When the CEO needs to sack the board

Joining a business after rapid growth, Russ Shaw found himself tasked with doing some trimming.

by Stephen Jones
Last Updated: 15 Feb 2019

Everyone knows the CEO is accountable to the board of directors. It's what keeps him or her in line. But beyond the board, the chief executive's ultimate responsibility is to the shareholders. So what happens when the shareholders decide the board has to go, and asks the CEO to do it?

That’s exactly Tech London Advocates founder Russ Shaw faced whilst CEO of late stage startup MobileWay. As the man who negotiated the sponsorship deal to brand the white elephant that was the Millenium Dome the O2 arena, it’s safe to say Shaw is not one to shy from a challenge. But this was a task he admits nothing could have prepared him for.  

"I came in right after a series C round. My job was to grow the topline revenue and streamline the business to ensure we increased the value.

"We had nine board directors and six non-exec observers. So there were 15 people on the board for a business that was turning over nearly £50m; an obvious way of adding value was cutting the board.

"I sat down with the lead investors and we agreed a plan of action. They did provide help but for some reason or another the bulk of the more challenging conversations fell to me as CEO. So I was left balancing the rigours of managing a global business while also dealing with the dynamics of board governance.

"I went from being accountable to the board, to being the one was trying to change it. The board observers were not difficult. They were disappointed but pragmatic and understood that it was in the best interests of the business. But there were two directors who had come in at an earlier round who were incredibly disruptive and difficult to manage.

"I ended up having a two hour phone call in the arrivals lounge of Heathrow airport where one of them was just shouting at me. A lot of his tension was with the situation, but it was all directed at me so I just had to dig deep, have patience and just listen to hear what he had to say. Part of my strategy was to let them vent. It was tricky, distracting and eventually we did get to a stage where we told him to knock it off.

"It took a lot of good interpersonal skills, an enormous amount of patience and constantly drilling down on the bigger picture about why it was important for the business to do this. Eventually the message got through and we were able to make the changes we needed.

"Two years later the business was acquired for a substantial amount of money, so everybody won in the end, but it didn't need to be as painful as it was.

"If it has taught me anything, it’s that board governance should be managed properly and the size of the board should be managed carefully, especially if you are moving from start-up to scale-up stage.

"It’s something that really shouldn't be put upon a CEO, or even a chairman - that’s why you have investors. Now being on the other side, as an NED, director and investor, I've tried to stay very mindful about the process."

Further reading

Image credit: ronstik/gettyimages


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