Tom Lazay / February 29, 2024 / 4 MIN READ

Boardroom Tips for Founders

Tom Lazay / / 4 MIN READ

Boardroom Tips for Founders

The Insider’s Playbook for Expansion Stage Board Meeting Success (Part III): Boardroom Tips for Founders

In Part 1 and Part 2 of this series, we walked through the basics of preparing for your first board meeting—including putting together your board—and setting your meetings up for success.

Now, we’re turning our attention to some lesser-known strategies that can help expansion-stage startup founders transform board meetings into opportunities for impactful decision-making and growth.

Discuss Hiring and Compensation Structures Early

When it comes to discussing hiring and compensation in board meetings—especially during an expansion stage following funding closure—preparation and foresight are crucial. Issues often arise around compensation packages, particularly option approvals for new hires and existing employees. 

I’ve seen cases where a founder presents a compensation package to the board for approval without being adequately prepared for the questions that will inevitably arise—including details about the role, package specifics, and the greater impact on the options pool. This leads to a situation where the package is not granted, and the founder is left scrambling to track down information in order to report back to the board and gain approval.

To avoid such delays, it’s essential for founders to proactively align with the board on compensation structures well before these decisions become urgent. This means having a clear plan for each hiring wave, including detailed proposals for salaries and option allocations within the company’s budget.

A well-defined system should include specifics like the number of options available, their percentage of the total outstanding shares, and the impact on the options pool. This system will frontload the context the board needs to understand why you’re presenting a particular compensation package—potentially saving weeks in a time-sensitive hiring or upgrade process.

Key Takeaway: Be proactive and clear with your board about compensation strategies well before crunch time. This will not only accelerate the approval process but also demonstrates your foresight in addressing the financial and strategic aspects of team expansion.

Know How to Navigate Conflicting Board Opinions

With multiple stakeholders involved in board meetings, it’s inevitable that there will be times when opinions don’t align. 

In such situations, a proactive approach is key. It’s often beneficial to engage in pre-meeting sessions or one-on-one discussions with board members to seek alignment on contentious issues. 

This groundwork can help clarify positions and pave the way for more productive, consensus-driven discussions during the actual board meeting. Especially in early-stage companies, the ability to foster consensus among board members is critical. A CEO’s ability to navigate these differing viewpoints and work towards alignment reflects not only on their leadership skills but also on the potential success and stability of the company.

Key Takeaway: Engage board members individually on contentious issues before meetings to gain perspective on their positions and seek common ground. It’s a practical move that underscores your commitment to leadership while keeping meetings productive and focused.

Outsource Record-Keeping to Ensure Compliance

Having a clerk on the board, typically a corporate attorney from your law firm, is a strategic move for expansion stage startups. 

This role, usually provided at no additional charge, ensures that your board meetings are compliant with legal requirements, such as taking accurate minutes and maintaining proper records in accordance with Delaware law. The presence of a legal expert as a clerk relieves the management team from the complexities and drudgery of legal compliance, allowing them to focus on strategic discussions and decision-making. Your expansion-stage VCs do not want a CEO spending any time on a low-value task such as corporate record-keeping.

Having clean and well-maintained corporate records is invaluable, especially when facing due diligence processes in the future. It’s a proactive step that can save significant time and prevent the stress of rectifying messy records later.

Key Takeaway: Before negotiating an expansion-stage term sheet with the help of your corporate counsel, ask your lawyer if they will join your board meetings as company clerk. If the answer is no, then find a new lawyer. 

We hope you’ve found our series on expansion-stage startup board meetings helpful and informative. Equipped with insider insights and backed by careful preparation, we’re confident you’ll have the tools you need to tackle your first (or next) board meeting like a seasoned pro. 

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