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Top 20 Tips for Emerging Company Board Meetings

Top 20 Tips for Emerging Company Board Meetings

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Published by Startup Tool Kit
Top 20 Tips for Emerging Company Board Meetings
Top 20 Tips for Emerging Company Board Meetings

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Published by: Startup Tool Kit on Nov 20, 2009
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11/30/2010

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One of the best ways to demonstrate to investors that your company is operating effectively and building value isto have good governance practices in place. A well-functioning Board of Directors having regular meetings is agreat way to keep your investors informed and engaged, and is a critical component of sound corporate governance.Here are some tips on how to accomplish this.
1.
HoldFrequentMeetings.
Following any initial venture nancing, expect to hold six to twelve Boardmeetings per year depending on investor preference. Venture capitalists are particularly sensitive to therst Board meeting after they invest—be sure to be adequately prepared, and there should be no importantdisclosures that were not disclosed in due diligence pre-closing. Suggest to your Board alternating betweenin-person and teleconference meetings with the latter being more operationally focused and shorter in duration.
2.
setaMeetingscHedule.
You will nd that it is hard to nd mutually-agreeable dates for all of your Boardmeetings. At the outset, and then before the beginning of each following year, work with the assistants of eachof your Board members to set a schedule of Board meetings for the whole year, and then do what you can tostick to it.
3.
selectaMeetinglocation.
Consider having some of your meetings away from the company’s ofces.For example, consider occasional meetings at the ofces of your investor or company counsel.
4.
useaBoardBook.
Send a Board “book” at least a day in advance. The Board book should include, ata minimum: a “dashboard” highlighting key nancial and operational metrics (talk with your VCs to see whatinfo they want to see); summary nancial statements including comparisons against plan/budget; operationalreports (sales, business development, product development/engineering, marketing, nance); minutesfrom prior meetings for approval; listing of proposed stock option grants for approval; and an up-to-datecapitalization table that includes a full listing of outstanding stock options.
5.
setaMeetingagenda.
Include a summary agenda with the Board book, including estimated discussiontimes for each agenda item (see “Time Management” below). The principal objective of each meeting is toreview critical operational and nancial issues as well as short term and long term strategy. With respect tooperational reviews, consider picking one functional area for focus at each meeting.
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for Emerging Company Board Meetings
tips
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6.
ManagetiMe.
Venture capitalists and busy executives are very sensitive to their schedules and as a resultare very appreciative when management can run Board meetings efciently. Board discussions can often takeon a life of their own, and while it is important to allow the Board to have meaningful discussions on importanttopics, it is also important to manage towards a timeline so that your meetings do not run far beyond the timeallocated for the meeting. To this end, assigning estimated discussion times next to each agenda item can be ahelpful tool to help guide expectations regarding anticipated discussion times and to help ensure that you areable to reach each topic on your agenda. Don’t read every slide contained in the Board book; rather, focus onhighlights. Detailed information can be placed in appendices to the Board book for review by Board membersbefore or after the meeting. Most Board meetings can be concluded in a two-hour period if people are focusedon being efcient.
7.
deterMineMeetingattendees.
Determine who gets invited to attend the meeting from themanagement team. Remember, this may be a political issue. Consider inviting management team members ona rotating basis to drill down on select topics. Empower management team members to make presentations tothe Board on their functional areas (being mindful of “Time Management”).
8.
Holdexecutivesessions.
At the beginning or end of each Board meeting, allot time for an “executive”session (i.e., Board members only, no management team members), even if there is no set agenda. This willcondition your management team to expect there to be a closed session which mitigates anxiety about them.
9.
Holdinvestor-onlysessions.
Consider scheduling an investor designee-only session at the end ofeach meeting. Some venture capital investors will expect this as a matter of custom. Ask your investors whatthey prefer.
10.
takeMinutes.
Minutes are intended to be “summaries” of the meetings. Most venture capitalists andcounsel would advise you that “less is more.” These shouldn’t be play-by-play summaries, but rather a very highlevel summary of discussions and actions, and attaching any appropriate resolutions adopted. Be careful aboutputting certain information in minutes, such as the names of individuals you are trying to recruit, prospectiveinvestors, potential buyers or targets—remember, this will be seen later in due diligence by others and you maynot want to discuss those details later. Have counsel prepare, or at least review, the minutes.
11.
don’tsurpriseBoardwitHBadnews.
Although it is ne to spring good news on your Board,consider calling individual Board members in advance of a meeting with bad news so that they are notsurprised. Similarly, if you are going to need to discuss difcult or controversial topics, call each Board memberindividually before the meeting so you know what to expect and can manage the discussion.
12.
adoptcoMpensationguidelines.
Have the Board adopt compensation guidelines for salary, bonusand option grants that will provide parameters to management in between Board meetings.
13.
electindependentdirectors.
Try to identify and elect independent directors with relevant experiencein connection with an initial nancing. Aside from the “checks and balances” these independent directors canprovide between founders and investors, having them may be essential for review and approval of interestedparty transactions, and will become important for Audit Committee and Compensation Committee membership.
toP 20 tIPs FoR eMeRgIng CoMPAny BoARD MeetIngs

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