Informal Time, Significant Value
Some of directors’ most impactful time is spent in interim meetings, one-off calls and dinners
On a flight to a board meeting earlier this year, a fellow director commented that he used to think out-of-town directors were better prepared than local directors, since the flight gave them time to review board documents. He then noted that everyone seems to be well prepared now, whether they are coming by plane or via a short drive. This observation is not surprising. Private company directors are spending more time than ever on their board duties. This is in addition to the considerable amount of time many directors spend outside of the company, reading industry publications and analyst reports, attending conferences to learn best practices in governance, visiting company stores and touring plants.
Much of this time is spent in committee meetings where agenda items are debated fully for approval or recommendation to the full board. Many committees have also convened interim meetings, which better allow for discussion and provide opportunities to engage outside consultants. Additionally, these interim meetings allow for more deliberation (and, importantly, a sleep cycle) before a final vote, alleviating the time pressure for a decision.
In addition to interim committee meetings, one-off phone calls from the CEO, chair or lead director to an individual director became more frequent during the height of the pandemic. These calls often provide quick guidance and valuable advice and allow for an ongoing conversation and connection between scheduled meetings. This “always-on” approach is reflected in board compensation packages as well. MLR Media’s Private Company Board Compensation Survey — the nation’s largest study of private company board governance and compensation practices, which we conduct in partnership with Compensation Advisory Partners — found that most private boards pay annual retainers, with only 13% having a “meeting fees only” pay model.
However, these one-off calls can lead to thorny issues if not carefully managed. How do you make sure all directors have the same baseline information? How do you balance the group dynamics and manage individual egos when directors find out they were not called? Will certain directors believe they are “on the outside” and feel slighted, possibly limiting their future participation?
One-off calls are easier to make with a smaller board. In addition, going through the lead director provides a helpful buffer and can limit transgressions across boundaries. This is similar to executive sessions, where comments, often fed back without attribution, can be helpful to get a point across to management.
Board meetings that took place over Zoom during the height of the pandemic frayed some of the connective tissue among board members. Returning to dinners before board meetings was an important step, especially to strengthen relationships among out-of-town directors, who may not see the “hometown” directors and management as often.
Over the years, directors have spent impactful time in interim meetings, one-off calls and dinners. While these sessions require more time spent on board duties and preparation, they ultimately provide significant value to the company.
While my fellow director and I were glad to take time during our flight to review our board packets one more time, we likely would have done that extra review at home had we not had to travel.