A High-Functioning Board Lets Management Manage
In the spring of 2020, The Larry H. Miller Group of Companies was prepared to suffer significant revenue losses due to the pandemic. The company’s holdings include movie theaters, a professional basketball team and a sports arena, and many of its businesses went dark. But the losses never came to be.
“Our company had the best year ever in 2020. It was really an incredible accomplishment by management and the board,” says Dennis Haslam, a board member. He adds that the group’s car dealerships saved the day with sales and repair revenues.
Haslam helped create the Larry H. Miller board with owner Gail Miller after the founder, Larry, died 10 years ago.
Up to that point, the immediate Miller family had overseen strategy, but as the company steadily grew, Miller and Haslam researched the best type of board for the company. Miller became chairman, her three sons joined as directors and Haslam came on as a “gray” director (technically independent, but a close friend). They learned that including independent directors was crucial to great governance and launched a national search for independent board members.
“We had a number of qualifiers,” Haslam says. “We needed somebody with experience with public company audit committees. We needed experience in the finance and insurance sector. We needed experience in high-end retail sales. We needed experience in family businesses. That was a list of our criteria.” The board now has six independent directors, a majority of the board’s seats.
Haslam says he considers the board to be high-functioning, which he defines as featuring good communication and a trust in management. The board and executives have regular strategy sessions and run various scenarios. While not all scenarios — like a global pandemic — can be predicted, the board knows what the original plans are for various situations and needs to be updated only on adaptations.
“Sometimes the best activity a board can engage in is no activity — let management do their jobs,” he says. “Allow them to be creative and make recommendations to the board. Keep the board informed and the board doesn’t always have to act, it just needs to be there.
“I would say that that our board was light on its feet when we communicated regularly with the CEO and his management team. We were basically in lock step with management.”
And it is expected that future generations will do the same. The family uses the classic three-circle model of family businesses: one for ownership, one for family and one for the business.
“It’s basically three circles that are intertwined inextricably,” Haslam says. To complement the fiduciary board of directors, the family has a family council and a private trust company, which Haslam says will be the eventual trustee and owner of all of the businesses. “It's highly organized, and I believe it’s world class governance.
“The grandchildren are also in a training program so that the third generation will learn how boards work. We invite them to the business board meetings. We invite them to the family board meetings because at some point in time they will need to take over.”