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There are no hard and fast rules around this. It is up to the board to develop a set of guidelines that it feels are fair, that reflect the values of the company, and that encourage efficiency, productivity, and conscientious governing by the board. These agreed-upon guidelines can reflect best practices in other companies and they must align with a reasonable board budget. Ideas for guidelines might be as follows:
- Length of board meetings – How much time does the board need to conduct its board work? The board may agree that board meetings will take only one day, and they will design their agenda and direct their chair to meet that goal. If the meeting takes longer, the board will agree that there is a valid need to stay longer and there will be compensation for an additional day or half day at a set amount.
If there is sufficient board business that meetings are of two days duration all or most of the time, then the meeting fee should be appropriately adjusted.
- Board meetings and committee meetings – these are two separate functions and should be compensated as such, whether the meetings are on the same day, or at separate times. This assumes that the work of the committe complements and supports board work and is not a duplication of efforts.
If these meetings are held on the same day, is there sufficient time to prepare a committee report for the board and for the board to properly digest committee findings or recommendations?
- Voluntary attendance at board meetings – committees generally comprise a small number of people with an interest in and/or experience in the work of the committee. They are set up as such so that they can be efficient and productive. If visitors are allowed or encouraged there needs to be an understanding of their role and the value they add.
Non-committee member directors may be invited to attend a particular meeting of a committee because of a special expertise they have, in which case they should be compensated. Or directors may be permitted, or even encouraged to attend a committee meeting on a voluntary basis as a means to learn more about that area (audit for example), and they could be compensated for one such meeting per three year director term. Any other voluntary attendance is unpaid, unless the board agrees that there is a valid reason for attendance. The directors can remain informed of the work of the committee through meeting agendas and minutes of committee meetings.
Questions to ask generally of the board as it develops the foregoing policies:
- Is the board doing board work or management work?
- Is the board productive during its board and committee meetings?
- Is the agenda set up to ensure efficient meetings?
- Is the chair managing board performance?
- Does the board regularly evaluate its performance as a board and committees?
Small Governance consultancy
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