), with the rest paid as an annual retainer. That way you communicate the expectation that you want them available as issues, challenges, or opportunities come up, regardless of when the next meeting is scheduled. Of course, your board members are clearly not doing it for the money, but you want to signal to them the value they represent to you, as well as hold them accountable for preparation.

Feedback: Sometimes You've Just Got to Let Go

I enjoyed Amy Barrett's article, "When, Why, and How to Fire That Customer" (Oct./Nov. 2007). That you should cut the wrong clients is such an important message to get out. We went through a similar soul-searching experience a few years ago, and it was the scariest thing we have faced, but it allowed us to spend time with the right clients and focus on doing a great job for them vs. a perceived mediocre job for the impossible ones. Profits were up significantly, and employee morale was up, too.



Acropolis Technology Group, St. Louis

After more than two decades following the strategies mentioned in Amy Barrett's article, I know they work.

I once had a franchise with one of America's largest retailers, who demanded we meet every customer need. At first we grew to $90 million a year, but then problems arose with past customers who had low average sales and high cancellation rates. We weren't permitted to raise rates or refuse any customer's request, and the bottom started to drop out. I now have a small, regional version of that service and a 3% cancellation rate. We set a goal of eliminating 10% of our customers a year so that we can meet growth goals of 20% per year.



I have several ex-customers and ex-prospective accounts that I have chosen not to do business with. That's right, I chose to fire them! While the reasons vary, the common thread is that pursuing their business was not a wise use of my time or company resources. Let the competition deal with them!


Back to BWSmallBiz December 2007/January 2008 Table of Contents

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