The Effective Board (Series: Private Company Board of Directors Boot Camp)

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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
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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 guaranty 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
Mark Melickian – Sugar Felsenthal Grais & Helsinger LLP
Phil Buffington – Adams & Reese LLP
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ABOUT THIS WEBINAR:
The Effective Board
All of us have had experiences of meetings that were painful to participate in. Lack
of preparation, ineffective facilitation, or inability to move decisions forward can all
lead to an ineffective board. With boards charged with a company’s most important
strategic matters, no company can afford to waste valuable meeting time. In this
discussion, we share practices that happen in real boardrooms that help equip
directors to participate and lead to energized and productive debate that feeds the
company’s 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 the 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
formalistic 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.

Episode #3:
The Effective Board
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SECTION 1: SETTING THE STAGE
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WHY HAVE A BOARD?
• Another point of view
 How to ensure that this group is not bound by insider and or family
politics
• For Fiduciary, at a minimum
 Selection of Senior Executives
 Approve Shareholder distributions
 Approve Long Range Plans
• Note that the level of authority of an Advisory Board may differ between a
Fiduciary and Advisory Board.
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WHY HAVE A BOARD? (cont’d)
• The Board Will:
 Deliver key ideas
 Provide a level of accountability
 Provide oversight
• Thereby Increasing:
 Likelihood of growth
 Stability
 Achieving goals
• Note again that while the level of authority may differ between a Fiduciary and
Advisory Board, often the Company Leadership will depend on the Board for input
on these, whether or not the Board has the authority to make binding decisions.
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WHY HAVE A BOARD? (cont’d)
• The Board is convened to offer independent insights on areas such as
 Succession Planning
 Long Range Plans
 Company or Division
o M&A
o Divestiture
o JV
o New Market Entry
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BOARD PROCESS: FIVE KEYS TO
PRODUCTIVE BOARD MEETINGS
Copyright © The Family Business Consulting Group, Inc.
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SECTION 2: PREPARATION
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ESTABLISH CLEAR LINES OF
COMMUNICATION
• Consistent methods and clear lines of communication about Board
meeting issues and action items are critical to meeting planning and
success.
• The Board Chair should be the focal point of communication about
Board meeting issues.
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REPORTS
• Written reports intended for presentation and discussion at
Board meetings should be circulated in advance to allow directors
time to prepare.
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RESOLUTIONS
• If possible, resolutions should also be circulated prior to the meeting
for review and comment.
• Board Chair should generally be first to see it before circulation to
other directors.
• A coherent and civil resolution review process may prevent a “war on
the floor.”
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REPORTS AND DISCUSSION
• Administrative leaders and committee chairs should report as needed - up
to the organization whether that is at every meeting or only periodically
• Written reports are the rule (even if short)
• No magic to the form of reports
• Consider confidentiality issues - should the report be confidential and/or
discussed only in closed session?
• When possible (and when in doubt), preview the report with the Board
Chair
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SECTION 3: AGENDA
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MEETING OBJECTIVES
• Formalize decisions
• Inform the Board - opportunity for Board to inquire and assess
information beyond the written reports
• Assign action items
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THE BOARD AGENDA
• Information Before the Meeting (hopefully 3-5 Days)
Performance information
Market issues including supply, competitors, channels, products, etc.
• At the Meeting
Minutes
Decisions required
Discussions at high level (Nose In, Fingers Out)
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THE BOARD AGENDA (cont’d)
• Fiduciary Vs. Advisory
Make sure you address what you are REQUIRED to as Fiduciary
• Establish a flow for the meetings as well as for the year
For the meeting, a standard set of ideas
For the year, if quarterly meetings, perhaps a topic deep dive
o Q4 Following year plan
o Q3 People and Compensation
o Q2 Market Dynamics
o Q1 Strategic Plan
All issues on the table, but focus for annual cycle
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SETTING THE AGENDA – SAMPLE
• Call to Order
Attendance
Introduction of Guests
• Approval of Minutes from February 21, 2018 Board Meeting
• CEO’s Report
• CFO’s Report
• Committee Reports
• Other Business
• Adjournment
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ABC Board of Directors Meeting
Wednesday, May 23, 2018, 10:00 am.
Agenda

AGENDA CONSIDERATIONS
• Think about where you want to focus your precious time together as a board:
• How much time on reviewing reports vs. discussing strategic matters?
• How will we allocate our energy - what comes first, and what’s handled later in
the day?
• How can we minimize distractions during the meeting? (i.e. scheduling a mid-
morning break for attending to calls/emails)
• Set time limits for each agenda item and keep to them!
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CLOSED SESSIONS
• Discussion of certain topics should be limited to closed or executive sessions of the
Board, such as
Conflict of interest issues
Executive compensation and similar issues
Litigation
Other topics of a highly confidential or sensitive nature
• Board meeting are by default open meetings, particularly where the organization
has member constituents who may be entitled to attend Board meetings
• Closed sessions require a motion and vote to enter, and a motion and vote to exit
(which should be duly recorded)
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CLOSED (EXECUTIVE) SESSIONS
• Minutes of closed sessions should be kept according to the same
principles of minutes generally - however, minutes of closed
sessions will generally not be available for review by non-board
members.
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SECTION 4: FACILITATION
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BOARD ENGAGEMENT
• Stress in position description as well as in interviews expectations of participation
You are here because of both specific topical knowledge as well as your overall
business acumen
• Create a review process
• For the Board as a whole
Is the company getting from the Board what they were looking for?
• For individual Board members
• Encourage open and frank discussions
NO AD HOMINEM
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THE MEETING ITSELF
• If you have planned well, the meeting should go (almost) according to
plan.
• Board Chair is the ringmaster - responsible for timing and tone of the
meeting.
• Following roll call, Chair should note whether a quorum is present in
the event a vote is required.
• Reserve questions and general discussion to specific times - typically
at either at the beginning or the end of the meeting.
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THE MEETING ITSELF (cont’d)
• Two rules for the Chair:
Keep it civil (or bring it back from the brink when it is not).
STICK TO THE AGENDA!!!
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ROBERT’S RULES
• Robert’s Rules of Order are the paradigm but generally impractical
and unnecessary as a method for conducting a Board meeting.
• That said, if the Board Chair or another director is steeped in
parliamentary rules, apply them when and where necessary - for
example, to break a logjam.
• Listening is the best rule (and skill) you can develop and demonstrate -
from the Chair to the newest member of the Board.
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IDENTIFYING ACTION ITEMS
• Action items can be identified as the meeting goes along and/or
identified in a wrap at the end (just prior to adjournment)
• Board Chair should circulate an action item list, deadlines, and
other key details after the meeting, and them follow up before the
next meeting
• Your takeaways and next actions can kick off the planning
process for the next meeting
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MINUTES
• Formal minutes are a necessary part of Board governance. Minutes are
considered legal documents by courts, auditors and the IRS.
• As a rule, the Board Secretary bears responsibility for ensuring that
appropriate minutes are prepared. However, minutes can be taken and
drafted by any officer, staff member or agent designated to the task.
• Review, comment, revision (if necessary) and approval of last meeting’s
minutes should be the first substantive item on the next meeting’s agenda.
• IF IT DOESN’T APPEAR IN THE MINUTES, IT DIDN’T HAPPEN.
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SECTION 5: FOLLOW UP
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MINUTES (cont’d)
• General Rule: Less detail rather than more
• Substantive categories to cover
Attendance - roll call of directors and guests
Decisions Reached (or not)
Action Items
Discussion Topics and Reports
Open Issues
• KEEP IT SIMPLE - okay to describe decisions made without reference to the votes
of specific directors or discussions held and reports given by identifying only the
participants and subject matter of the discussion of report.
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BOARD MEETING FOLLOW-UP
• Make sure to document action plans including due dates
• Interim reporting to ensure all are up to speed
• Interim committee meetings
• Open communication
Within Board
With leadership, as appropriate
With Shareholders, as appropriate
But all Board members need to understand the limits as well as expectations of
reporting on conversations back to other Board members
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PLANNING FOR THE NEXT BOARD
MEETING
• Success or failure of a Board meeting depends on what happens
in the days/weeks/months since the last meeting.
• Communication and preparation are key
• Board Chair should drive the process
• Include Board members in the planning process
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SECTION 6: THE ROLE OF THE
CHAIR
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SOME GENERAL KEY RULES
• Chair runs the meeting
• Close debate by consensus where possible
• Any voting process is acceptable so long as properly recorded
• Use votes on action items as leverage to assign responsibility
• Be civil
• Be clear
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A KEY RULE
• KNOW YOUR BYLAWS (or at least the rules that govern
quorums, voting, and other procedural matters)
• You don’t want to conduct important business NOW and have a
Board member or other stakeholder point out LATER that you
acted in violation of the Bylaws
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THREE WISDOMS FOR BOARD
CHAIRS
• Don’t let the perfect be the enemy of the good: Better to be 80% perfect and take
action than wait for everything to come together just right.
• It’s OK to experiment: The only way to get better is to try new things. Take a few
risks, and learn from them.
• Take advantage of tribal knowledge: For many situations the board faces,
someone in the organization has had experiences you can learn from. Ask others
for perspectives and history that can inform your path forward.
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SECTION 7: ADDITIONAL
MATERIALS
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BOARD FORMATION FOUNDATION
• Make sure there is a Board Charter outlining:
Board responsibilities
Board member responsibilities
• Make sure there is an understanding of evaluation processes
For Outside Members and for Insiders
For the Board as a whole
o May be different for Fiduciary Vs. Advisory
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RESOLUTIONS AND VOTING
• Resolutions and votes are how the Board decides to act (or not)
• Directors make resolutions - not non-director regulars or guests
• A resolution should not be a surprise to the Board Chair
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RESOLUTIONS AND VOTING (cont’d)
• When Presenting a resolution
Preview the resolution
Give background and hold discussion
Close the discussion (the Board CHair) - if there is no consensus on closing
debate, consider whether to continue the motion to a future meeting
Call for a motion and a second
Vote
Chair notes for the record that it passed or not passed - result ( but not specific
votes) is noted in the minutes
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ADJOURNMENT
• This may seem obvious, but...
 Board Chair should note on the record that there is no further
business and move to close the meeting
 Don’t forget to second the motion, vote, and declare the meeting
closed
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COMMITTEES
• Committees are formed to assist the Board in its business and
deliberation
• Committees can be standing committees, ad-hoc committees and
advisory committees (not much difference between the latter)
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WHY FORM A COMMITTEE?
• To handle ongoing significant activities
• To handle a special project or address an issue that is too complex
for the Board to handle
• To investigate, analyze and advise the Board on significant
matters
• To comply with applicable law or “best practices”
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STANDING COMMITTEES
• Standing committees are established to handle ongoing major
activities, such as
Finance
Audit
Governance/Nominating
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ABOUT THE FACULTY
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Mark Trembacki – marktrembacki@gmail.com
Mark Trembacki is the founder and Managing Principal of Risk Management Levers, Inc., a
consulting firm focused on strategy, risk management, acquisition integration, and change
management. He is an adjunct professor at the University of Illinois Urbana-Champaign
teaching Enterprise Risk Management in the Masters of Finance program. Mark has a MBA in
Finance from The University of Chicago Booth School of Business, a BS in Accounting from
The University of Illinois at Urbana-Champaign, and is a CPA. He is a qualified SEC Financial
Expert, a National Association of Corporate Directors (NACD) Governance Fellow, and recently
earned NACD’s CERT Certificate in Cybersecurity Oversight from Carnegie Mellon University’s
Software Engineering Institute. Mark also completed a Cyber Security Management Graduate
Certificate from the University of Virginia in December 2017. Mark is the Board Chair at the
DuPage Children’s Museum and a trustee of the Chicago Historical Society (Chicago History
Museum).
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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.
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Mark Melickian – mmelickian@sfgh.com
Mark Melickian leads Sugar Felsenthal Grais & Helsinger LLP’s restructuring practice. Over the past 20 plus
years, he has worked primarily on business transactional and litigation matters with a focus on chapter 11
commercial bankruptcy cases and non-bankruptcy distressed situations. His practice includes both debtor-
and creditor-side representations and include financial institutions, indenture trustees, trade creditors, asset
purchasers, investors, commercial real estate interests, corporate officers, and other parties in interest in
chapter 11 cases throughout the country. In addition, a significant focus of his practice is the representation of
committees and other estate fiduciaries in bankruptcy cases – over the past two decades, he has counseled
dozens of official and unofficial bankruptcy committees, liquidating trustees, litigation trustees, and plan
administrators charged with pursuing and liquidating assets for the benefit of estate creditors.
Mark has written extensively on bankruptcy and insolvency law and other topics, having contributed materials
on these subjects to American Bankruptcy Institute Journal, Bankruptcy Strategist, Wiley Bankruptcy Law
Update, Ginsberg & Martin on Bankruptcy, Norton Bankruptcy Law Adviser, the Cornell University Legal
Ethics Library, and dozens of professional conferences and seminars. For several years, he wrote a monthly
legal affairs column for Student Lawyer, an America Bar Association publication, for which he received the
Peter Lisagor Award for Exemplary Journalism from the Chicago chapter of the Society of Professional
Journalists. He is a graduate of Colorado State University and Northwestern University School of Law.
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Phil Buffington – Phil.Buffington@arlaw.com
Phil Buffington joined Adams and Reese in 2011 and serves as Leader of the Financial Services
Team, and is a Partner in the Transactions Practice Group. For more than 30 years, Phil has
served as a trusted advisor to community, regional and national financial institutions, and he
routinely helps these institutions assess and analyze regulatory and litigation risks, including
issues involving:
His practice is focused primarily on the representation of financial institutions in corporate
governance, transactional and bankruptcy matters. He serves on the Adjunct Faculty Staff of
Mississippi College School of Law (Banking Law and Business Planning) and also serves as a
Faculty Member at the Mississippi School of Banking (Commercial Lending I and II). He is a
frequent speaker and presenter for CLE and other courses on topics related bank regulatory
matters, commercial lending, secured transactions and other banking topics.
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QUESTIONS OR COMMENTS?
If you have any questions about this webinar that you did not get to ask during
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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.
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