Behind the boardroom door…

February 9, 2009

It’s pretty rare that any of us get to go behind the boardroom door. That’s because minutes from board meetings are almost never included in the filings. Indeed, the only real appearance most board members make is in the proxy statement and in 8Ks when they come and go.

But that changed late Friday, when Amerisafe (AMSF) filed this 8K, which included not just the news that director Thomas W. Hallagan plans to resign when his term expires in June, but a fairly detailed memo on why. The 8K prompted Amerisafe to put out this press release before the market opened today and the stock is down about 9% on the news.

In an email sent to board members back on Jan. 14, Hallagan wrote this:

The short answer is that in the era of rampant fraud in the sub-prime market, Bernie Madoff’s fraudulent ponzi scheme, and the worst financial meltdown seen by any of us, I am concerned about functioning at Amerisafe. Since we each have fiduciary duty and personal liability, I am detailing my concerns for you to consider in your own right.

Hallagan then goes on to raise 12 points — dating back at least a year — ranging from father-son conflicts to whether the investment committee, which Hallagan headed, was “too focused on the details”. According to the proxy, Hallagan, a CPA, joined the board in May 2006 and made just over $50K in 2007 for serving on the board. The filing is a must-read, even if you don’t have any interest in Amerisafe, simply because it’s very rare to get this insiders’ view.

Of course, it’s impossible to know who’s in the right here. But at a time when it seems as if all too many board members simply rubber-stamp whatever is presented to them — collecting hefty fees in the process as a new study out this morning from The Corporate Library documents which found that average director compensation at S&P 500 companies exceeded $2 bmillion — it’s a bit refreshing to get a look behind the boardroom door.

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