Archive for the ‘Board Meetings’ Category

MacLeod: The Model Board Package

Today’s post of the day is from Mark MacLeod (Real Ventures) titled The Model Board Package. Mark shares my intense frustration with the structure of most board meetings and offers up some great suggestions along with a solid template for a board presentation. As some of you may know, I’m working on a book on Startup Boards with Mahendra Ramsinghani - if this is a topic that is interesting to you do us a favor and fill out our survey on startup boards.

How to Run a Great Board Meeting

Today, the great post is by my partner Brad.  He has a great post on how to run a great board meeting.  Should be required reading in my opinion.

The One Page Board Summary

Will Herman has an excellent post up describing At A Glance Financial Information that should be in every board package.  As a special bonus, Will included a link to a Google spreadsheet example.

Concluding Thoughts about Good Board Packages

Chris concludes our series on board packages.  Chris, take it away…

Now that I’ve given you an outline to what I think makes a good board package, I’m going to exercise my VC prerogative :) and immediately caveat that advice. In my mind, the trick to effective board packages is less about the outline of the content and more about finding the right balance between being so deep in the details that the board book gets bloated and lost in the weeds and being so high level that it becomes perfunctory and glosses over the important things.

While it’s tempting to look for an example of a “perfect” board package and then replicate it, the perfect board package isn’t something that can be easily copied because it’s company specific and requires a thoughtful case-by-case approach.

Helpful hints:

- When you distribute your board package, assemble it into a single electronic document (in my world, ideally it’s a PDF) so your board can easily print it out, follow the flow of the board package, etc., rather than sending it as a bunch of separate documents.

- Put page numbers on every page (you can easily do this once you’ve got everything into a single PDF) so the group can stay on the same page and easily reference various sections during the board meeting.

- When in doubt, ask your board before the meeting what they want to discuss. 

This concludes our board package series.  We hope that you’ve enjoyed.

Board Package Series – Business Reporting

In our continuing series of creating effective board packages, we now turn to business reporting.  Chris, you have the floor…

This is the stuff that most CEOs think of when they think of board reporting packages—financials, departmental overviews, etc. And this stuff is indeed a core component of any good board package, because the more you include this in a board package, the less time you need to spend “reporting” on it and the more time you can spend discussing the implications of it on the business.

Examples of typical monthly board reporting include:

- Company financials – I like to see prior month, quarter to date and year to date actual financials (as well as comparisons to your budget) along with a rolling 13 month P&L by month and an A/R aging summary. I also like to get company financials in Excel format (in addition to what’s included in the board package) since that lets me reformat and play with the numbers to get a better sense of what’s going on;

- Financial performance guidance - for the next month/quarter/remainder of year. Being able to project your company’s financial performance obviously requires a certain level of maturity in your business, but this is a good way to make sure that financial reporting isn’t only about looking in the rear-view mirror;

- Key operating metrics – i.e. the non-financial metrics you and your executive team use to judge how the business is doing;

- Sales/biz dev pipeline report – including accompanying narrative on what deals were won, what deals were lost (and why), where sales efforts seem to be stalling out, what progress has been made on key deals, etc.;

- Product/technology development updates;

- Administrative and HR updates – current headcount by department, hiring plans for the upcoming month/quarter/year; and

- Current Capitalization Table - (with sufficient shareholder detail for it to be meaningful). It may seem redundant to include a cap table in each board package when a company’s capitalization typically doesn’t change frequently, but remember that many of your board members sit on multiple boards and work with a lot of companies. Since capitalization often plays an important role in a lot of early stage company discussions (such as upcoming financing discussions, option grants, etc.), it’s helpful to just get in the habit of including it in every board package.

Depending on the stage of your company, this “reporting” section may be more product/technology oriented (as it would be in an earlier stage company) or may be skewed more towards sales and business development (if your company is at the critical go-to-market stage) or may emphasize financial reporting (for a more mature company). Most board reports should include departmental updates for all of your company’s departments, but the granularity/depth of those updates will vary depending on what’s going on in your business.

All of these types of reporting are very important, but to reinforce something that Chris brings up the “why” is just as important (and sometimes more) than the “what.”  Be sensitive that these reports aren’t just history, but lessons learned and that the executives who head up the functional areas understand and agree with the board on the metrics that are used to judge success. 

Board Package Series – Board Administrative Issues

In our next posting in the Board Package Series, Chris tackles what he deems (and I agree) as the least interesting board material that finds its way into the package:  Board Administrative Issues.

There’s no getting around it—there’s always going to be administrivia that a board of directors has to deal with, so your goal as CEO is to get your board through these materials as quickly as possible so you can get on to the valuable part of a board meeting (the discussion). And the way to do that is to 1) organize all of the administrative matters in one section with all of the appropriate information and 2) get that information out well in advance of your board meeting.

Examples of typical administrative matters you should include in your board package include:

- Minutes of the prior board meeting that need to be reviewed/approved by the board;

- Reports or recommendations to the board from any board committees (i.e. audit, compensation, etc.);

- Option grants requiring board approval;

- Board resolutions and other board consents such as establishing stock plans, benefits plans, etc. (and, to the extent that those resolutions or consents need explaining, provide the appropriate context);

- Reminder list of upcoming board meeting dates/times/location; and

- Ed – also any other general operations, legal, real estate and other non-critical things that the board should be aware of.

There’s no greater waste of board time than having a half dozen (or more people) sitting in silence during the actual board meeting reading the prior meeting’s minutes so they can approve them. Ditto for the board having to spend time discussing what a particular board consent is for because it was included in the board package without the necessary contextual information. By religiously including this kind of stuff in your board package, you can breeze through the administrivia a whole lot faster (or at least focus on the substantive conversations, if necessary, rather than trying to get everyone up to speed on the basics).

Helpful Hints:

- Detailed option grant info is important. When you include your proposed option grants, give your board enough information to understand what you’re proposing and the context. I like to see a table that shows the grantee’s name, title/position with the company, proposed option grant, existing options (if any) held by the grantee, what percent of the company (on a fully-diluted basis) the proposed grant represents, what percent of the company the grantee would hold including all prior grants, grant strike price, and vesting schedule for the proposed grant

- Organize all board signature pages in one place. If you need board signatures on a bunch of stuff and will need board members to sign them remotely, organize the signature pages, along with instructions for sending them back to the company, into a single separate document. That way your board won’t have to hunt through their board packages for signature pages to sign.

Bottom line, this should be but an efficient exercise to get to the stuff that really matters.  The next posts in the series will deal with the important stuff.

How to Create A Good Board Package

Our partner Chris begins our series with an overview, below.  Editorial comments are also included.

One of the distinctions that is critical to understand in order to have effective board meetings is that a board meeting isn’t simply a “live” version of the company’s board reporting package. (And conversely, a board package isn’t simply a paper version of a board meeting.) Board meetings and board packages should be viewed as complementary means of accomplishing two goals—(i) transfer of information and (ii) interactive discussion and critical thought about the state of the business

There’s been plenty written on AskTheVC and other venture blogs about what makes for a good board meeting, so I won’t attempt to repeat all that advice (but if you haven’t already read it and are a CEO with a board to manage, you would be well-advised to do so). But one thing I think bears repeating is that a thoughtful board package distributed in advance of your board meeting (combined with the commitment of your board to read said board package in advance of your meeting) is a prerequisite to a good board meeting. Otherwise you’ve doomed yourself to the “board meeting = live version of board package” routine.

Ed- It can’t be stressed enough that the board package needs to get into the hands of board members well in advance of the actual meeting.  Don’t assume that your board members have reserved the evening of the board to review the information that you send them.  If you do a good job of this, you have the right to expect that your board will be well-informed and engaged during the meeting.  If you fail in this attempt, then, as Chris says, you will have fun reading PowerPoint slides together.

So, if a good board meeting begins with a good board reporting package, then what makes for a good board package?

I like to see board packages that recognize there are a few distinct types of content that should be included. I’d broadly describe those types of content as follows:

- Business Overview and CEO Critical Thought

- Business Reporting

- Board Administrative Issues

Over the series of posts, Chris will tackle each of these categories, starting with the least interesting (and least impactful—at least from a board perspective).

Creating a Good Board Package Series

As Brad and I have written over time about how to run an effective board meeting, we’ve received one question many times from many of you:  How does one create a good board package to accompany the meeting?

As with our posts on term sheets, 409A and letters of intent, we thought this subject matter required a more in depth answer than a single posting and decided to create a series about this.

Before we could create something, however, our partner Chris Wand created a wonderful piece regarding this very subject and we are going to post his work as a series of blogs.

For those of you who know Chris, you know that he’s incredibly insightful and thorough.  You also know that he has vowed never to blog and whether this constitutes blogging for him, we’ll leave that up to the reader. 

We’ll post the series over the next week or two.  We hope that you enjoy it.