Company Meeting Title

1
You Your Board
Derby Managements Entrepreneurial Rules of the
Board
Derby Management20 Park Plaza Boston, MA
02116 617-266-9266 www.derbymanagement.com
2
You Your Board

• Benefits to you
• You need someone to talk to.
• You need fresh strategic ideas.
• Everyone needs mentoring
• Directors are independent (mostly)

3
You Your Board

• Benefits to you
• Contacts
• Its not bad to have performance reviews
• Conditioning for post IPO

4
The Directors Job

• Directors Add Value
• Ensure legal and ethical conduct
• Select and evaluating management
• Approve strategy and business plans
• Provide general oversight of the business

5
The Directors Job

• Directors Ensure Board Functioning
• Evaluate processes and performance
• Select directors
• Compensate directors

6
The Best Directors

• Source of contacts
• Industry business experience
• Functional experience
• Not personal friends
• Have character
• Have chemistry

7
Criteria for Directors

• Have the respect of the shareholders
• Share the Strategic Vision
• Are able to balance tactics with strategy
• Have availability of time
• Are motivated for success
• Have the right chemistry

8
Board Structure

• Directors 5-7
• Meetings 10 Range 4-12
• Time/hours 4 Range 3-8
• Committees 3
• Committee Mtgs 6
• Hours/Director 100 per year

9
Board Structure

• Structure
• Meeting Frequency
• Pre venture capital 8-12/ year
• Venture capital 10-12/year
• Established 8-10/year
• Length 3 to 4 hours

10
Board Structure

• Structure
• Size 5 or 7 Directors
• CEO
• Maybe the Founder, now ex-CEO
• 2 investors
• 1-2 industry or skills expertise
• May allow (1 or 2) visitors
• Hint Try not to allow consistent visitors

11
You Your Board

• Structure
• Remember the 3 martini rule
• One investor feels pretty good
• Two investors cause some misjudgment
• Three investors cause being out of control
• Thanks to Dan Holland, Partner, One Liberty
  Ventures

12
You Your Board

• Structure
• Compensation
• Cash none other than direct expenses
• Equity 1.0-2.0 very early stage
  0.25-1.0 VC funded
• Insurance
• DO insurance is typical today

13
Board Functioning

• Annual Schedules
• calendars, types of meetings
• Materials 3 days in advance
• agenda, financials, minutes
• Prompt starts scheduled ends
• Directors, CFO presenters
• Executive Director if an association
• VPs are presentation visitors

14
Board Functioning

• Meeting Structure-1
• Planned
• 20 status 20 tactical issues 60 strategic
• Current performance defines percentages
• Agenda-status updates
• Minutes approval
• Financial results to Plan review by CFO
• Sales, Bookings Backlog to Plan review by Sales
• Agenda-tactical issues
• Review of 1-2 primary departmental tactical
  issues
• Presented by the departmental manager

15
Board Functioning

• Meeting Structure-2
• Agenda-Strategic
• 50-60 of every meeting
• Robust discussions
• Problem solving
• 1 primary strategic issue
• Presentation by CEO or primary manager

16
Board Functioning

• Meeting Structure-3
• Board meetings are not staff meetings
• CEO CFO always present
• Managers come for presentations and leave
• Should always be time for Directors-only
  discussions

17
Board Functioning

• Meeting Structures-4
• Agenda-Committee Reports
• Financial Audit Committee 1-2 times/year
• 2 board members
• Review audit reports with CPA firm CFO
• Recommends actions to board

18
Board Functioning

• Meeting Structure-5
• Compensation Committee
• CEO 2-3 board members
• Recommends CEO compensation objectives
• Works with CEO on VPs comp plans
• Coordinates board review actions
• Annual CEO performance review
• Annual VP performance review

19
Typical Board Problems

• Too many people at the board meetings
• Too many insiders
• Inadequate skills experience diversity
• Inadequate communication
• Poor meeting preparation

20
Recommendations To Improve

• Take a step back and
• Inventory existing skills experience
• Define the primary annual board objectives
• Define attributes needed for directors
• Define the proper board size structure
• Define the selection process for directors
• Select the rightdirectors
• Change some of the existing directors

21
Derby Managements Entrepreneurial Rules of the
Board
Derby Management20 Park Plaza Boston, MA
02116 617-266-9266 www.derbymanagement.com