• Source link: https://feld.com/archives/2005/01/term-sheet-board-of-directors.html
• TL;DR: VCs have an interest in having control over a company in order to protect their investment and comply with federal tax regulations. Outside board members are usually compensated with stock options.
• How helpful?: 3/5
• Topic Tags: Board of directors, governance
• Relevant questions addressed:
• How is the board of directors selected?
• How are Board members compensated
• Summary bullet points
• VCs care about control over the companies they invest in -> one key way they do this is through BoD elections
  • Protect their investments
  • Comply with federal tax statutes
• VCs often want to add “board observer” instead of/in addition to official member of the board
• Often, investors want a board seat for then-serving CEO of company
  • If CEO is same as one of the key founders, they would take up two seats in this case
• Usually don’t receive any cash compensation for serving on a BoD of a private company
  • Outside Board members usually compensated with stock options