On Monday, we posted a news story about National RV shareholders hiring legal counsel to best represent their interests as the company maneuvers its way through bankruptcy court. Apparently, the shareholders no longer trust the company's board of directors, nor should they.

In appealing for judicial permission to represent shareholders, one of the issues cited by the San Diego law firm of Baker & McKenzie was the fact that National RV's board of directors and senior managers had only a 3 percent stake in the company's common stock.

In fact, in a legal brief filed, the law firm noted that National RV's "executive officers and directors collectively hold a beneficial interest in merely 3 percent of National Holding's common stock. This low level of ownership is insufficient to give (National RV's) insiders a meaningful stake in equity to enable the (company) to adequately represent equity's interests."

In other words, National RV's director's and executive officers don't have enough skin in the game.  As a result, the law firm suggested the board of directors couldn't possibly act in the best interests of shareholders.

I find this to be a rather unusual argument. No doubt many will point out that shareholders annually elect people to represent them on the board of directors, and those directors act with the willing consent of the shareholders. That is true.

But, isn't this a bit like electing congressional representatives? We, the voters, listen to their plans and their positions, and then elect these yahoos into office based on what they say they'll do just so they can mess things up for the rest of us once in office. Can anyone say with a straight face that his or her Congressman is acting in the best interests of taxpayers?

So, maybe these lawyers have a point. Perhaps corporate boards don't necessarily represent the best interests of the company's true stakeholders. That was likely the case with National RV for years, just ask Bob Lee who resigned from the board in disgust a year before the company filed bankruptcy. As the founder of Country Coach, which was purchased by National RV, Bob had plenty of sweat equity in the company and his fingers were on the pulse of consumers who supported the company. Would it be a generalization to say that too many corporate board members lack those traits?

When we look at the true stakeholders supporting any RV manufacturer, certainly the stockholders come to mind. But, so do dealers and RV users. How many publicly held RV manufacturers have RV dealers and people who actually own the companies' products on the board? Heck, how many privately held companies invite dealers and RV owners into the boardroom?

Maybe I'm just whacked -- which wouldn't surprise me. But it would be interesting to see how companies perform when the people who sell their products and use their products join forces with people who make those products and finance the whole shebang. Allowing small business owners and RV users to join the usual board cadre of lawyers, accountants, analysts and non-competing CEOs to make decisions affecting the direction and profitability of the company may literally transform that company.

The bankruptcy filing submitted on behalf of National RV's shareholders also noted that a compensation packaged had been negotiated among the company's insiders that may not be in the best interests of shareholders. In other words, the board members who drove the company into bankruptcy expect to get paid handsomely for doing so.

Board members do have a tough job. But, they can also be seriously out of touch with what's actually going on in companies or organizations they oversee. They rely upon material provided by the company in making their decisions. They may even meet off site or via conference call, thus depriving them of the ability to even walk the halls or production lines to talk to staff. With stock options and compensation for their service, they do have some vested interest in the company's financial success. But are stock options and a salary enough? 

If board members and senior executives can get paid for squandering the investments of others, then maybe they don't have enough skin in the game. I wonder if a board member who owned a National RV dealership may have guided the company in a different direction than the people who did serve on the board?

Today, hundreds of National RV dealers are left holding the bag with products they can't sell and units they must fix at their expense. A hundred plus people holding more than 10 million shares of stock are also left wondering if their investments are worth more than the paper on which the stock certificate is printed. And thousands of consumers are stuck with products they'll have a hard time reselling now that replacement parts will be impossible to obtain. Who represented their best interests on the company's board of directors?