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Hopelessly conflicted? – a dilemma

By Julie Garland McLellan on October 11, 2012

Rina has asked for your advice. She is a long standing director of a holding company for a large group of companies. The holding company Chairman, Quentin, has been a friend and mentor to her over many years.

Recently the holding company bought a stake in a small listed company and Rina was appointed to the board as Quentin’s nominee. She was aware that some of her co-directors believed that Quentin wanted to gain control of the company without paying a premium and worked hard to demonstrate her independent judgement so as to win their trust.

Robert, the CEO of the listed company is an outstanding individual with a commercial flair and detailed but quick grasp of the key issues facing his company. He is vitally important to the company’s success. Rina has often praised Robert in her talks with Quentin. Now Quentin has decided to offer Robert a position as CEO of one of the large wholly owned subsidiaries of the holding company with a clear indication that, if he performs well, he can become CEO of the holding company.

Rina is torn. She knows that she has a duty to the listed company that includes acting to retain key staff and protect the IP that exists within the management team; she has a duty to the shareholders of the holding company which would include ensuring that each subsidiary had the best management it could find, and she also feels beholden to Quentin, who has helped and advised her in her career thus far.

Quentin has asked Rina to urge Robert to accept his offer but she is not sure if that would be ethical and, indeed, feels partly responsible for bringing Robert to Quentin’s notice.

What should Rina do?

Many readers of this blog will be familiar with my newsletter The Director’s Dilemma. This newsletter features a real life case study with expert responses containing advice for the protagonist. Many readers of this blog are practicing experts and have valuable advice to offer so, again, we are posting an unpublished case study and inviting YOU to respond.

If you would like to publish your advice on this topic in a global company directors’ newsletter please respond to the dilemma above with approximately 250 words of advice for Rina. Back issues of the newsletter are available at http://www.mclellan.com.au/newsletter.html where you can check out the format and quality.

The newsletters will be compiled into a book. If your advice relates to a legal jurisdiction, the readers will be sophisticated enough to extract the underlying principles and seek detailed legal advice in their own jurisdiction. The first volume of newsletters is published and available at http://www.amazon.com/Dilemmas-Practical-Studies-Company-Directors/dp/1449921965/ref=sr_1_1?ie=UTF8&qid=1321912637&sr=8-1

What would you advise?

Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website at www.mclellan.com.au or visit her author page at http://www.amazon.com/Julie-Garland-McLellan/e/B003A3KPUO

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Julie Garland-McLellan uses her experience and depth of knowledge in corporate governance to show boards with limited resources how to be more effective through practical governance innovation and know-how.
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