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Back to Basics: Board Meetings

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May 9, 2022

Thanks to Natalie Cooper, Robert Lamm, and Randi Val Morrison

The pandemic prompted many companies to modify—at least temporarily—some of their core business, as well as board, practices in the face of health- and safety-related requirements that prevented or restricted travel and in-person gatherings. While the circumstances that gave rise to the restrictions were unwelcome, they provided companies an opportunity to review and re-evaluate the effectiveness of longstanding practices that, but for the pandemic, would likely not have taken place.

In this post, we look at whether the pandemic prompted lasting changes to key board meeting practices and processes. We present findings from a February 2022 survey of Society for Corporate Governance members representing more than 150 public and private companies. The intent of the survey was to understand long-term changes made in response to the pandemic in practices such as board meeting formats (frequency and length), virtual meeting approaches, attendance, and materials and agendas.

Findings

Respondents, primarily corporate secretaries, in-house counsel, and other in-house governance professionals, represent public companies (89%) and private companies (11%) of varying sizes and industries. [1] The findings pertain to all companies, public and private. Where applicable, commentary has been included to highlight differences among respondent demographics. The actual number of responses for each question is provided.

Access results by company size and type.

NOTE: The survey was entirely focused on benchmarking long-term changes (implemented or planned) to board practices and processes as compared to pre-pandemic times.

To what extent has the pandemic impacted your board’s overall processes and practices? (161 responses)

For both public and private companies, moderate impact, followed by low impact, were the most common responses.

Have any changes to your board’s processes and practices facilitated board efficiencies? (157 responses)

With the exception of small-caps at 18%, at least 50% of all other respondent types and sizes reported changes in processes and practices that facilitated moderate board efficiencies. More than one-quarter of small-caps reported no change/status quo and that their boards did not institute any long-term changes to processes and practices.

Describe any changes to regular board meeting frequency and length. Select all that apply. (154 responses)

At least 50% of all respondent types and sizes reported no changes made to board meeting frequency, though 25% of large-caps and 17% of private companies reported an increase and 9% of small-caps reported a decrease. Some respondents offered comments that provided additional color and/or themes, such as:

Board meetings held more frequently early in the pandemic, but pre-pandemic cadence resumed going forward;
Willingness to add an additional virtual board/committee meeting if a meeting agenda is getting too long;
Committee meetings now held the week before the board meeting rather than the morning of the board meeting so that time can be used for full board discussion;
More virtual meetings.

Describe any changes to your regular board meeting attendance practices. Select all that apply. (148 responses)

Compared to other market caps and private company respondents, almost twice as many small-caps (45%) have shifted to virtual-only meetings. A majority of mid-caps (52%), 38% of large-caps, and 28% of private companies have implemented or planned a mix of in-person only and virtual-only meetings. Hybrid attendance, with some directors attending in-person and some remotely, is more common among large-caps at 40% and is just over one-quarter (27%) for small- and mid-caps and private companies. The most common practice reported among private companies (33%) was that their boards have not implemented and are not planning to make any changes to meeting attendance practices for regular meetings. Some respondents offered comments that provided additional color and/or themes, such as:

Directors who attend remotely do so via videoconference rather than teleconference, as was the case pre-pandemic;
In-person attendance reserved for multi-day meetings, with the balance held in a virtual format; and
Evolved to a hybrid meeting structure that consists of the shareholder meeting and some committee meetings being held virtually, with the balance of meetings in-person.

Describe your board’s virtual meeting practices. Select all that apply. (147 responses)

Private companies more often reimburse for technology-related products and support (28%) compared to less than 20% of large- and mid-caps and no small-caps. More than one-third of large- and mid-caps include breakout groups in their virtual meetings, compared to 18% of small-caps and 17% of private companies. Nearly 45% of private companies, more than one-third of small- and large-caps, and nearly 30% of mid-caps, said their directors can choose whether to be on camera in video meetings. Some respondents provided comments that, among other things, reinforced the ongoing use by some companies of traditional conference calls in lieu of videoconference for at least some virtual meetings.

Another respondent noted that virtual meetings encompassed greater management participation as compared to in-person, off-site meetings.

With regard to pre-read materials and meeting agendas, the majority of each respondent type and size reported that they have not implemented and are not planning to make any changes to pre-read materials and meeting agendas, and a few respondents commented that many of the practices were conducted pre-pandemic.

Describe any changes to board pre-read materials. Select all that apply. (145 responses)

Describe changes to board meeting agendas. Select all that apply. (140 responses)

Endnotes

[1] Public company respondent market capitalization as of December 2021: 50% large-cap (which includes mega- and large-cap) (> $10 billion); 42% mid-cap ($2 billion to $10 billion); and 8% small-cap (includes small-, micro-, and nano-cap) (< $2 billion). Private company respondent annual revenue as of December 2021: 50% large (>$1 billion); 28% medium ($250 million to $1 billion); 17% small (<$250 million); and 6% not able to share. Respondent industry breakdown: 35% energy, resources, and industrials; 27% financial services; 20% consumer; 12% technology, media, and telecommunications; and 5% life sciences and health care.

Throughout this post, in some cases, percentages may not total 100 due to rounding and/or a question that allowed respondents to select multiple choices.

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We are independently owned, and have no entangling relationships that may create potential conflict of interest scenarios, or may attract the unwanted scrutiny of regulators, shareholders, the media, or create public outcry. Veritas goes above and beyond to provide unbiased executive compensation counsel. Since we are independently owned, we do our job with utmost objectivity - without any entangling business relationships.

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