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Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™
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Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™
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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
2
Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™
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DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guarantee in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one-hour webinar on the topic.
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MEET THE FACULTY
Moderator:
Mark Trembacki – Risk Management Levers, Inc.
Panelists:
Kristi Daeda – The Family Business Consulting Group
Jay Reilly – Saul Ewing Arnstein & Lehr LLP
David Spitulnik – Spitulnik Advisors
Aarthi Belani – Jones Day
4
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ABOUT THIS WEBINAR:
Roles & Responsibilities: A Primer
Private company owners, including family businesses, ESOPs, and private equity owners,
often have different expectations for their boards than is common in publicly-traded firms.
Besides being much less encumbered by state, SEC and exchange rules that apply to public
companies, many private firms are looking for a completely different kind of engagement
from directors. In companies with new boards, leaders and directors often struggle early on
to determine the role of the board and how to separate board responsibilities from those of
ownership and management. In this webinar, the audience will learn what companies are
really looking for (or should be) from their boards, and the many ways that boards
contribute to private company success.
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ABOUT THIS SERIES: Private Company
Board of Directors Boot Camp 2019
More and more privately-held companies are exploring the benefits of effective corporate
governance and, consequently, are working towards formalizing board processes. This trend has
been driven in part by shareholder lawsuits against private company directors, ever-increasing
pressure that companies face from foreign competitors and increasing government regulation. The
demographic wave of the huge number of businesses whose leadership is getting ready to retire and
which, therefore, must engage in succession planning is another significant factor. Yet, many private
companies delay implementing a more formal governance regime or simply do not understand they
even need it. This webinar series discusses various aspects of good governance in private companies.
Applicable to owners, executives, directors and their respective trusted advisors, this webinar series
brings a variety of experiences and perspectives on the most common questions around private
company governance.
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EPISODES IN THIS SERIES
9/12/19 Episode #1:
Roles & Responsibilities: a Primer
10/10/19 Episode #2:
The Effective Director
11/7/19 Episode #3:
The Effective Board
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Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.
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Episode #1:
Roles & Responsibilities: A Primer
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WHAT IS A BOARD OF DIRECTORS?
• Usually legally required
• Represents ALL shareholders
• May consist of inside directors (shareholder, officer, management) and
outside directors (independent executives)
• Provides “insight” and “oversight”
• Structure and procedures are defined by the organization’s bylaws
• Typically has a formal nomination/election process
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WHAT IS THE PURPOSE OF THE
BOARD?
• To enhance the quality of strategic decisions
• To ensure the CEO is doing his/her job
• To ensure a strong succession plan is in place for continuity
• To ensure the Company is compliant with applicable law, regulations and
ethical policies
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PUBLIC COMPANY V. PRIVATE
COMPANY: WHAT’S THE DIFFERENCE?
• Public companies
Full disclosure of all financial records to the board
Responsible for the hiring and firing of the CEO
Subject to Sarbanes-Oxley and associated compliance requirements
• Private companies
Often, a group of major “insider” shareholders exist; care must be taken to
consider minority shareholder interest
The CEO is usually a major shareholder of the company
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TYPES OF BOARDS
• Advisory Board
Common in private companies
Typically a transitional structure
Members engaged by the Company
Informal body that provides non-binding advice to management
Work for the CEO - do not have the ability to hire/fire CEO
Cannot force management to take a specific action
Typically no audit oversight
Do not share the same liability and compliance costs of their Fiduciary counterparts
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TYPES OF BOARDS (CONTINUED)
• Fiduciary Board
Required for public companies and private corporations
Elected by the shareholders
Responsibility to act as a Fiduciary for ALL shareholders
Typically execute governance best practices (because they are liable if they
don’t)
Oversight/approval of strategic plan, budgets, major projects, and policies
Monitor the company’s financial structure, performance, and culture
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TYPES OF BOARDS (CONTINUED)
• Fiduciary Board (cont’d)
Hire/fire/evaluate the CEO and approve and oversee compensation
Evaluate other execs and family members - with consequences
Responsible for oversight of succession
Comply with law
Ensure the company’s compliance with the law
Insiders versus independents
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WHAT IS FIDUCIARY RESPONSIBILITY?
• Duty of care
Officers and directors must exercise ordinary and reasonable care in their duties and
act on an informed basis in due consideration of all relevant information reasonably
available.
Board members are protected from personal liability through “The Business
Judgment Rule” when making an ordinary business decision with rational business
purpose, IF the directors of a corporation acted (or affirmatively decided to refrain
from acting) on an informed basis, in good faith and in the honest belief that the
action taken was in the best interests of the company.
NOTE: Enhanced scrutiny applies in a sale of control context and the entire fairness
stand applies when actual conflicts of interest exist.
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WHAT IS FIDUCIARY RESPONSIBILITY? (CONT’D)
• Duty of loyalty
They must act in good faith in a manner reasonably believed to be in the best interest of
the company
Board members must give undivided allegiance to the company when making decisions
affecting the company, all personal interests must be put aside
Board members must disclose all conflicts of interest and exclude themselves from any
discussion or vote in which they may have a personal interest
• Duty of obedience
All board members must act in accordance with the company’s governing documents such
as, articles of incorporation and bylaws as well as all applicable laws and regulations
• Duty of disclosure arises if shareholders are called on to act
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ADDITIONAL OBLIGATIONS OF A
FIDUCIARY BOARD
• Audit committee reviews
• Analysis of material lawsuits
• Whistleblowers
• Examination of corporate risk exposure
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WHY CHOOSE AN ADVISORY BOARD?
• They can focus on strategy and avoid liability and compliance constraints
associated with Fiduciary Boards, that being said, you should still hold your
Advisory Board to Fiduciary Board standards
• Advisory Boards have the benefit of choice
They can avoid defensive topics and focus instead on the offensive topics such as:
1. Bringing in new customers
2. Expanding into new markets
3. Introducing new products
4. Attracting great talent
5. Increasing profitability
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TIPS FOR ESTABLISHING A BOARD
• Must Have A Charter
• What Do You Expect The Board To Do?
• What Collective Skills Should Be Brought To The Table?
• What Do You Expect Each Board Member To Do?
• How Often Will You Meet As A Group?
• How Often Will You Talk With Them?
• Can (Should?) Include Outsiders As Well As Insiders
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COMMON SKILLS AND EXPERIENCES
SHAREHOLDERS LOOK FOR IN CANDIDATES
• Prior to an interview:
Board experience
Strong financial literacy
Strategic planning skills
Industry or related industry experience
Strong leadership skills
Experience with effecting change or significant growth within an organization
Private company experience
A strong network
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COMMON SKILLS AND EXPERIENCES
SHAREHOLDERS LOOK FOR IN CANDIDATES
(CONT’D)
• During an interview:
Strong listening skills
High ethical standards
Decision making ability
Appropriate management of “air time”
A proclivity for inclusions
Adapted from: Creating a Harmonious Board by Kelly LeCouvie, PhD
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THE CASE FOR PAID BOARD
MEMBERS
• Companies that pay boards tend to get more return on investment
• Board members have a vested interest (time, energy) as do you
• Shows you understand the value
• Communicates expectation of high value in return
• When paying, you’ll prepare more: spend 2X the amount of time of your meeting in
preparing (agenda, materials, etc.)
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WHAT IT TAKES TO MAKE A BOARD
MEMBER SUCCESSFUL
• In-depth knowledge of the business
• Ability to constructively challenge the executives
• Set strategies and hold the executives accountable
• Understanding that being a board member is not a side job, but a real time
investment
• Asking the right questions is often more important than having the answers
Ask open-ended questions. Don’t ask “Why?” “How?” is a better formulation to
activate positive thinking.
23
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WHAT IT TAKES TO MAKE A BOARD
MEMBER SUCCESSFUL (CONT'D)
Understand the underlying thinking of the company and its leaders
Ask follow-up questions. Avoid making statements after the initial question, ask
another question.
Enjoy the silence. One can learn and contribute more than from someone merely
filling a gap.
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WHAT IT TAKES TO MAKE A BOARD
MEMBER SUCCESSFUL (CONT'D)
Learn. A board member might not always have the answer, but others might. A
good board member may be able to help others think and learn even though
he/she is not the expert.
A board member should take notes. This demonstrates respect and – for many –
helps give extra time for effortful thinking.
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SPECIFIC SKILL SET FOR A BOARD
MEMBER
• Preparation
Being well-prepared before every meeting is an obvious and absolute prerequisite
to be able to contribute and add value to the discussions. Without spending a
great deal of time reading and thinking about the issues the company faces, a
board member can neither formulate the powerful questions nor constructively
challenge the discussions.
• Punctuality
• Positivity
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SPECIFIC SKILL SET FOR A BOARD
MEMBER (CONT'D)
• Respect
As a non-executive board member, the most effective contribution a person
can make is to help the executives excel. A director needs to be self-confident
and control his/her ego in a way that enables them to listen and work in the
team without engaging in the operational activities.
• Good listener
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SPECIFIC SKILL SET FOR A BOARD
MEMBER (CONT'D)
• Team player
A person is not on the board to be liked or accepted and is often not there for the
money. Instead, the board member is there for the owners’ and the executives’
sake – not their own.
• Honesty and transparency
• Responsiveness
• Loyalty
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BOARD MEMBER CONTRIBUTIONS
• Expertise
• Self discipline and accountability
• Objectivity
• Board experience
• Strategic Thinking
• Insight into key people, empathic counsel
• Network
• Professionalizes behavior
Adapted from Building a Successful Family Business Board by Pendergast, Brun de Pontet and Ward
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COMMON ITEMS THAT CAN HINDER
A BOARD
• Lack of clarity on the roles of individual directors and the board as a whole. Role
ambiguity slows decision-making and causes unnecessary director conflicts.
• Poor Process management hinders effective board preparation, meeting
management, and communications. This results in indecisiveness and a lack of
urgency on critical challenges facing the organization.
• Lack of alignment and agreement on company strategy causes disinterest among
board members, who then simply default to tackling regulatory and compliance
issues. Poor strategic alignment also hampers a board’s ability to prioritize issues
and set their near-term agendas. This often causes board disruption and sends
damaging signals to financial markets.
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COMMON ITEMS THAT CAN HINDER
A BOARD (CONT'D)
• Poor team dynamics fracture boards and lead to power struggles. Like any effective
working group, a board should be comprised of professional peers who respect and
work well with each other.
• Board composition is a serious impediment, if not done right. Today’s challenges
require new perspectives and skills. But boards often lack the ability to objectively
evaluate their makeup to determine if they have the right people and skills at the
table.
31
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SAMPLE BOARD AGENDA
Source: Jeremy Barlow. www.boardeffect.com/blog/role-of-the-board-chair
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ABC Company
123 Main St.
Anytown, USA 12345
AGENDA
January 1, 2016
Time: 9:00 am
Location:
Company Corporate Office
123 Main St. Suite A
Anytown, USA 12345
I. Call to Order
II. Approval of the Agenda
III. Approval of the Minutes
IV. Reports
1. Executive Director
2. Finance Director
3. Nominating Committee
4. Governance Committee
5. Public Relations
Committee
V. Old Business
1. Board nominations
2. Contract negotiations
VI. New Business
1. Special Event
VII. Comments and Announcements
VIII. Adjournment
Next meeting date August 1, 2018
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THE ROLE OF THE CHAIR
• Lead and guide the rest of the board
• Direct liaison between the board and management
Works with CEO on board meeting agendas
• Facilitate board meetings and guide committee work
With the CEO the chair recommends committee chairs and serves as an ex-
officio member of all committees
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THE ROLE OF THE CHAIR (CONT'D)
• Upholds and addresses rules of conduct
• Recruits and develops new board members
• Conducts self-evaluations
• Plans for succession
• Balances participation of Board members (encouraging quieter members to
speak, etc.)
Source: Jeremy Barlow. www.boardeffect.com/blog/role-of-the-board-chair
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ROLES OF OWNERS
VERSUS DIRECTORS
VERSUS
MANAGEMENT IN A
FAMILY BUSINESS
D = Decide I = Input
Owners Board Mgmt
Family values, mission, vision D
Resolving family conflict D
Supporting troubled family D
Family education D
Family employment policy D D I
Ownership succession D
Board composition/director selection D I
Leadership succession D
Senior leadership compensation D I
Distribution/dividends I D I
Business strategy development I D
Business strategy approval/oversight D I
Day to day operations D
Company culture and corporate risk I D I
Community relations I I D
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COMMON BOARD COMMITTEES
• Audit
• Compensation
• Governance and Nominating
• Finance
• Risk Management
• Technology and Innovation
• Executive
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SAMPLE COMMITTEE RESPONSIBILITIES
• Audit Committee:
Recommend and review selection of outside auditors.
Assure the efficient completion of internal and external audits.
Review and approve annual internal and external audit procedures, including the
methodology and areas of audit and revisions to the annual report.
Review and approve accounting, legal, and financial policies.
Ensure methods are in place for identifying and investigating potential fraud.
Review financial statements before they are presented to the full board.
Ensure shareholders receive adequate financial information from the Company.
37
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SAMPLE COMMITTEE RESPONSIBILITIES (CONT'D)
• Compensation Committee:
Supervise the design and implementation of policies related to compensation,
performance evaluation, employee development, and retirement.
Approve the personal development plans for senior-level executives.
Approve annual salary increases for senior-level executives.
Conduct a formal performance evaluation of the CEO.
Review performance evaluations of senior-level executives.
Oversee the development of succession plans for senior-level management.
Propose programs for professional development for shareholders.
Adopt 409A valuations regularly in connection with administration of stock plan
Approve option grants
38
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SAMPLE COMMITTEE RESPONSIBILITIES
(CONT'D)
• Governance Committee:
Identify and recommend independent director candidates.
Recommend candidates for board officer positions and board committee
membership.
Develop a succession plan for the board chair.
Make recommendations to the shareholder assembly of appropriate
compensation levels for board members.
39
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SAMPLE COMMITTEE RESPONSIBILITIES
(CONT'D)
• Governance Committee (CONT'D)
Coordinate the annual board-evaluation process.
Develop and recommend long-term board goals for approval by the full board.
Ensure that all committees have established objectives and charters.
Oversee the board orientation process for new board members.
Assure that a code of ethics guides business and director conduct.
Adapted from: The Chair Forum, The Family Business Consulting Group
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VALUE OF INDEPENDENT DIRECTORS
ON A BOARD
• Increase professionalism/decrease conflict in the board room
• Lead contentious/confidential matters such as performance management and
compensation
• Bring just-in-time strategic knowledge
• Mentor for key management/successors
• Knowledge of practices in other leading firms
• Challenge assumptions
• Encourage board discourse to stay at strategic/oversight level rather than in
operations
41
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THE NON-STRATEGIC VALUE OF
NEW DIRECTORS
• Much attention is given to the strategic advantages of strong directors on your board. Yet,
in addition to traditional benefits, there are often many unexpected contributions that are
just as important as the strategic input directors provide in the boardroom. These can
include:
 Meeting preparedness: Directors tend to increase their preparation process when new
directors are added to the board. The CEO is likely to think more deeply about the kind of
preparation required for new directors to succeed.
 Board education: Incumbent directors may be prompted to become more educated about
roles and responsibilities of good directors. It may lead to more formality and
sophistication around board function.
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THE NON-STRATEGIC VALUE OF NEW
DIRECTORS (CONT'D)
• Mentorship and leadership development: Directors often become mentors or
confidantes to the CEO and other stakeholders.
• Strong board culture: Good directors possess attributes that help facilitate
group cohesion. New directors may cause inside directors to be instinctively on
their best behavior. Skilled directors will work hard to manage dissension.
Adapted from: “The Non-Strategic Value of Directors” by Kelly LeCouvie, PhD. The Family
Business Advisor published by The Family Business Consulting Group.
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ADDING INDEPENDENTS
INCREASES BOARD
VALUE FOR LEADERSHIP
• Percentage of a sample of
family-owned business CEOs
rating their board as effective
based on involvement of
independent directors.
Source: Building a Successful
Family Business Board, by
Pendergast, Ward and Brun de
Pontet, The Family Business
Consulting Group
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THE PROSPECTUS: A TOOL FOR
ATTRACTING AND SELECTING THE
RIGHT INDEPENDENT DIRECTORS
• Desired traits of directors are often captured in a prospectus, a document that
includes a “job description” of a director as well as background information on
the company and desired traits and experience. A prospectus should include:
 Overview
 History and Company Profile
 Description of Current Board Structure
45
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THE PROSPECTUS: A TOOL FOR
ATTRACTING AND SELECTING THE RIGHT
INDEPENDENT DIRECTORS (CONT'D)
• Director Expectations & Responsibilities
• Compensation & Terms
• Desired Director Profile
• Overview of Selection Process
46
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EFFECTIVE BOARD FACILITATION
CHECKLIST
• How well do I:
Observe and participate in group processes simultaneously, contributing on
content level while influencing process?
Manage the discussion – initiating, focusing, closing?
Pace the group’s work?
Encourage, balance and maintain participation and cooperation?
Reinforce effective interpersonal and professional behaviors?
47
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EFFECTIVE BOARD FACILITATION
CHECKLIST (CONT'D)
Push to consensus?
Manage conflicts?
Ensure clarity of decisions and follow through?
Adapted from: The Chair Forum, The Family Business Consulting Group
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OUTLINE OF BOARD BACKGROUND
BOOK
• Helping Directors Prepare: The Board Background Book
• Directors depend on the chair to get the information they need to do their job
well. One effective way to accomplish that is with a board background book. The
board background book is a comprehensive, professionally presented summary
of important information about the business.
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OUTLINE OF BOARD BACKGROUND
BOOK (CONT'D)
• Contents:
1. Mission Statement, History and Strategy
2. Who’s Who (Org Chart, Shareholders, Officers, Key Advisors, etc.)
3. Biographies (Key executives and Directors)
4. Competitors, Vendors & Customers
5. Financial Information
6. Audit & Estate Valuation
50
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OUTLINE OF BOARD BACKGROUND
BOOK (CONT'D)
7. Articles, Bylaws, Indemnification
8. Other Information (Union status, Insurance coverage, Asset appraisals, Real estate,
etc.)
9. Board Schedule and Agenda
Adapted from: Building a Successful Family Business Board: A Guide for
Leaders, Directors & Families by J. Pendergast, J. Ward, S. Brun de Pontet.
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GETTING THE MOST OUT OF YOUR
BOARD
• Finding the right board members is important, but it’s only half the battle. To get
the most out of your board, you have to give board members a meaningful role
and set up meetings so that they can contribute. To take advantage of all the
board has to offer:
 Clearly outline your expectations of board members
 Educate them on your business.
 Empower the board.
52
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GETTING THE MOST OUT OF YOUR
BOARD (CONT'D)
 Set a meaningful board agenda.
 Provide exposure to key management members.
 Establish a communication channel between owners and outside board
members.
 Evaluate board performance.
Adapted from: “Getting the Most Out of Your Board” by Jennifer M. Pendergast, The
Family Business Advisor, published by The Family Business Consulting Group.
53
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PLANNING YOUR BOARD’S CALENDAR:
SAMPLE QUARTERLY THEMES
54
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ABOUT THE FACULTY
55
Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™
Receive our free weekly newsletter at www.financialpoise.com/subscribe
Mark Trembacki – marktrembacki@gmail.com
As Managing Principal of Risk Management Levers, Mark Trembacki provides organizations
with practical value-added solutions in strategy development and execution, enterprise risk
management, acquisition integration and governance. He teaches Enterprise Risk
Management in the Masters of Finance program at the University of Illinois, Urbana-
Champaign. Mark enjoyed a diverse career at BMO Financial Group, holding a variety of
executive risk management and business leadership roles.
Mark graduated from the University of Illinois, earned an MBA in Finance from The University
of Chicago Booth School of Business, and is a CPA. He earned a Cyber Security Management
Graduate Certificate from the University of Virginia and is recognized as a National Association
of Corporate Directors (NACD) Governance Fellow. Mark serves as Board Chair of the DuPage
Children’s Museum and Treasurer of the Chicago History Museum.
56
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Kristi Daeda – daeda@thefbcg.com
Kristi Daeda is Vice President at The Family Business Consulting Group. Kristi leads a variety of practice areas for
The Family Business Consulting Group including the firm’s governance and board search practice, family business
education, support for publications such as The Family Business Advisor and the firm’s collection of family
business books, strategic partnerships, and branding and communications efforts. She also moderates the firm’s
popular series of webinar discussions on family business topics. Prior to joining FBCG, Kristi led sales, purchasing,
marketing and IT for a family owned e-commerce retail company. She also spent five years as founder and
president of a consultancy focused on helping professionals effectively market themselves, either as
consultants/service providers or in job search for executive roles. Kristi is a member of the Family Firm Institute,
where she has contributed to the online publication The Practitioner and volunteered in planning its international
conference. She is also on the Chicago Chapter board of the Private Directors Association and serves as co-chair for
the education committee. Her writings are published in two books, Launchpad, a guide to building a successful
career, and Lenses of Leadership: A Call to Action. She is a frequent speaker and writer on themes around family
business, governance and personal development. In addition to her professional activities, Kristi is involved with
her local school and an organization that provides pro-bono strategic consulting to nonprofit organizations. She
lives with her husband, two children and dog in the suburbs of Chicago.
57
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Jay Reilly – Jay.Reilly@saul.com
With his private practice and in-house experience, Jay Reilly, Counsel at Saul Ewing Arnstein &
Lehr LLP, brings to clients a dual perspective of legal issues facing businesses. He has a deep
knowledge of the bio-tech, life sciences and pharmaceutical industries and has counseled smaller
companies on a variety of corporate matters.
Prior to joining Saul Ewing Arnstein & Lehr, Jay was General Counsel and Chief Compliance Officer
for Emergent BioSolutions, a publicly traded specialty pharmaceutical company in Washington,
D.C. In this position, Jay managed the company’s in-house legal staff and monitored government
contract and compliance matters. He has extensive knowledge of securities law compliance and has
directed numerous complex corporate transactions, including mergers and acquisitions, real estate
deals, joint ventures, strategic alliances and licensing agreements. In addition, Jay has first-hand
experience counseling members of boards of directors on governance, fiduciary duties and risk
mitigation. Previously, Jay was in-house with Novell, Inc. in Waltham, Massachusetts. He also was a
senior corporate associate for five years at Wilmer, Cutler, Pickering, Hale and Dorr LLP in Boston,
Massachusetts.
58
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David Spitulnik – dspitulnik@spitulnikadvisors.com
David Spitulnik is a successful executive with over 35 years of experience in both large technology
companies and in consulting to and leadership of mid-market, closely held and family owned
businesses across a variety of industries. In addition to serving as chair of the Private Directors
Association’s Private and Family Business Center Outreach Committee, David frequently writes on a
number of topics related to leading, building, maintaining and strengthening businesses and their
governance structures. Drawing from a broad range of experience in the United States and
internationally, David is called upon to coach and mentor business leaders and to advise businesses
on board creation, structure and effectiveness so that the individual, the board and the company can
maintain powerful forward momentum.
David recently published a book on leadership, Becoming An Insightful Leader: Charting Your
Course To Purposeful Success. The book focuses on the journey from managing to leading to
advising and reflects David’s belief in communicating and questioning how individuals and teams
will define and then accomplish their goals and objectives. David graduated from Haverford College
with a B.A. in Economics and received his MBA from the Kellogg School at Northwestern University.
59
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Aarthi Belani – abelani@jonesday.com
Aarthi Belani is a partner in the M&A practice in the Silicon Valley office of Jones Day. She focuses
on M&A and venture deals in tech and life sciences. Prior to joining Jones Day, Aarthi was on the in-
house legal team covering strategy and corporate development at Credit Suisse in New York. Aarthi
was an associate in the New York office of Cleary Gottlieb Steen & Hamilton for the first five years of
her private practice career, prior to which she was a Junior Fellow at the Institute for International
Law and Justice at NYU School of Law, where she attended law school. She is a Leadership
Committee member of How Women Lead, a nonprofit that is part of the 2020 Women on Boards
campaign to increase the representation of women on corporate boards, and a director of Bidoun, a
not-for-profit publishing, curatorial, and educational initiative that prints a quarterly magazine
showcasing art and culture from South Asia and the Middle East. She also has been a director of
Keep a Child Alive, a pediatric AIDS nonprofit. Aarthi attended Stanford University as an
undergraduate.
60
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QUESTIONS OR COMMENTS?
If you have any questions about this webinar that you did not get to ask during
the live premiere, or if you are watching this webinar On Demand, please do
not hesitate to email us at info@financialpoise.com with any questions or
comments you may have. Please include the name of the webinar in your email
and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
61
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ABOUT FINANCIAL POISE
DailyDAC LLC, d/b/a Financial Poise™ provides
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business owners and executives, and investors. Its
websites, webinars, and books provide Plain
English, entertaining, explanations about legal,
financial, and other subjects of interest to these
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Roles & Responsibilities: A Primer (Series: Board of Directors Boot Camp)

  • 1. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe 1
  • 2. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Practical and entertaining education for attorneys, accountants, business owners and executives, and investors. 2
  • 3. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe DISCLAIMER The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure the information it publishes is accurate, Financial Poise™ makes no guarantee in this regard. About this PowerPoint: if you are looking at this PowerPoint without the benefit of listening to the conversation that surrounded it then you are doing yourself a disservice. This PowerPoint was prepared in contemplation of being viewed in conjunction with listening to a one-hour webinar on the topic. 3
  • 4. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe MEET THE FACULTY Moderator: Mark Trembacki – Risk Management Levers, Inc. Panelists: Kristi Daeda – The Family Business Consulting Group Jay Reilly – Saul Ewing Arnstein & Lehr LLP David Spitulnik – Spitulnik Advisors Aarthi Belani – Jones Day 4
  • 5. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS WEBINAR: Roles & Responsibilities: A Primer Private company owners, including family businesses, ESOPs, and private equity owners, often have different expectations for their boards than is common in publicly-traded firms. Besides being much less encumbered by state, SEC and exchange rules that apply to public companies, many private firms are looking for a completely different kind of engagement from directors. In companies with new boards, leaders and directors often struggle early on to determine the role of the board and how to separate board responsibilities from those of ownership and management. In this webinar, the audience will learn what companies are really looking for (or should be) from their boards, and the many ways that boards contribute to private company success. 5
  • 6. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS SERIES: Private Company Board of Directors Boot Camp 2019 More and more privately-held companies are exploring the benefits of effective corporate governance and, consequently, are working towards formalizing board processes. This trend has been driven in part by shareholder lawsuits against private company directors, ever-increasing pressure that companies face from foreign competitors and increasing government regulation. The demographic wave of the huge number of businesses whose leadership is getting ready to retire and which, therefore, must engage in succession planning is another significant factor. Yet, many private companies delay implementing a more formal governance regime or simply do not understand they even need it. This webinar series discusses various aspects of good governance in private companies. Applicable to owners, executives, directors and their respective trusted advisors, this webinar series brings a variety of experiences and perspectives on the most common questions around private company governance. 6
  • 7. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EPISODES IN THIS SERIES 9/12/19 Episode #1: Roles & Responsibilities: a Primer 10/10/19 Episode #2: The Effective Director 11/7/19 Episode #3: The Effective Board 7 Dates shown are premiere dates. All webinars will be available On Demand approximately 4 weeks after they premiere.
  • 8. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Episode #1: Roles & Responsibilities: A Primer 8
  • 9. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IS A BOARD OF DIRECTORS? • Usually legally required • Represents ALL shareholders • May consist of inside directors (shareholder, officer, management) and outside directors (independent executives) • Provides “insight” and “oversight” • Structure and procedures are defined by the organization’s bylaws • Typically has a formal nomination/election process 9
  • 10. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IS THE PURPOSE OF THE BOARD? • To enhance the quality of strategic decisions • To ensure the CEO is doing his/her job • To ensure a strong succession plan is in place for continuity • To ensure the Company is compliant with applicable law, regulations and ethical policies 10
  • 11. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PUBLIC COMPANY V. PRIVATE COMPANY: WHAT’S THE DIFFERENCE? • Public companies Full disclosure of all financial records to the board Responsible for the hiring and firing of the CEO Subject to Sarbanes-Oxley and associated compliance requirements • Private companies Often, a group of major “insider” shareholders exist; care must be taken to consider minority shareholder interest The CEO is usually a major shareholder of the company 11
  • 12. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe TYPES OF BOARDS • Advisory Board Common in private companies Typically a transitional structure Members engaged by the Company Informal body that provides non-binding advice to management Work for the CEO - do not have the ability to hire/fire CEO Cannot force management to take a specific action Typically no audit oversight Do not share the same liability and compliance costs of their Fiduciary counterparts 12
  • 13. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe TYPES OF BOARDS (CONTINUED) • Fiduciary Board Required for public companies and private corporations Elected by the shareholders Responsibility to act as a Fiduciary for ALL shareholders Typically execute governance best practices (because they are liable if they don’t) Oversight/approval of strategic plan, budgets, major projects, and policies Monitor the company’s financial structure, performance, and culture 13
  • 14. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe TYPES OF BOARDS (CONTINUED) • Fiduciary Board (cont’d) Hire/fire/evaluate the CEO and approve and oversee compensation Evaluate other execs and family members - with consequences Responsible for oversight of succession Comply with law Ensure the company’s compliance with the law Insiders versus independents 14
  • 15. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IS FIDUCIARY RESPONSIBILITY? • Duty of care Officers and directors must exercise ordinary and reasonable care in their duties and act on an informed basis in due consideration of all relevant information reasonably available. Board members are protected from personal liability through “The Business Judgment Rule” when making an ordinary business decision with rational business purpose, IF the directors of a corporation acted (or affirmatively decided to refrain from acting) on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. NOTE: Enhanced scrutiny applies in a sale of control context and the entire fairness stand applies when actual conflicts of interest exist. 15
  • 16. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IS FIDUCIARY RESPONSIBILITY? (CONT’D) • Duty of loyalty They must act in good faith in a manner reasonably believed to be in the best interest of the company Board members must give undivided allegiance to the company when making decisions affecting the company, all personal interests must be put aside Board members must disclose all conflicts of interest and exclude themselves from any discussion or vote in which they may have a personal interest • Duty of obedience All board members must act in accordance with the company’s governing documents such as, articles of incorporation and bylaws as well as all applicable laws and regulations • Duty of disclosure arises if shareholders are called on to act 16
  • 17. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ADDITIONAL OBLIGATIONS OF A FIDUCIARY BOARD • Audit committee reviews • Analysis of material lawsuits • Whistleblowers • Examination of corporate risk exposure 17
  • 18. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHY CHOOSE AN ADVISORY BOARD? • They can focus on strategy and avoid liability and compliance constraints associated with Fiduciary Boards, that being said, you should still hold your Advisory Board to Fiduciary Board standards • Advisory Boards have the benefit of choice They can avoid defensive topics and focus instead on the offensive topics such as: 1. Bringing in new customers 2. Expanding into new markets 3. Introducing new products 4. Attracting great talent 5. Increasing profitability 18
  • 19. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe TIPS FOR ESTABLISHING A BOARD • Must Have A Charter • What Do You Expect The Board To Do? • What Collective Skills Should Be Brought To The Table? • What Do You Expect Each Board Member To Do? • How Often Will You Meet As A Group? • How Often Will You Talk With Them? • Can (Should?) Include Outsiders As Well As Insiders 19
  • 20. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COMMON SKILLS AND EXPERIENCES SHAREHOLDERS LOOK FOR IN CANDIDATES • Prior to an interview: Board experience Strong financial literacy Strategic planning skills Industry or related industry experience Strong leadership skills Experience with effecting change or significant growth within an organization Private company experience A strong network 20
  • 21. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COMMON SKILLS AND EXPERIENCES SHAREHOLDERS LOOK FOR IN CANDIDATES (CONT’D) • During an interview: Strong listening skills High ethical standards Decision making ability Appropriate management of “air time” A proclivity for inclusions Adapted from: Creating a Harmonious Board by Kelly LeCouvie, PhD 21
  • 22. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE CASE FOR PAID BOARD MEMBERS • Companies that pay boards tend to get more return on investment • Board members have a vested interest (time, energy) as do you • Shows you understand the value • Communicates expectation of high value in return • When paying, you’ll prepare more: spend 2X the amount of time of your meeting in preparing (agenda, materials, etc.) 22
  • 23. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IT TAKES TO MAKE A BOARD MEMBER SUCCESSFUL • In-depth knowledge of the business • Ability to constructively challenge the executives • Set strategies and hold the executives accountable • Understanding that being a board member is not a side job, but a real time investment • Asking the right questions is often more important than having the answers Ask open-ended questions. Don’t ask “Why?” “How?” is a better formulation to activate positive thinking. 23
  • 24. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IT TAKES TO MAKE A BOARD MEMBER SUCCESSFUL (CONT'D) Understand the underlying thinking of the company and its leaders Ask follow-up questions. Avoid making statements after the initial question, ask another question. Enjoy the silence. One can learn and contribute more than from someone merely filling a gap. 24
  • 25. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT IT TAKES TO MAKE A BOARD MEMBER SUCCESSFUL (CONT'D) Learn. A board member might not always have the answer, but others might. A good board member may be able to help others think and learn even though he/she is not the expert. A board member should take notes. This demonstrates respect and – for many – helps give extra time for effortful thinking. 25
  • 26. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SPECIFIC SKILL SET FOR A BOARD MEMBER • Preparation Being well-prepared before every meeting is an obvious and absolute prerequisite to be able to contribute and add value to the discussions. Without spending a great deal of time reading and thinking about the issues the company faces, a board member can neither formulate the powerful questions nor constructively challenge the discussions. • Punctuality • Positivity 26
  • 27. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SPECIFIC SKILL SET FOR A BOARD MEMBER (CONT'D) • Respect As a non-executive board member, the most effective contribution a person can make is to help the executives excel. A director needs to be self-confident and control his/her ego in a way that enables them to listen and work in the team without engaging in the operational activities. • Good listener 27
  • 28. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SPECIFIC SKILL SET FOR A BOARD MEMBER (CONT'D) • Team player A person is not on the board to be liked or accepted and is often not there for the money. Instead, the board member is there for the owners’ and the executives’ sake – not their own. • Honesty and transparency • Responsiveness • Loyalty 28
  • 29. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe BOARD MEMBER CONTRIBUTIONS • Expertise • Self discipline and accountability • Objectivity • Board experience • Strategic Thinking • Insight into key people, empathic counsel • Network • Professionalizes behavior Adapted from Building a Successful Family Business Board by Pendergast, Brun de Pontet and Ward 29
  • 30. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COMMON ITEMS THAT CAN HINDER A BOARD • Lack of clarity on the roles of individual directors and the board as a whole. Role ambiguity slows decision-making and causes unnecessary director conflicts. • Poor Process management hinders effective board preparation, meeting management, and communications. This results in indecisiveness and a lack of urgency on critical challenges facing the organization. • Lack of alignment and agreement on company strategy causes disinterest among board members, who then simply default to tackling regulatory and compliance issues. Poor strategic alignment also hampers a board’s ability to prioritize issues and set their near-term agendas. This often causes board disruption and sends damaging signals to financial markets. 30
  • 31. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COMMON ITEMS THAT CAN HINDER A BOARD (CONT'D) • Poor team dynamics fracture boards and lead to power struggles. Like any effective working group, a board should be comprised of professional peers who respect and work well with each other. • Board composition is a serious impediment, if not done right. Today’s challenges require new perspectives and skills. But boards often lack the ability to objectively evaluate their makeup to determine if they have the right people and skills at the table. 31
  • 32. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SAMPLE BOARD AGENDA Source: Jeremy Barlow. www.boardeffect.com/blog/role-of-the-board-chair 32 ABC Company 123 Main St. Anytown, USA 12345 AGENDA January 1, 2016 Time: 9:00 am Location: Company Corporate Office 123 Main St. Suite A Anytown, USA 12345 I. Call to Order II. Approval of the Agenda III. Approval of the Minutes IV. Reports 1. Executive Director 2. Finance Director 3. Nominating Committee 4. Governance Committee 5. Public Relations Committee V. Old Business 1. Board nominations 2. Contract negotiations VI. New Business 1. Special Event VII. Comments and Announcements VIII. Adjournment Next meeting date August 1, 2018
  • 33. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE ROLE OF THE CHAIR • Lead and guide the rest of the board • Direct liaison between the board and management Works with CEO on board meeting agendas • Facilitate board meetings and guide committee work With the CEO the chair recommends committee chairs and serves as an ex- officio member of all committees 33
  • 34. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE ROLE OF THE CHAIR (CONT'D) • Upholds and addresses rules of conduct • Recruits and develops new board members • Conducts self-evaluations • Plans for succession • Balances participation of Board members (encouraging quieter members to speak, etc.) Source: Jeremy Barlow. www.boardeffect.com/blog/role-of-the-board-chair 34
  • 35. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe 35 ROLES OF OWNERS VERSUS DIRECTORS VERSUS MANAGEMENT IN A FAMILY BUSINESS D = Decide I = Input Owners Board Mgmt Family values, mission, vision D Resolving family conflict D Supporting troubled family D Family education D Family employment policy D D I Ownership succession D Board composition/director selection D I Leadership succession D Senior leadership compensation D I Distribution/dividends I D I Business strategy development I D Business strategy approval/oversight D I Day to day operations D Company culture and corporate risk I D I Community relations I I D
  • 36. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COMMON BOARD COMMITTEES • Audit • Compensation • Governance and Nominating • Finance • Risk Management • Technology and Innovation • Executive 36
  • 37. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SAMPLE COMMITTEE RESPONSIBILITIES • Audit Committee: Recommend and review selection of outside auditors. Assure the efficient completion of internal and external audits. Review and approve annual internal and external audit procedures, including the methodology and areas of audit and revisions to the annual report. Review and approve accounting, legal, and financial policies. Ensure methods are in place for identifying and investigating potential fraud. Review financial statements before they are presented to the full board. Ensure shareholders receive adequate financial information from the Company. 37
  • 38. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SAMPLE COMMITTEE RESPONSIBILITIES (CONT'D) • Compensation Committee: Supervise the design and implementation of policies related to compensation, performance evaluation, employee development, and retirement. Approve the personal development plans for senior-level executives. Approve annual salary increases for senior-level executives. Conduct a formal performance evaluation of the CEO. Review performance evaluations of senior-level executives. Oversee the development of succession plans for senior-level management. Propose programs for professional development for shareholders. Adopt 409A valuations regularly in connection with administration of stock plan Approve option grants 38
  • 39. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SAMPLE COMMITTEE RESPONSIBILITIES (CONT'D) • Governance Committee: Identify and recommend independent director candidates. Recommend candidates for board officer positions and board committee membership. Develop a succession plan for the board chair. Make recommendations to the shareholder assembly of appropriate compensation levels for board members. 39
  • 40. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe SAMPLE COMMITTEE RESPONSIBILITIES (CONT'D) • Governance Committee (CONT'D) Coordinate the annual board-evaluation process. Develop and recommend long-term board goals for approval by the full board. Ensure that all committees have established objectives and charters. Oversee the board orientation process for new board members. Assure that a code of ethics guides business and director conduct. Adapted from: The Chair Forum, The Family Business Consulting Group 40
  • 41. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe VALUE OF INDEPENDENT DIRECTORS ON A BOARD • Increase professionalism/decrease conflict in the board room • Lead contentious/confidential matters such as performance management and compensation • Bring just-in-time strategic knowledge • Mentor for key management/successors • Knowledge of practices in other leading firms • Challenge assumptions • Encourage board discourse to stay at strategic/oversight level rather than in operations 41
  • 42. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE NON-STRATEGIC VALUE OF NEW DIRECTORS • Much attention is given to the strategic advantages of strong directors on your board. Yet, in addition to traditional benefits, there are often many unexpected contributions that are just as important as the strategic input directors provide in the boardroom. These can include:  Meeting preparedness: Directors tend to increase their preparation process when new directors are added to the board. The CEO is likely to think more deeply about the kind of preparation required for new directors to succeed.  Board education: Incumbent directors may be prompted to become more educated about roles and responsibilities of good directors. It may lead to more formality and sophistication around board function. 42
  • 43. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE NON-STRATEGIC VALUE OF NEW DIRECTORS (CONT'D) • Mentorship and leadership development: Directors often become mentors or confidantes to the CEO and other stakeholders. • Strong board culture: Good directors possess attributes that help facilitate group cohesion. New directors may cause inside directors to be instinctively on their best behavior. Skilled directors will work hard to manage dissension. Adapted from: “The Non-Strategic Value of Directors” by Kelly LeCouvie, PhD. The Family Business Advisor published by The Family Business Consulting Group. 43
  • 44. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ADDING INDEPENDENTS INCREASES BOARD VALUE FOR LEADERSHIP • Percentage of a sample of family-owned business CEOs rating their board as effective based on involvement of independent directors. Source: Building a Successful Family Business Board, by Pendergast, Ward and Brun de Pontet, The Family Business Consulting Group
  • 45. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE PROSPECTUS: A TOOL FOR ATTRACTING AND SELECTING THE RIGHT INDEPENDENT DIRECTORS • Desired traits of directors are often captured in a prospectus, a document that includes a “job description” of a director as well as background information on the company and desired traits and experience. A prospectus should include:  Overview  History and Company Profile  Description of Current Board Structure 45
  • 46. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe THE PROSPECTUS: A TOOL FOR ATTRACTING AND SELECTING THE RIGHT INDEPENDENT DIRECTORS (CONT'D) • Director Expectations & Responsibilities • Compensation & Terms • Desired Director Profile • Overview of Selection Process 46
  • 47. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EFFECTIVE BOARD FACILITATION CHECKLIST • How well do I: Observe and participate in group processes simultaneously, contributing on content level while influencing process? Manage the discussion – initiating, focusing, closing? Pace the group’s work? Encourage, balance and maintain participation and cooperation? Reinforce effective interpersonal and professional behaviors? 47
  • 48. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EFFECTIVE BOARD FACILITATION CHECKLIST (CONT'D) Push to consensus? Manage conflicts? Ensure clarity of decisions and follow through? Adapted from: The Chair Forum, The Family Business Consulting Group 48
  • 49. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe OUTLINE OF BOARD BACKGROUND BOOK • Helping Directors Prepare: The Board Background Book • Directors depend on the chair to get the information they need to do their job well. One effective way to accomplish that is with a board background book. The board background book is a comprehensive, professionally presented summary of important information about the business. 49
  • 50. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe OUTLINE OF BOARD BACKGROUND BOOK (CONT'D) • Contents: 1. Mission Statement, History and Strategy 2. Who’s Who (Org Chart, Shareholders, Officers, Key Advisors, etc.) 3. Biographies (Key executives and Directors) 4. Competitors, Vendors & Customers 5. Financial Information 6. Audit & Estate Valuation 50
  • 51. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe OUTLINE OF BOARD BACKGROUND BOOK (CONT'D) 7. Articles, Bylaws, Indemnification 8. Other Information (Union status, Insurance coverage, Asset appraisals, Real estate, etc.) 9. Board Schedule and Agenda Adapted from: Building a Successful Family Business Board: A Guide for Leaders, Directors & Families by J. Pendergast, J. Ward, S. Brun de Pontet. 51
  • 52. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe GETTING THE MOST OUT OF YOUR BOARD • Finding the right board members is important, but it’s only half the battle. To get the most out of your board, you have to give board members a meaningful role and set up meetings so that they can contribute. To take advantage of all the board has to offer:  Clearly outline your expectations of board members  Educate them on your business.  Empower the board. 52
  • 53. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe GETTING THE MOST OUT OF YOUR BOARD (CONT'D)  Set a meaningful board agenda.  Provide exposure to key management members.  Establish a communication channel between owners and outside board members.  Evaluate board performance. Adapted from: “Getting the Most Out of Your Board” by Jennifer M. Pendergast, The Family Business Advisor, published by The Family Business Consulting Group. 53
  • 54. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PLANNING YOUR BOARD’S CALENDAR: SAMPLE QUARTERLY THEMES 54
  • 55. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY 55
  • 56. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Mark Trembacki – marktrembacki@gmail.com As Managing Principal of Risk Management Levers, Mark Trembacki provides organizations with practical value-added solutions in strategy development and execution, enterprise risk management, acquisition integration and governance. He teaches Enterprise Risk Management in the Masters of Finance program at the University of Illinois, Urbana- Champaign. Mark enjoyed a diverse career at BMO Financial Group, holding a variety of executive risk management and business leadership roles. Mark graduated from the University of Illinois, earned an MBA in Finance from The University of Chicago Booth School of Business, and is a CPA. He earned a Cyber Security Management Graduate Certificate from the University of Virginia and is recognized as a National Association of Corporate Directors (NACD) Governance Fellow. Mark serves as Board Chair of the DuPage Children’s Museum and Treasurer of the Chicago History Museum. 56
  • 57. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Kristi Daeda – daeda@thefbcg.com Kristi Daeda is Vice President at The Family Business Consulting Group. Kristi leads a variety of practice areas for The Family Business Consulting Group including the firm’s governance and board search practice, family business education, support for publications such as The Family Business Advisor and the firm’s collection of family business books, strategic partnerships, and branding and communications efforts. She also moderates the firm’s popular series of webinar discussions on family business topics. Prior to joining FBCG, Kristi led sales, purchasing, marketing and IT for a family owned e-commerce retail company. She also spent five years as founder and president of a consultancy focused on helping professionals effectively market themselves, either as consultants/service providers or in job search for executive roles. Kristi is a member of the Family Firm Institute, where she has contributed to the online publication The Practitioner and volunteered in planning its international conference. She is also on the Chicago Chapter board of the Private Directors Association and serves as co-chair for the education committee. Her writings are published in two books, Launchpad, a guide to building a successful career, and Lenses of Leadership: A Call to Action. She is a frequent speaker and writer on themes around family business, governance and personal development. In addition to her professional activities, Kristi is involved with her local school and an organization that provides pro-bono strategic consulting to nonprofit organizations. She lives with her husband, two children and dog in the suburbs of Chicago. 57
  • 58. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Jay Reilly – Jay.Reilly@saul.com With his private practice and in-house experience, Jay Reilly, Counsel at Saul Ewing Arnstein & Lehr LLP, brings to clients a dual perspective of legal issues facing businesses. He has a deep knowledge of the bio-tech, life sciences and pharmaceutical industries and has counseled smaller companies on a variety of corporate matters. Prior to joining Saul Ewing Arnstein & Lehr, Jay was General Counsel and Chief Compliance Officer for Emergent BioSolutions, a publicly traded specialty pharmaceutical company in Washington, D.C. In this position, Jay managed the company’s in-house legal staff and monitored government contract and compliance matters. He has extensive knowledge of securities law compliance and has directed numerous complex corporate transactions, including mergers and acquisitions, real estate deals, joint ventures, strategic alliances and licensing agreements. In addition, Jay has first-hand experience counseling members of boards of directors on governance, fiduciary duties and risk mitigation. Previously, Jay was in-house with Novell, Inc. in Waltham, Massachusetts. He also was a senior corporate associate for five years at Wilmer, Cutler, Pickering, Hale and Dorr LLP in Boston, Massachusetts. 58
  • 59. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe David Spitulnik – dspitulnik@spitulnikadvisors.com David Spitulnik is a successful executive with over 35 years of experience in both large technology companies and in consulting to and leadership of mid-market, closely held and family owned businesses across a variety of industries. In addition to serving as chair of the Private Directors Association’s Private and Family Business Center Outreach Committee, David frequently writes on a number of topics related to leading, building, maintaining and strengthening businesses and their governance structures. Drawing from a broad range of experience in the United States and internationally, David is called upon to coach and mentor business leaders and to advise businesses on board creation, structure and effectiveness so that the individual, the board and the company can maintain powerful forward momentum. David recently published a book on leadership, Becoming An Insightful Leader: Charting Your Course To Purposeful Success. The book focuses on the journey from managing to leading to advising and reflects David’s belief in communicating and questioning how individuals and teams will define and then accomplish their goals and objectives. David graduated from Haverford College with a B.A. in Economics and received his MBA from the Kellogg School at Northwestern University. 59
  • 60. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Aarthi Belani – abelani@jonesday.com Aarthi Belani is a partner in the M&A practice in the Silicon Valley office of Jones Day. She focuses on M&A and venture deals in tech and life sciences. Prior to joining Jones Day, Aarthi was on the in- house legal team covering strategy and corporate development at Credit Suisse in New York. Aarthi was an associate in the New York office of Cleary Gottlieb Steen & Hamilton for the first five years of her private practice career, prior to which she was a Junior Fellow at the Institute for International Law and Justice at NYU School of Law, where she attended law school. She is a Leadership Committee member of How Women Lead, a nonprofit that is part of the 2020 Women on Boards campaign to increase the representation of women on corporate boards, and a director of Bidoun, a not-for-profit publishing, curatorial, and educational initiative that prints a quarterly magazine showcasing art and culture from South Asia and the Middle East. She also has been a director of Keep a Child Alive, a pediatric AIDS nonprofit. Aarthi attended Stanford University as an undergraduate. 60
  • 61. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe QUESTIONS OR COMMENTS? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at info@financialpoise.com with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 61
  • 62. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT FINANCIAL POISE DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to attorneys, accountants, business owners and executives, and investors. Its websites, webinars, and books provide Plain English, entertaining, explanations about legal, financial, and other subjects of interest to these audiences. Visit us at www.financialpoise.com. 62 Our free weekly newsletter, Financial Poise Weekly, educates readers about business, business law, finance, and investing. To receive it simply add yourself by going to: https://www.financialpoise.com/newsletter/ Email addresses are never sold to or shared with third parties.