Board Effectiveness

Educating Your Board – at Every Meeting

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Increasingly, investors want to know what companies are doing to educate their boards – and look for that information in proxy statements. University law schools and business schools are offering multi-day seminars. Accounting firms and consultants offer on-line training. In addition, board education can also be happening at every board and committee meeting. But not in the way you are thinking.

For every meeting, management and board advisors prepare significant amounts of advance materials (often called “briefs”). Too often these materials are not as “educational” as they could be. Here are a few suggestions for remedying that:

  • Explain why the topic is on the agenda. Is it required to comply with a regulatory requirement? Is it driven by an internal process – like succession planning? Telling directors why they are being asked to address this agenda topic grounds everyone in an understanding of purpose. Write something like “The SEC requires that the Audit Committee at least annually review….” Also, explain whether this agenda topic 1) is “Offense” (growth-related) or “Defense (risk-mitigating) and 2) relates to Leadership, Strategy, or Execution  (Learn more about Foresight’s proprietary agenda topics hierarchy at
  • Specify the desired outcome from the agenda topic. Review and discussion leading to advice to management? Alignment between board and management on strategy? Decision on proposed transaction? Telling directors what management, after consultation with the Lead Director or Chair, is looking to accomplish with the board will help to frame the discussion. Write something like “Following discussion, the committee will be asked to approve the updated executive compensation program and performance measures for the 2020-2022 performance period.”
  • Provide external context for the agenda topic. If other companies are addressing this same agenda topic in some fashion, note that and explain why they are. If this is a purely company-specific topic, say that. Say something like “As a result of our company’s 2019 acquisition of BBB Company, the company must decide/report/is subject to/whatever….”.  
  • Anticipate the question: “What are our peers doing about this?”  Whether the board is addressing a new corporate policy on hedging or a compensation program provision or almost any topic, management will be asked. Directors want to know what peers are doing – not to follow like lemmings but to understand the landscape of alternatives and practices being used by others in similar circumstances.
  • Help those drafting briefing materials to understand the board’s role. Help them to identify the information critical to the board decision-making. Sending 100 pages of dense data is unlikely to help the board make the best decision. Better to pick the key data points, explain why those are the key data points, and focus the brief on those data points that will enable the board to make the best strategic or leadership decision or to provide management with considered advice and insights.
  • If your company’s significant investors have a point of view on the agenda topic, include that information. If your investors have varying views, explain the reason for those divergent views, if known. This information may not be dispositive, but it should be provided.

Hopefully these suggestions are helpful to you. And, if you follow our suggestions, you and your board will be better prepared for board meetings and you can describe your improved approach to board briefs in your next proxy statement.

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