January 18, 2016
Executive Sessions: What They Are and Why You Should Have Them
By Linda Marie Pearson, CPA, CFE
A private conversation among board members seems to contradict the openness and transparency expected of today’s nonprofits. Managed appropriately, however, executive sessions are a vital part of the board process.
An executive session is essentially a meeting-within-a-meeting — a special closed session of the board in which more candid, confidential conversations can take place. It may take place before, in the middle or at the end of a regular board meeting.
An executive session is exclusive to board members. Others, such as the chief executive, select senior staff members, outside advisors (i.e. lawyers, auditors, consultants) may be invited to join for part or all of the session.
It’s important to note that an executive session is different from a meeting of an “executive committee.” Usually composed of the chief executive, officers and committee chairs, an executive committee typically meets only in emergencies, although some meet more regularly and are charged with handling business between regular board meetings. When an executive committee meets, it is not called an executive session.
Strengthening Governance and Leadership
Properly called and conducted, executive sessions serve three core functions:
They assure confidentiality. Some organizational matters legitimately require confidentiality. For example, certain discussions with legal counsel are subject to attorney-client privilege. Likewise, the board and executive director may wish to hold a discussion of strategic business decisions privately — before sharing details with the organization’s various stakeholders.
They foster board independence and oversight. Executive sessions encourage nonprofit boards to “think for themselves” in such critical areas as determining executive compensation, evaluating senior staff performance and having open conversations with their auditors without management present.
They enhance relationships among board members and with the chief executive. Executive sessions provide an opportunity for peer-to-peer discussion of issues and concerns between the executive and board without staff present. This helps foster a more constructive partnership between the board and chief executive.
Playing by the Rules
If not handled properly, an executive session can create the notion that “something is wrong” or that the board is somehow going behind the back of the chief executive. The key is to establish formal procedures for calling an executive session, clearly communicate the intent of such a session, and then appropriately document it.
Following these simple steps can help diffuse the perception that executive sessions are convened only in times of crisis or to deal with matters involving the chief executive.
Establish policy. Typically, the board chair has the authority to call an executive session. Some boards require that a majority or super majority confirm the decision if an executive session is requested by a board member other than the chair.
Consider establishing a board policy that articulates the process for calling and conducting an executive session. This includes identifying issues that are acceptable for closed meetings, such as:
On the advice of counsel
To discuss current pending legal matters
To consult with the auditors and compensation consultants
To acquire or dispose of property
To discuss or act on personnel issues
To address such other matters as the board deems appropriate.