People Meeting At Table Behind Blinds Feature
Article

What Is the Proper Use of Executive Sessions

by Michael Boulton
June 12, 2016

When properly convened and conducted, an executive session creates a “safe space” for a nonprofit’s board of directors to discuss matters openly and honestly. In addition, these closed discussions can help foster a more constructive partnership between the board and the executive director.

That said, closed-door sessions can have a negative effect on board governance, creating the perception that “something is wrong” or that the board is somehow going behind the back of the executive director.

Following are some answers to common questions that nonprofit leaders have about when and how to use an executive session.

What purpose does an executive session serve?
An executive session is essentially a meeting-within-a-meeting—a special closed session convened before, in the middle of or at the end of a regular board meeting. Without staff or executive leaders present, board members are free to “think for themselves” and ask the tough questions.  

There are certainly legitimate reasons to have confidential discussions (i.g., consultations with legal counsel or consideration of contractual issues). Likewise, the board and executive director may want to discuss a strategic business decision privately before sharing details publicly.

When should an executive session be convened?
The majority of board business should be conducted in a traditional open board meeting. Executive sessions should be reserved for cases when more candid, confidential conversations are required. Issues that might necessitate a closed meeting include:

  • Discussing current or pending legal matters
  • Consulting with auditors
  • Determining executive compensation
  • Evaluating performance of senior staff
  • Acquiring or disposing of property
  • Discussing or acting on personnel issues
  • On the advice of counsel

Who calls for an executive session?
The board chair is authorized to call an executive session—either as needed or as a publicized agenda item for a regularly scheduled meeting. If someone other than the chair requests an executive session, some boards require that a majority approve the decision to meet in closed session.

Who should attend?
Not to be confused with a meeting of the “executive committee,” an executive session is exclusive to board members. The chief executive and/or select senior staff members may be invited to join for part or all of the session. Likewise, the nonprofit’s attorneys, auditors and consultants may be invited to present findings or provide strategic advice.

How do we keep everything transparent?
The key is to establish formal procedures for calling an executive session, clearly communicating the intent of such a session and then appropriately documenting it. Of course, if your nonprofit is subject to open meeting or sunshine laws, make sure that executive sessions are in full compliance.

The regular board meeting minutes should clearly document the fact that an executive session was held—including when the board went into executive session, the primary purpose of the session and any formal decisions that were made. The general substance of the executive session should be noted. If the session contributed to a formal board decision, it may be necessary to provide further documentation in the minutes.

Wherever appropriate, the board should officially return to an open meeting for a formal vote.

How do we ensure confidentiality?
Make sure all participants clearly understand which parts of the discussion should remain confidential. Limit access to session materials or specific executive session minutes only to those persons who actually participated in the session.

Our Take
Executive sessions can be an effective tool for improving a nonprofit board’s oversight responsibilities. Your nonprofit might even consider making executive sessions a regularly scheduled component of all board meetings. Board members can meet privately for a time with the executive director, and then discuss matters without he or she present.

June 12, 2016

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Author
Resources
More News and Insights
Transform-Your-Collections-and-Planning-Processes-With-AI-Bots
Webinar
A new era has arrived to transform the collections and receivables universe.

April 22, 2021 | 10:00 AM - 11:00 AM PST
Managing Liquidity in Risky Markets — 5 Mistakes Investors Make
Article
How do VC and PE investors limit unexpected cash outflows and preserve dry powder?

April 09, 2021
Regulatory and Industry News Alerts from Armanino
Article
Proactive tax modeling is key in preparing for proposed corporate and international tax changes.

April 08, 2021