What board members need from CEOs: Advice to make the most out of your next board meeting

I’ve been asked a few times, “What is required from the CEO when presenting to the Board?”. Most importantly, the Board needs to see the REAL data. Board members need to know the facts. Without facts, they will not be able to make the right decisions. A good CEO should be truthful, and a good Board should provide support, advice, and direction to the CEO.

So, how can CEOs properly present at Board meetings to be most transparent?

Dov Moran, Managing Partner at Grove Ventures. Photo: David Garb

People First

Begin with the people. People are the highest-value asset of your company. You should know how many employees you have, how they’re divided into departments, how many joined/left, and why.

Talk about the organizational structure. Has it changed since the last meeting? Why? Do all top managers have the right tools to succeed and have full responsibility for their work? How are top managers compensated?

What kind of people are you looking to hire? How long does it take to find the right people? Can the Board members help?

Talk about morale (it is advisable to present an employee satisfaction survey at least once a year), HR activities, and the company’s culture. These insights are important in good times, but even more important when the company is going through tough times. A company that lacks quality employees has no real value.

Strategy

In most Board meetings, the CEO reminds the Board members of the strategy. Having a strategy is critical for any company, but especially for startups since they live in a tumultuous world with many uncertainties and surprises. A strategy for a company is like using the North star to navigate to a desired destination. Often, the road is more complicated than anticipated and we can’t walk on the path we planned to walk on. We may need to go around, left, or even backward. It’s ok to divert from the path from time to time if we make sure we haven’t lost the way entirely.

Quarterly meetings are meant to help us make sure that we are indeed going in the right direction. Usually, a Board should spend only 5 minutes of the meeting on strategy. However, taking the time to properly discuss the strategy creates an opportunity to repair, alter or renew it when necessary. Don’t save these five minutes of the session to briefly say: “This is the strategy, this is what we are doing, and this is how it goes. Next item in the list”. Remind the Board (and yourself!) of the values, vision, and mission statement of your company. I believe that these things are heavily integrated into the company’s strategy and need to be remembered and updated from time to time. Sometimes these ‘5 minutes’ will become the majority of the meeting, and later be regarded as one of the most important events in the company’s life.

Execution

This is the part of the meeting where the CEO shares what has happened in the company since the last quarterly meeting. How is the R&D progressing? What were the milestones achieved? What are the milestones for the next quarter?

If there is hardware involved: how is the manufacturing doing? What is the yield, quality, and cost? What are the plans and targets for cost reduction, and how does the company plan to implement them?

What’s the status of necessary agreements or contracts? How are the deliveries, returns, and customer complaints being managed?

What has been the market reaction? Who are the large (existing or potential) customers? What are their expectations of the product?

It is also important to observe your competitors – How are they doing? Have they achieved any important milestones? How are we competing with them?

Finance

Well… this is the ‘boring’ part of the meeting. What are the numbers? How and why do they deviate from the financial plan? Can we fix that? Do we need to change the plan and projected numbers for the next quarter/year?

If the company is selling (great!), a breakdown of sales is required: products, geographies, large customers, etc. A thorough analysis of the Gross Margin (or the “cost of sale”) is a must.

Most essential and required at any Board meeting is how much runway (life) the company has. A startup needs to be highly sensitive to its cash situation. The rule is simple: “Don’t raise money when you need it, but rather - raise money whenever you can”.

Final Tips

• Try to keep your presentations in a similar format, to help the Board compare information from your last meetings.
• It is recommended to have a 5-minute session at the end of the Board for “external” directors only, to speak about the company’s status and the CEO’s activity, without the CEO nor the CFO’s presence.
• Send the board presentation ahead of time, at least 2-3 days prior to the meeting.
• Share the Board meeting’s summary including resolutions as soon as possible, and no longer than a week after the meeting has convened.
• Establish a Compensation Committee with participants who are unrelated to the company’s executives. From time to time, the CEO/CFO should recommend option grants and salary increases to top executives. Once the CEO provides the committee with its recommendation, the committee should decide and raise it for the Board’s approval. Be strict about this process, be modest, use a comparable, establish standards for the company rather than a one-by-one policy and have the CFO prepared to justify your requests. Try to present option grants for Board approval every quarter and salary increases once a year.
• A board should meet at least once a quarter, and I would add another meeting at the beginning of the year dedicated to the strategy, annual plan, budget, and KPIs. At times of crisis, more meetings are required, use your Board members for ideas and intros to funding.
• At tough times/when you are expecting surprises or resistance, speak with all Board members prior to the meeting.
• Finally, do not serve unhealthy food. It may not kill your Board members early, but if you want to kill them - there are other better ways to do so.

To some, Board Meetings can be a headache. Good CEOs, however, use these meetings to allow the Board to evaluate their activity, their company, and their strategy and become part of their team.

Dov Moran is the Managing Partner of Grove Ventures