startup boards - best practices
TRANSCRIPT
Board meetingsIn Early Stage Companies
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Official Responsibilities
The board of directors shall outline the policy of the company and oversee its operations, including the activities of the general manager, and more particularly: (i) determine the company’s plan of action including allocation of monetary and human resources; (ii) examine the company’s financial status and set any credit limits in which company shall operate; (iii) determine the organizational structure of the company and its wage policy; (v) appoint and remove the general manager; (vi) resolve to carry out certain actions which must be carried out by the board of directors pursuant to the articles of association and Law; and (vii) resolve to effect a distribution of dividends. Please note that the powers of the board of directors as specified in this section may not be delegated to the general manager
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And more…
• Maximize shareholder value for all of the company’s shareholders.
• Duties of Care and Loyalty. Fiduciary duty to the company and all shareholders
• Attract, recruit, and retain talented management team and board members. Hiring and firing the CEO and approving officer selection
• Mentor, task, and measure the executive team
• Oversee and promote fiscal, legal, and ethical governance standards
AT CARMEL WE HAVE A DOCUMENT LISTING ALL RELEVANT RESPONSIBLITIES
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Structure
• Defined in the term sheet
• Balance of power (Ownership vs. veto rights and control)
• Usually an odd number, but doesn’t have to be
• Small…
• Important to have an independent board member (industry expert)
• Requires compensation
• It’s another team in your company. An important team.
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Relationship with the CEO
• The CEO is the boss, not the board
• But the key responsibly of the board is to support/replace the CEO
• The board can help drive the direction
• But... Never present the board with an open question
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Meeting Frequency
• Video/Audio conferences are awful
• At least 4 times a year IN PERSON
• Try to make all meetings in Person
• Board members usually require reimbursement of travel expenses
• Bottom line: 4-8 times per year
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What makes a good board?
• You
• Personal chemistry
• Balance of experiences
• “Roles” for each board member
• It’s another important team in your company
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Preparation – The week before
• Board Material: Structure is fixed, content is variable
• Send material ahead of time
• No Surprises
• Discussion, not updates
• Strategy, not tactics
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The board material
• CEO Summary
• Highlights/Lowlights
• Departmental Overview
• One area to elaborate
• Finance: Add full budget + financial summary
• Finance: Add cap table + Changes in ESOP budget etc.
AT CARMEL WE HAVE RELEVANT TEMPLATES FOR BOARD DOCUMENTS
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The meeting
• Location: Always best at your own office. Insist on it.
• 3 Hours (unless special events)
• With management team
• Focus on value for you/company
• Bring the lawyer (depends on the retainer)
• Leave time for executive session
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Post board meeting
• Collect feedback
• Issue action items
• Board minutes
AT CARMEL WE HAVE RELEVANT TEMPLATES FOR BOARD DOCUMENTS
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Know your Rights and Responsibilities
Great Boards are an asset
Boards require attention & management