Most formal boards operate under a set of bylaws that spell out the board’s responsibilities and powers. These responsibilities can include hiring and firing of key executives, determining executive compensation and incentive plans, reviewing and approving annual budgets and company financials, approving strategic decisions, and many other tasks. Your board can be charged with a lot of responsibilities or just a select few, and it must be determined if the board’s decisions are binding or merely advisory.
How often should your board meet? The average is once a quarter, but you’ll want to structure your board meeting schedule to address your company’s needs. Assuming your board members are regularly available, you may find that monthly meetings are more productive for keeping up with a fast moving, growing business.
Meeting organization is important to maximize the time spent. Always prepare an agenda and distribute it ahead of the meeting so board members have time to prepare. Keep detailed minutes of meetings as a paper trail of all discussions and actions. Your board members are busy people with other jobs and responsibilities so you want to avoid meetings that are mostly talk but no action.
Beyond reimbursing for expenses, there is no requirement that you compensate your independent board members. Large corporations typically compensate their board members, but small, private companies often don’t have the financial resources to do so. Investor board members have a vested interest in helping your company run smoothly, so they rarely expect additional compensation.