Refresh Organics - Harvard Case

Topics: Board of directors, Corporate governance, Management Pages: 2 (723 words) Published: February 28, 2014
Summary – This case looks a decision that George Hausman, the co-founder and CEO of Refresh Organics (RO), makes regarding creating a board of directors. RO is a midsize, steadily growing, privately owned company which is a distributor of organic produce. RO has never had a formal board of directors, but Hausman had several close business advisors who he consulted with regularly and referred to as “the kitchen cabinet.” Hausman considered putting together a true board of directors or if simply making an advisory council would be better suited for the needs of RO. Ultimately, Hausman decided to form a board of directors of ten members, including himself and three out of four members of “the kitchen cabinet,” replacing his wife, an accountant, with a former Big 4 partner. On the board was also a new minority shareholder from a private equity firm, two executives from RO, and two executives from other companies. The board had a strong make up of eclectic talents and experience. The one down side of the board was the some of the executives from other companies would get off topic during board meetings and sometimes members could not make it to the meeting. Hausman routinely sent P&L statements and a balance sheet prior to board meetings, but elected not to for the 2Q meeting in order to discuss the issues in person as RO missed its financial goals. Board of Directors vs. Advisory Board – Prior to forming the board of directors, there were many considerations that Hausman should have made in determining whether to create an official board of directors or an advisory board. The first consideration is what level of control does he want the board to have. Generally, a Board of directors has a vote in company decisions such as hiring & firing of executives, executive compensation, and option policies. On the other hand, advisory boards are an informal group who do not have direct say over major company issues and can be structured for a specific reason. Also, Hausman...
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