A FAEMEBS MUTUAL FIEE INSURANCE COMPANY. 5 



BOARD OF DIRECTORS. 



The management of the company should be vested in a board of 

 directors. The members of this board should be elected on such a 

 plan that the term of office of only a part of the directors expires each 

 year. Thus the board is a continuous body. The number of the 

 directors should be sufficiently large to give representation to the 

 different districts in the business territory, and to assure reasonably 

 careful deliberation of questions of policy. If the number is too 

 large, however, the transaction of business is likely to be unduly 

 retarded by the profusion of opinions, and further, the per diem 

 allowances for board meetings will become a needlessly heavy ex- 

 pense. Except where local conditions appear to require a certain 

 grouping or distribution of the directors, nine members seem to form 

 a board of convenient size. As nine is an odd number, there is no 

 possibility of a deadlock when all members are present; at the same 

 time a board of nine directors can be divided for election purposes 

 into three groups or classes with the same number in each class. 



If fewer than three classes are provided for, the group or class 

 arrangement, which is intended to make the board a continuous body, 

 becomes of little value, since the policy of the board may be entirely 

 reversed by the new members chosen at a single election. The same 

 danger may easily appear, even with three classes provided for, when 

 the number of directors is either seven or five. With a board of 

 seven members, for example, one class would consist of three direc- 

 tors and the other two classes of two directors each. In the year 

 when- the term of the three directors regularly expired a single acci- 

 dental vacancy in either of the other two classes would cause a 

 majority of the board to be elected at one meeting. 



An opportunity to make a radical change in the management at a 

 single meeting might be desirable if a large number of the members 

 always attended the annual meetings. But where the attendance is 

 usually small, as is frequently the case, one or two dissatisfied mem- 

 bers may bring in a few friends and control the meeting. If all or 

 a majority of the directors are to be elected at this meeting, the 

 affairs of the company may thus be controlled for an entire year by 

 men who represent a very small percentage of the membership. On 

 the other hand, when only a third of the directors are to be elected 

 at one meeting, the opportunity for such an action is removed. Even 

 if one small group should control one meeting, there is ample oppor- 

 tunity for the membership in general to be informed of the situation 

 before the next annual meeting, so that the election of another third 

 of the directors by the few disaffected members is readily prevented. 



