By Barry S. Bader and Elaine Zablocki
Improving Communications by Closing the Doors
Governing boards traditionally call executive sessions from time to time to discuss confidential, proprietary or personnel related matters in closed session. In recent years, however, the increasing emphasis on board independence and vigilance has triggered a new use for executive sessions. Now, many boards hold regular executive sessions— sometimes with the CEO and sometimes with only the outside directors— to encourage more open and candid discussions.
In the past, chief executives would grow understandably anxious when board members closed the doors and excluded the chief executive. Even when the CEO was included, many execs disliked not having their senior team in the room to hear directors’ views first hand and to answer specific questions in their areas of expertise.
Boards that unexpectedly excused the CEO and then didn’t report what had gone on behind locked doors were even more troubling. Except in rare circumstances, such as a discussion of potential CEO malfeasance, secret deliberations can weaken trust and communication between the board and the senior executive team.
One problem is that boards use the term executive session too loosely, to describe two different types of meetings: executive sessions with the CEO but without other senior management, and executive sessions without the CEO or any other inside directors, respectively. If a board plans to incorporate regular executive sessions into its routine, board members need a clear understanding and policy about the ways executive sessions will – and will not – be used.