Board Adviser Agreement
This Board Adviser Agreement is helpful for protecting board advisers and corporations because companies are increasingly including board advisers or corporate advisory boards in their corporate governance arrangements. Board advisers are individuals with business experience or other relevant expertise who advise a company’s board of directors and management, most frequently on management and strategy issues. However, unlike corporate directors, board advisers have no actual authority to make business decisions or manage company affairs.
A company may work with one or more individual board advisers or set up a board composed of several advisers. Thus, these boards are often referred to as advisory boards. Likewise, their members are sometimes referred to as advisory directors. Before a company begins a relationship with a board adviser or establishes an advisory board, the company should:
- Ensure that both the company and each board adviser have a clear idea of both:
- what the board adviser’s goal, role, and responsibilities will be; and
- how the relationship will function in practice.
- Address common board adviser concerns related to the relationship, including:
- minimizing the risk that the adviser will face liability to the company, its stockholders, or third parties for actions taken in the adviser’s role; and
- setting the adviser’s compensation.
- Take steps to protect key company interests that could be compromised by the relationship. Areas of concern include:
- guarding against potential disclosure or misuse of the company’s confidential information;
- ensuring the company becomes and stays informed about any adviser conflicts of interest during the relationship; and
- protecting the company’s intellectual property rights.
Although not required, individuals should consider entering into a formal agreement with a board adviser. Doing so can be a key step towards achieving the above goals. Moreover, companies may use this agreement as a starting point for drafting an agreement with a prospective board adviser.
This Board Adviser Agreement assumes the company:
- Is organized as a corporation.
- Is not a reporting company.
- Will compensate the board adviser with cash or equity or both.
- Intends to engage the adviser as an independent contractor, and not as an employee, which is usually the case in board adviser relationships.
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