How executive session board meeting fosters trust and drives results (with numbers)

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How executive session board meeting fosters trust and drives results (with numbers)

By iDeals Board
January 25, 2024
7 min read
executive board meeting

While open communication and accountability are hallmarks of modern corporate governance, some issues should remain out of the public eye. This is especially due to the heightened risk of human error in confidential discussions, highlighting that 95% of document security breaches stem from unintentional mistakes. 

Thus, personnel issues, strategic negotiations, and internal board disagreements necessitate the safe space of a regularly scheduled board meeting.

Executive sessions provide a forum for sensitive topics that require the utmost confidentiality. This discrete setting enables honest discussions and exchanges of opinions. Also, it sounders decision-making, while limiting the danger of accidental leaks or exposure.

This article answers the questions: what is an executive session in a board meeting? What are the roles of the executive committee and steering committee. Also, it explores the questions to ask senior executives and how the work session is going on. 

What is an executive session?

Governing bodies like boards of directors, chief executive or board chair can hold private meetings called executive sessions. These gatherings behind closed doors remain confidential and exclude the public. 

Moreover, executive sessions are essential for handling sensitive matters requiring more privacy and board independence. Participants can openly discuss these issues without public pressure, voice concerns freely, and arrive at informed decisions.

Despite the private nature of the executive session, the decision to enter and the general topics covered are often announced publicly beforehand. After the session concludes, a public announcement may be made summarizing any decisions, without revealing confidential details.

Speaking about meeting duration, time is a precious asset. It’s especially relevant in the context of executive board meeting. Bylaws frequently specify duration, to encourage full discussion while being concise. While 30 minutes may be a typical benchmark, sessions can range from swift five-minute huddles to more extended deliberations, always guided by the board meeting agendas and the urgency of matters at hand.

The main features of an executive session include:

  • Limited attendance. Only authorized members with decision-making power can participate.
  • Confidentiality. Discussions and decisions made in the session are typically kept confidential.
  • Focus on sensitive matters. The session addresses issues that could be harmed by public disclosure or scrutiny.
  • Open discussion. The closed-door environment encourages a free and honest exchange of opinions.

What can be discussed in the executive session?

Executive sessions are often supervised by particular open meeting legislation that specifies topics discussed and under what conditions. These rules try to strike a compromise between transparency and the requirement for secrecy. Here are the most common matters discussed during executive sessions: 

  1. Legal matters. Discussions involving potential or pending litigation, legal issues, disciplinary matters, attorney-client privilege, and regulatory compliance necessitate confidentiality to protect the organization and sensitive legal strategies.
  2. Personnel matters. Employee discipline, performance evaluations, and potential terminations benefit from the privacy of an executive session to protect individual reputations and ensure fair processes.
  3. Strategic planning and negotiations. M&A activities, partnerships, and major financial transactions require a secure environment for free discussions about sensitive financial data and plans. It prevents early public exposure that could impact negotiations or markets.
  4. Internal matters. Board evaluations, succession planning, and crisis management often involve confidential internal assessments and require candid exchange without outside influence to ensure effective decision-making.

Executive session board meeting rules

Executive sessions allow boards to have confidential conversations on important issues. However, working in this closed-door environment requires a special set of rules, and executive session board meeting minutes play an important role in maintaining openness and accountability.

In this section, we’re breaking through the most important rules for executive session board meetings:

  1. Legal counsel. Consulting with legal counsel is important to ensure that the session itself complies with all applicable rules and regulations.
  2. Notice and agenda. The board must specify the authorized topics for discussion in a clear and concise agenda provided well in advance, often alongside the main board meeting agenda.
  3. Voting and quorum. Formal votes by the board are required to enter and exit an executive session. A quorum, as stated by the bylaws, must be present for the duration of the closed-door discussion.
  4. Minutes and records. While most organizations don’t require detailed executive session minutes, some form of record-keeping is essential. Secure maintenance and access control are often entrusted to the designated corporate secretary role.
  5. Transparency and public access. Executive sessions aren’t always private. Meeting minutes may be disclosed under certain circumstances, and returning to an open session needs clear procedures.

Authorized purposes. Executive sessions are limited to discussing specific matters authorized by applicable legislation and the organization’s bylaws.

Who can attend an executive session board meeting?

Behind the closed doors of an executive session board meeting, a limited group navigates the organization’s most sensitive issues. But who exactly can join the executive sessions?

Voting board members

These persons, who have voting rights, serve as the foundation for each executive session. Their different viewpoints and collective expertise drive decision-making on topics such as:

  • Mergers and acquisitions
  • Executive compensation
  • Crisis management
  • Long-term strategies

CEO and chairman

The CEO, while not a permanent fixture, may be invited when the board needs direct input. This happens when strategic decisions affect their performance or need them to have a strategic vision. Similarly, the CEO’s day-to-day leadership framework proves useful for resolving operational obstacles.

When the chairman’s leadership comes under question, he steps away. This guarantees that board members may conduct impartial evaluations and have open discussions without prejudice or undue influence. Their absence is a planned move to ensure the process’s integrity, not a show of weakness.

Read our dedicated article to learn more about CEO and chairman roles.

See how we can support your board meetings

Best practices for conducting successful board executive session

Here’s how boards can guarantee they’re more than simply “closed doors” but informative discussions.

  1. Set a clear agenda. Describe specific themes and intended goals. It is important to stay focused and avoid any deviations from the topic.
  2. Invite strategically. Include relevant expertise while maintaining a focused group for open conversation.
  3. Conduct post-session debrief. Inform the whole board of the major takeaways while maintaining confidentiality.
  4. Be an active chairman. Guide the debate, make sure all opinions are heard, and manage time wisely.
  5. Establish board policy. For sensitive issues beyond the routine agenda, follow established protocols for calling and conducting board of directors executive sessions.

Examples of effective executive sessions of the board

Striking a balance between transparency and strategic discretion is crucial for boardroom effectiveness. Instead, the Volkswagen example highlights the consequences of an incorrect balance. 

Volkswagen’s “Diesel Dupe” scandal, which involved purposeful manipulation of emissions testing using “defeat devices”. This lack of openness and accountability encouraged a culture of groupthink and unethical behavior in the company. As a result, Volkswagen faced about $18bn in penalties, reputational loss, and ecological damage. 

This case highlights the risks of secrecy in executive sessions and business operations. Organizations should:

  1. Improve transparency by recording and sharing crucial choices.
  2. Encourage ethical inquiry and create a safe space for disagreement.
  3. Incorporate long-term environmental and ethical concerns into decision-making.

How iDeals Board improves executive sessions of board meetings

In today’s corporate landscape, effective governance often hinges on agile decision-making within executive sessions. As Deloitte highlights, the future of boardroom efficiency lies in seamless information access and centralized communication. With 81% of companies in 2021 actively seeking to digitize all executive levels, the demand for a robust yet innovative board portal is undeniable. 

Recognizing this evolving need, iDeals Board streamlines calendar management for executive assistants and empowers executive sessions with the following tools:

  1. Secure communication channels. Ensure that private discussions remain confidential by using high-grade encryption and 2FA for all communication, document sharing, and video conferencing within the executive session. 
  2. Granular access control. Granular permissions allow restricting participation in and sharing of materials within the executive session.
  3. Easy meeting minutes creation. Capture crucial decisions, action items, and discussions while maintaining confidentiality.
  4. Voting. Facilitate safe and anonymous voting within the executive session to measure preferences and establish consensus quickly.
  5. Document annotation. Securely redact confidential sections while allowing for real-time participation and input throughout the executive session. 

Key takeaways 

  1. Executive sessions offer a safe space for discussing sensitive topics like legal matters, personnel issues, strategic plans, and internal disputes.
  2. Bylaws define the topics and duration of executive sessions.
  3. Confidentiality of executive sessions protects the organization from premature public exposure or manipulation.

FAQ 

1. What do Robert’s rules say about executive sessions?

They don’t allow or prohibit them. Robert’s rules permit boards to choose their procedures for having executive sessions.

2. How to document executive sessions in minutes?

Minutes should not document every word, but rather highlight significant decisions, action items, and opposing viewpoints (without credit). 

3. Can a board member be excluded from the executive session?

No, board members have a right to participate in all meetings unless it directly conflicts with their personal interests or involves specific allegations against them.