The objective of a board meeting is not just to have a pleasant, polite meeting. The important thing is to govern right, to get to the right answers, and to give the right advice. It’s about the greater good which is a successful company.
Most good boards have lively discussions and are very comfortable being in full-interrupt mode knowing that the person running the meeting will manage the clock and keep things on track.
If a new director has been a CEO or been in a general management role, remember you are not the boss. During the first several meetings, listen to learn. Once you understand the business and the company, then question, offer ideas, and probe.
Ask questions when it would be useful for other people to hear the answer. You may need to use your personal capital to guide a conversation because you think the conversation might be missing something key.
It’s important for other directors to discipline or manage excess airtime. Sitting CEOs or former CEOs may unconsciously kick into their boss mode. Running a meeting requires group discipline. It’s not having one boss manage the meeting.
When one director is taking too much time talking, gently comment “we’re going to cover that tomorrow,” “let’s take that offline,” “we ought to put that on the agenda for next time,” or “let’s bring that to the close session.” Expressive body language can help relay the message to the director that they are wasting time.
- Relating to board culture, it’s important that boards trust each other enough to be frank with each other and have the courage to push back when appropriate. Directors need to challenge, and to discipline, each other when appropriate.
- When there’s a committee readout for a meeting in which all board members attended, it’s good practice for the committee chair also to summarize any big decisions or what was accomplished. Since everyone attended, you don’t need to go into details of the back-and-forth discussion.
- One suggestion when doing a committee readout is for the committee chair is to go offline and think through what really happened at that meeting. What does the full board need to know? Are there any risks to share? Was there anything unusual that happened?
- Generally, all directors should have access to all the committee materials. However, for Compensation and NomGov Committees, and whoever does performance reviews, apply judgment on what is shared. Compensation data and specific performance feedback is sensitive.
- One point of view is that unless there’s something super-sensitive (like performance details), all directors ought to be given access to all committee materials.
How do you participate in committee meetings?
As a new director, you are encouraged to attend all committee meetings whenever possible to gain an overview of the business. If all board members do not participate in all committee meetings, ask to sit in committee meetings as an observer to learn.
In meetings, don’t just watch to the person giving the presentation. Pay attention to the body language of the “backbenchers.” When and if appropriate, ask questions to check if the operating executive is comfortably deferring to the next level person if the answer is unknown. This is a good way to get to know the company.
To be prepared for Audit Committee meetings, before the first meeting, ask for a one-on-one meeting, a tutorial, or a series of one-on-one meetings with the treasurer or CFO and with the outside external auditor.
For Compensation Committees, make sure you understand the role of the compensation consultant and how they do the math (does the math match the assumptions presented?). It is appropriate to dig deep so that you are more technically competent in your role as a committee member. Get to know how the process works if there are proxy advisors.
What happens in private board sessions?
- Private, or closed, sessions are one of the most important times during a board meeting, and not just something that you do as a protocol so that the minutes can reflect it. It’s an environment where directors can be frank with each other. Use the closed-session time to discuss “Did we get off course?” or “Did we use time efficiently?”
- It allows board members to speak openly with each other about what’s going on or about their doubts. You should feel comfortable raising concerns or asking a “stupid” question because that stupid question might yield something profound. This is where a new director can add a lot of value because you are not familiar with the protocols.
- A private session when the CEO is in the room is also a good time to ask questions about company executives and to probe deeper.
- Candor is probably the most important boardroom best-practice. Companies make a huge mistake when people are more concerned about being pleasant and getting along than asking tough questions. Politeness and collegiality are important, but not at the expense of asking tough questions or having uncomfortable conversations.
- A new director can really add value in the first several meetings because of your fresh perspective.
How to optimize meeting time
How can boards optimize the focus of the meeting for important items and avoid getting into the weeds? This question is central to the culture of the board. The board disciplines itself to ensure it focuses on the key issues and not the noise. It’s not the directors’ job to go through 50 pages of a spreadsheet to find a mistake.
If the board can’t find the signal in the noise, then the board materials are an issue. Directors can work with management to define or refine what is presented. Every board varies on the level of detail and density of information. Overall, it’s important that the board stay at a high level for oversight and let management do its job of operating the company.
Directors can self-reflect after every board meeting and ask, “What’s important? Did we spend the most time on the important questions?” If the answer is no, then the meetings need to change.
- One helpful practice for boards is taking the first 10 minutes of a board meeting to ask, “What are the five things we want to focus on in the board meeting today?” Then, during the private session, review if the main priorities were discussed.
- Another effective practice is to have a session with the CEO before the first part of the official board meeting. This gives the CEO a chance to share what is top-of-mind for them. The CEO can guide the board to the most important issues. It holds the CEO accountable with the discipline of staying at a high enough level.
- Some boards typically have dinner the night before with just the board members (no management team) or the board plus the CEO, CFO, and General Counsel. Use this time to set the objectives for the board meeting with questions like “What are the key things we want to talk about?” or “What do you want to get out of the meeting?” or “What key decisions do we have to make?” The CEO will start and then the board will share what it wants to get out of it and what key questions they might have. This sets the tone for the following day(s).