Board Meetings & Board Management

An effective board can mean the difference between an ordinary company and a great one
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/ Finance / Board Meetings

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What is a Board Meeting?

Companies and organizations are governed by a Board of Directors composed of members who periodically meet. This meeting is called a Board meeting wherein issues, solutions, and strategies are discussed for the benefit of the company. Members of the Board of Directors, headed by a Chairman, is made up of key officers within the organization. Members of the Board can also be experts in the fields of technology, finance, marketing and other disciplines.

Purpose of Board Meetings

  1. Guide and oversee the business
  2. To come up with decisions on corporate concerns, which cannot be delegated to lower-ranking officers
  3. To monitor operative and administrative key performances
  4. To review and approve corporate budgets
  5. Select and dismiss key executives/officers.

What to Know About Running Board Meetings

Managing a board of directors can be a huge challenge even for experienced entrepreneurs. What do they expect for an agenda? Who should participate?

The preparation that is required to present your story in a concise and accurate fashion can take days of time from you and your team. And just when you get through one meeting, it can feel as though you must start preparing for the next. Many entrepreneurs complain of the endless cycle of preparing for board meetings. And in our experience, most entrepreneurs view board meetings as a necessary evil and something to manage away.

It doesn’t have to be that way. By following a few basic principles and avoiding some of the more common mistakes, you can make board meetings a positive experience and leverage the valuable experiences of your board members to help you navigate the growth of your business.

Board Meeting Best Practices

To Dos:

Don’t Dos:

What’s Discussed in Board Meetings?

Below is a sample of some of the matters discussed in board meetings.

Previous Minutes

Board meetings usually begin with reviewing and approving the minutes of the previous board meeting. The board will ratify, if necessary, and approve the previous minutes. The previous minutes can either be read separately by the members of the board or aloud by the Board Secretary.

Past Performance

The board reviews revenue, sales pipeline, expenses, marketing research, and development to know how the business is doing. As an oversight body, the board discusses what transpired during the year compared to prior years and quarter-over-quarter results and whether they have accomplished their targets.

Corporate Actions and Future Strategies

The board talks about the past and present status of the company, as well as its future direction. After reviewing past performance and evaluating the current business status, they come up with strategies to guide them in the preceding years. The key management executives will usually contribute ideas during the discussion, which the board will evaluate and consider. The board deliberates on the plans of action the management will need to undertake to ensure the operational viability of the company.

Board Meeting Handouts

Handouts are prepared and distributed during board meetings for the members to understand the issues to be discussed. The handouts are used for discussion of the board and are not the final stand ad position of its members.

Board Meeting Agenda

Having a prepared agenda for a board meeting is a must. The board agenda maximizes efficiency and productivity.

The following are the things usually included in the board agenda:

  • Call to Order
  • Changes in the agenda
  • Approval of minutes from the previous meeting
  • Reports from:
    – Chief Executive Offer
    – Finance Committee
    – Other Committees
  • Old business and concerns
  • New business and concerns
  • Comments, announcements and other business
  • Adjournment

Board Secretary & The Board Agenda

The Board Secretary has a vital role in the preparation of the agenda. He or she has to plan and gather information at least two weeks before the board meeting. A meeting should be held with the company’s executives to ensure that all concerns must be included on the board agenda. However, this doesn’t mean that the agenda will be final at this point. Exchange of communications between the Board Secretary, Board of Directors, and executive officers will be made for the updating of the agenda.

After getting all necessary inputs from the Board of Directors and key executive officers, the board secretary can draft the agenda for distribution. Board members who will have an agenda item for discussion should submit their materials to the Board Secretary ahead of time. This will enable the board secretary to disseminate these materials to all board members before the scheduled meeting.

Board Financials

What should be in the Board Financial’s package? Here are the things to minimally include in businesses that have a meaningful monthly cadence – which most build stage companies do. For some it’s weekly; an example is an app where week-over-week growth is a meaningful metric.

  • Last month’s P&L vs. original forecast, and YTD vs. forecast
  • Last month’s P&L vs. prior month – dollars view
  • Last month’s P&L vs. prior month – unit economics view (meaning, take your P&L, and divide everything by the unit that’s most important in your business. Could be square feet, available days for appointments, hours sold, hats – you name i
  • Meaningful YoY stats by product line, location, or some other way to give investors an idea of where growth is (or is not coming from
  • Headcount summary – by department, where are we against plan? For many startups, this is where cash either gets burned (hiring too fast) or revenue growth is thwarted (because you can’t find the right head of marketing and while this saves you money in the short run, it means you are not driving top line in the medium-term
  • Rolling forecast vs. original projection – meaning, if I re-forecast the business for the rest of the year (which you should be doing on an almost constant basis), where am I going to end up
  • Cash projection

If you have these ready to go three days ahead of time in well-formatted slides with pithy color commentary, you’ll serve everyone well. You might need to add a few more based the particular business that you’re in, but this should get everyone grounded in the results and communicate how things are going. Investors will have the opportunity to look through the numbers and draw some initial conclusions, which will make the financials review section of the meeting much smoother. Your goal as the CFO is to let the strategic discussion take center stage and let the numbers support that discussion.

Caveat: sometimes you will have Board members/observers who do not read numbers early no matter how early you provide them, and are going to ask nitpick questions about one obscure figure that you know is not vital to anything. Take a deep breath and go with it. It’s not constructive behavior, and with any luck, the other Board members will talk to this person offline about expectations. Your role is to set them high, and keep them there.

[This section adopted from Build Stage CFO]

Board Meeting Minutes

The minutes are the official and legal record of any board meeting. Once again, the board secretary plays a crucial role in preparing the board meeting minutes.

There are four steps which a board secretary needs to follow to have proper minutes of the board meeting:

1. Preparation

Reviewing previous minutes of meetings can be used as a guide to know what format to use.

2. Recording

Information to be included in the minutes of meeting:

  • Date of the meeting
  • Time the meeting was called to order
  • Names of participants and absentees in the meeting
  • Corrections and amendments to previous minutes of the meeting
  • Additions and changes to the current agenda
  • Presence of a quorum
  • Actions on motions (taken or rejected)
  • Votes (motion, second and results of votes)
  • Agreed actions
  • Next steps to be taken
  • Items to be deferred
  • New business
  • Open discussions, comments
  • Date and time of the next board meeting
  • Time of adjournment

3. Writing

The draft minutes should be reviewed and edited to make it clear. The Board Secretary is also expected to write the discussions as objectively as possible, without subjective commentary or personal opinions.

4. Signing, Sharing and Filing

The Board Secretary is responsible for ensuring that the appropriate board members and officials sign the final minutes. The approved minutes are meant to be shared either by print or via e-mail. Further, it is wise to have back-up copies of the minutes of the board meeting. The filing of the minutes appropriately will be beneficial for the company as a future reference.

There are other uses for board minutes :

  • Tracking progress on agreed actions
  • Recording of future plans
  • Reference point for any plan of action
  • Recording of motions, votes, and abstentions

Board Meeting Procedures

Below are the things which need to be followed for a board meeting to be successful:

Notice of Board Meeting

The notice should include necessary information such as date, time, and place where the board meeting will be held. The timely notice should be given to participants so that they will have sufficient time to respond and prepare for the meeting.

Quorum

The board has a quorum if the attendees are more than 50% of the total members. Having a quorum during meetings will ensure the company that it has the majority vote of the board members.

Motions

The Chairman of the Board is responsible for dealing with the motions made during board meetings. Each member of the board has the responsibility to ensure that the motions are managed accordingly.

Voting

Voting can be done by the members of the board through the stating of yea/yes votes or nay/no votes. Voting can also be done by a show of hands or by ballot. Some companies vote through a roll call. The Chairman of the Board may call for a retake of votes if the results are not clear.

The following are other protocols to be followed during a board meeting:

  • Only one person speaks at a time
  • The Chairperson decides and recognizes who has the right to speak
  • All comments are made through the Chairman of the Board
  • No cross conversations
  • No vulgar language nor verbal attacks against any member of the board
  • Rules are respected and obeyed
  • A motion should be seconded before the Chairman can restate the motion
  • Only the Chairman can announce the vote results
  • A member who notices a violation of a rule can call out a “Point of Order”.

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