3.16 Board Review

Well-functioning Boards should have a process in place to regularly examine how it is performing. A regular review identifies or highlights problems of which the Board may not be aware, or improvements that could be made. Given the pressures of time on Directors, and the number and variety of issues with which Boards of early-stage tech companies must contend, this task usually falls into the category of "important, but not urgent", and often does not get done.

The Board review involves all Board members and should be managed by the Chairman who should also chair the Governance Committee if the Board has appointed one. The purpose is to identify strengths and weaknesses, and to institute improvements to weak areas the Board identifies.

The review is best done half way through the fiscal year. This allows new Board members sufficient time to become familiar with the company and Board system, and leaves enough time before the next Annual General Meeting for improvements to be made, and to search for new directors, should that become necessary.

The Board review process can be simplified by using a standard questionnaire. Attached as Appendix A is a series of questions Board members can use to quantify the Board's performance in several areas.

APPENDIX A: SAMPLE BOARD REVIEW QUESTIONNAIRE

  Exc. Very
Good
Avg. Needs
Impr.
Sig.
Prob.
ROLES          
Directors understand the roles of Board and management.          
Management understands the roles of Board and management.          
Directors are sufficiently well-informed of Company strategy, plans, and business.          
COMPOSITION          
Board regularly compares skill sets of Directors to changing skill sets required by Company.          
Directors are appointed for their experience and contribution to the company.          
COMMITTEES          
Board has the right Committees in place.          
Audit Committee is effective.          
Compensation Committee is effective.          
Governance Committee is effective.          
MEETINGS          
Board meets as frequently as necessary.          
Meeting agenda and reports are distributed sufficiently in advance.          
CEO, Chairman and Secretary review Agenda prior to meeting.          
Meetings are run effectively.          
Meetings focus on material company issues.          
INFORMATION          
Board receives the information it needs to exercise its mandate.          
CEO's Report succinctly identifies material activities and issues and management's response.          
CFO's Report succinctly presents financial status and forecast.          
STRATEGY AND OPERATIONS          
Board reviews strategic plan as required and no less than annually.          
Board approves annual operating plan and budget.          
Management reports results against operating plan quarterly.          
Management reports results against budget monthly.          
FIDUCIARY DUTY          
Independent Directors meet in-camera.          
Board has sufficient independence from management to exercise oversight.          
Directors declare conflicts of interest.          
Directors act in the best interest of the company and all shareholders.          
CEO and management seek advice of Board.          
Board provides guidance to CEO and management.          
Management heeds advice of Board.          
Board reviews CEO performance.          
Board approves compensation for senior management and Officers.          
Board receives risk assessment report.          
TIME AND COMPENSATION          
Directors devote appropriate amount of time to Board and company.          
Directors are compensated appropriately.          

PERSONAL NARRATIVE

1.

Describe successes and needed improvements for the Board:

 

2.

Describe personal successes and areas for improvement as a Director:

 

3.

What factors contributed to your performance or lack of performance in the areas above: (please be specific)

 

4.

Other comments or suggestions to increase effectiveness of the Board?