Weening argued that Everett acts as if he's an independent director, despite his firm's connection to Cumulus. However, Weening acknowledged that Everett cannot vote on certain matters where there could be a conflict of interest, such as stock option plans for Cumulus executives. Not really, said experts on corporate governance and shareholder rights. The guidelines for corporate boards set by the National Association of Corporate Directors, Washington, D.C., define Everett as an insider because he has a business relationship with Cumulus, said Roger Raber, the organization's president. Everett is one of two board members on the Cumulus compensation committee and audit committee.
Outside directors are the other members of the committees.
The National Association of Corporate Directors recommends that one, or at most, two board members come from the company's inside ranks. Insiders tend to be loyal to management and don't necessarily look out for the best interests of shareholders, Raber said. Cumulus added Robison, of Paul Allen's venture fund, Vulcan Ventures Inc., Bellevue, Wash., to the board in August 1999 as its first step toward more outsiders, Weening said. Sheridan was a charter board member and works for Bank of America, which was an early private investor in Cumulus and still holds a significant stake in the company. Governance could become a relevant issue in the cases, but it's worth noting that the suits were filed by law firms vulturing for disgruntled Cumulus shareholders.