Now, why would an investor would pay a director to serve on the BoD of a portfolio company? Especially when companies already pay directors? Probably to recruit outstanding candidates to run against incumbents, and align company and director incentives. But, that decision and its rationale remain the prerogative of the investor and the director.

But, whether they can do so, and whether the company can restrict investors from doing this, is quite clear: investors can, and companies that restrict this are wrong. These restrictions not only limit the candidates that investors can recruit to a BoD. They can also limit how portfolio managers can serve on a company BoD, and require disclosure of PM salary and bonuses. Shareholders can and should punish companies and BoDs that seek to restrict these arrangements.