Board management

What is board management?

A corporation is run by a board of directors (often referred to simply as “the board”), which serves in the best interests of the business’s shareholders. Board management refers to how a company’s leadership team works with its board. Executive leadership reports to the board and executes on its strategies, therefore a good working relationship is essential to a startup’s success. 

The role of the board

Federal and state-level laws, as well as a company’s incorporation documents, require public and private corporations—including C-corps—to have boards of directors (BoDs). Companies that are formed as LLCs (limited liability companies) do not have the same requirements, although some still choose to assemble a board. 

The board is responsible for running the company and setting strategy, while the executive leadership (the CEO and the rest of the C-suite) typically handles operations and execution. Ultimately, the CEO and other management reports to the board. The board can provide guidance and advice to management, especially for major business decisions. 

Executive performance evaluation

The BoD is also charged with evaluating the performance of leaders, and can ultimately move to replace the CEO, as required.

Board meetings

Formal board meetings often take place on a quarterly basis and may last between three to four hours. You will likely meet and communicate with your board more often than that through monthly written updates to each board member and regular informal catch ups when possible.

The CEO sets the agenda for each board meeting. Each meeting will likely contain some amount of administrative or clerical matters, for certain corporate items your board is required to approve. Try to timebox clerical matters so you can spend as much time as possible discussing important strategic decisions. 

Building the deck 

Board materials, including your deck, should be sent around at least 24 to 72 hours ahead of the meeting so members can prepare. It’s better to use your meetings for discussion of key issues, rather than recap and overview of what’s in the deck.  

A board deck typically includes an executive update, financials, performance against agreed-upon KPIs, key new hires, highlights, and risks. While these metrics will change as you grow in size or develop new products, consistently tracking the same metrics across meetings can help demonstrate trends to the board.

For earlier stage companies, it’s common to have decks that are 15-20 pages, while at later stages, a deck may be 50-60 slides—far more than can be covered in four hours, but enough to provide the information directors need. 

Download Carta’s board deck template

Don’t start your board decks from scratch for each meeting.  Board members will often look back at previous decks before meetings, so come prepared. What did you say last time you were going to do this quarter? Were those goals achieved? If not, what happened? Did your strategies change during the past quarter, and why? 

Let your board help you 

Your board is part of your team, and it’s there to help your company succeed. Let them in on the big, strategic questions you have and don’t be afraid to seek out their point of view. 

While you don’t want to “over manage” your board or insulate them from key decisions, you also don’t want to bother them with minutiae. For example, you don’t need to ask your board for advice on who to hire for junior positions, but you will want to talk to them about your overall hiring plan. And for major, exec-level hires, you may want to seek your board’s help to source talent.

Who is on the board of directors? 

Often, the CEO of a company will sit on the board and vote on board matters. For startups, this is almost always the case. At early-stage companies, boards are often smaller, but as a company grows, so does the size of its board. The size and composition of the board is typically negotiated with each funding round. Most private companies have between three and nine directors (boards are typically an odd number to avoid a tie vote). 

In addition to the company's CEO, a startup’s board of directors often includes other key operators, like the CFO, co-founders, and venture capitalists who have invested in the company. Often key investors in startups require a seat on the board as a term of their investment. 

Corporate governance best practices

Some boards have “outside directors,” also known as “independent directors.”. These are members of the board who have not invested in the company and do not have another role (like CEO or CFO). Often, outside directors are successful operators and leaders from other companies who join the board as objective, independent voices. 

Independent directors are part of corporate governance best practices. While not all startups have independent directors, it increasingly becomes an expectation as a company matures. A public company, or a company preparing for IPO is expected to have independent directors in place. Certain exchanges have requirements for the number of independent directors in place for a company to be listed on the exchange. Both the New York Stock Exchange (NYSE) and Nasdaq require that a majority of board members be independent. 

Board responsibilities and fiduciary duty 

The board is required to act in the best interests of the company’s shareholders. Members of a board of directors have a fiduciary duty to act in good faith to make diligent, prudent decisions they believe will benefit the company. 

Board responsibilities include: 

• High-level strategy. The BoD counsels the CEO and other executives in several areas related to a company’s long-term direction, including its strategic goals, capital allocation, and new products or initiatives.

• Executive personnel. The board is fully or partially responsible for hiring and firing a company’s CEO and other senior executives. 

• Executive compensation. Signing off on compensation for the CEO and other senior executives. 

• Major transactions. The board typically provides strategic guidance on and must approve any merger or acquisition (M&A) that a company undertakes, either as the buyer or as the target company being acquired. The board also typically advises on and approves major decisions related to conducting an initial public offering (IPO). 

• Administrative tasks. The board ensures compliance with any applicable laws that may require board approvals or oversight, which vary based on the state in which the business was incorporated (e.g. the Delaware General Corporation Law [DGCL] if the company was incorporated in Delaware). This includes common tasks involving the cap table, like setting up an equity plan, issuing option grants or RSUs to employees, and getting a new 409a valuation. 

How Carta helps with board management 

If your company uses Carta, board management is seamless with helpful tools and integrations for board consents, documentation, and meetings. 

• Board consents: Equity issuance transactions require board approval. This includes options and RSU issuance, equity plans, and fundraising. With electronic board consents, your company administrator doesn’t need to wait until the next board meeting to approve a set of option grants for a new hire cohort. Simply use Carta to send a consent to your board member’s email where they can sign and approve electronically. 

• Board documents: Carta serves as your source of truth repository for board consents. View all historically approved consents in the app or upload new documents if board approval was captured elsewhere. 

• Board meetings: Prepare your board members in advance with a clear agenda and materials to review. Take advantage of Carta’s integration with Zeck’s cloud-based board meeting software to instantly import your cap table to your board materials. Present your slides within Carta’s tool to track historical decks and ensure nothing gets lost.