Tag: BoardOps

The SEC’s Corp Fin Staff is looking for disclosure that enables investors to understand how management and boards are analyzing current and expected impacts of COVID-19 on company operations and financial condition, including liquidity and capital resources. For this reason, in planning your company’s upcoming board and committee meetings, you may want to:

1) Incorporate COVID elements into briefing materials for standing agenda topics and/or

2) Add additional agenda topics in order to appropriately address unprecedented circumstances created by COVID.

Here are a few thoughts about how boards can do that effectively and how Foresight^® can provide board agility in times of crisis:

COVID’s Impact on Company Finances: SEC guidance suggests that, as basis for disclosure, your board would address:

• Short- and long-term funding and liquidity risks
• Burn rate and ability to withstand sharp declines in sales or supply chain disruptions.

Perhaps your Finance team could prepare updated liquidity analyses taking into account such variables as COVID “high water” unemployment levels where your company does business and your company’s personnel actions (pay cuts or increases, furloughs, layoffs, and recall actions and plans). That can support board discussion of:

• Use of lines of credit and government support programs, access to capital markets
• Scenario planning for expected, faster, and slower recovery
• Cost savings (or increases) from COVID-related changes to your business  
• Material changes to your company’s cost of capital.

Several Foresight Agenda Topics lend themselves to board discussion of COVID-related financial information:

• Report of the Chief Financial Officer: The CFO could report on COVID-related impacts on the balance sheet, cash flow, financings, progress on strategic transactions, investor response to recent company announcements, etc. The CFO might also review COVID’s Supply Chain impacts, e.g., weaknesses, uncertainties, and workarounds.
• Report on financial reporting issues. Your audit committee will likely expect to hear how you are applying Staff guidance to company filings.
• Approve capital strategy and annual capital plan. Your board will likely look more closely at dividend policy, debt structure, working capital, capital needs/uses for the year (including accelerating or postponing specific capital projects).
• Approve debt. Your board may need to authorize the issuance of specific debt instruments or delegate authority to issue debt.
• Report on major financial risks:  It is timely to review COVID’s impact on major financial risks, disclosure, and controls created to mitigate those risks.

COVID’s Impact on Sales: To the extent relevant, briefing materials and board discussion could cover:

• Lost, improved, or significant shifts in Sales and anticipated recovery
• New/modified customer payment terms – including financing that the company provides
• Revenue cycle days and accounts payable days

These Foresight Agenda Topics lend themselves to discussion of COVID-related Sales information:

• Report of the CEO – Business Update: This is an opportune time to share significant COVID-related developments, including any regarding Sales.
• Report of the Chief Financial Officer: The CFO’s Report complement’s the CEO’s Report with updates on operating results, including Sales.
• Report on Operating Segments: It is useful for each operating segment to annually discuss the segment with the full board – this year’s reports would include COVID’s impact on Sales.

COVID’s Impact on Risk: Board discussion could address:

• Update of your Enterprise Risk Management (“ERM”) program to identify new COVID-related risks or uncertainties including material operational risks and uncertainties
• Cybersecurity Risk associated with increased numbers of employees “Working from Home” (WFH)
• Reputational risk from company COVID-related actions/inaction and, although not mentioned in SEC guidance, risk from company actions/inaction in response to recent protests

These Foresight Agenda Topics lend themselves to discussion of COVID-related Risk information:

• Review enterprise risk management program: Annually, the board reviews the annual ERM risk assessment. COVID’s impact on your business may warrant an update to your ERM and report to your board.
• Review strategically significant environmental, social and governance (ESG) risks: Your company and investors may use environmental, social and governance (ESG) criteria assess risks from your products and business operations and practices. As it relates to COVID:  
  • Social: Company relationships with its employees, suppliers, customers, and the communities in which it operates, and the company’s health and safety policies
  • Governance: Risk-based incentives.
    
    

COVID’s Impact on Information Technology: Board discussion can cover:

• WFH: Does your company need to invest in new equipment to address your company’s technical capabilities? How has WFH impacted productivity?
• Results of/lessons learned from new COVID-prompted tech initiatives

These Foresight Agenda Topics lend themselves to discussion of COVID-related Risk information:

• Review company’s information technology capabilities: This year’s review could include assessment of capabilities versus post-COVID-needs.
• Review role of technology in the company’s business and industry: It is useful to review the role of technology in post-COVID strategy, including key aspects of tech-reliant processes and products.

COVID’s Impact on Human Capital Management (HCM): Board discussion can cover:

• Employee health and wellness, including retrofitting facilities (especially manufacturing facilities), procedures to ensure health and safety, and sick leave policies
• Plans for facilities use – short- and long-term – including WFH
• Return to work planning: accommodation and limits, and security measures addressing protests/looting

These Foresight Agenda Topics lend themselves to discussion of COVID-related HCM.

• Review HCM programs including succession planning (below C-suite) During the HCM committee’s review of human capital management programs (e.g., recruitment, retention, evaluation, compensation, succession planning), it is good to consider the programs’ alignment with company values, culture, strategic direction, and compensation philosophy.
• Review diversity and inclusion: The HCM committee receives reports on the status of the workforce regarding diversity (gender and ethnicity), equity and inclusion efforts – and that reporting should include consideration of recent protests.

COVID’s “Silver Linings”: Some companies are finding business opportunities in COVID. (E.g., Remote meeting services have never had greater demand, but even they must significantly invest more in security provisions.) Board consideration of new opportunities is warranted. 

• New innovations in processes or product/service
• New customer needs or perceptions
• Distribution improvements:  e.g., moving to the cloud, increased on-line activity,
• Regulatory changes (albeit some only temporary) and regulatory advice to specific industries (e.g., COVID-related relaxation in pharma, banking, insurance)

Conclusion

COVID has changed how many many things are done – including how boards carry out their responsibilities. Foresight provides boards agility in times of crisis, including tools for effective agenda planning and support for high-quality board discussions, decisions, and disclosure.

To learn more about Foresight^®, click here: https://foresight.board-ops.com/

© 2020 Corporate Governance Partners, Inc., Chicago, IL 60601

Instead of quarterly in-person meetings, many boards are meeting weekly or bi-weekly for shorter, virtual meetings. Board meetings are unlikely not revert to the old norms soon. The challenge: using technology to make these virtual board and committee meetings as productive as possible. Board management software makes remote meeting prep possible for corporate governance professionals, General Counsels, CFOs, CEOs, and others. Board portals make distribution of briefing materials a breeze. Videoconferencing makes the meetings themselves possible.

Attention Span: The average feature film lasts about two hours. (Many people have a tough time paying attention for even that long. Even at in-person board meetings, attention drifts if a topic runs on too long. Planners of virtual board and committee meetings should take this into account.

Scheduling: Typically, regular board meetings occur in-person over 1 or 2 days – often with committee meetings occurring sequentially or concurrently before or after a board meeting. Attending all of those meetings via videoconference is like a running marathon in the rain. Yet breaking up those long-scheduled regular meetings into more digestible segments is challenging because those meetings have been on directors and executives as calendars as much as 2 to 3 years in advance. Most boards will continue to meet (but virtually) on those scheduled dates, adding more meeting dates as needed to address COVID-19 impacts.

Agenda Topics/Outcomes: Adapting board and committee agenda to virtual meeting formats will help keep the meeting and business moving forward. Start by being clear regarding the desired outcome for each agenda topic: Approve, Review, Ratify, Delegate, Report of. Being specific gets everyone on the same page about the reasons for the agenda item.    

Advance Prep: No longer will (or should) boards sit through dirge-like PowerPoint presentations. As presenters draft briefing materials, they should be clear about why the topic is on the agenda and suggest the 2 or 3 aspects of topic about which the presenter is seeking board input. Tech offers additional possibilities. Prerecord and post executive’s or advisor’s remarks to the portal for directors to both see and hear in advance of the meeting. Use the board portal to get briefing materials to directors for review well ahead of time; a week in advance of the meeting is good practice.   

Companies have varied in pre-meeting outreach practices. Going fully virtual might prompt committee staff officers to call each committee member several days prior to the meeting to cover questions they might have covered over coffee before an in-person meeting. Outreach affords committee members a chance to ask the staff officer to provide some additional information at the meeting and to give the staff officer a heads up if the director is not supportive of a proposed approach.

Video Conferencing:

• The Chair may want to establish a few “ways of videoconferencing” guidelines to help meetings run efficiently while still ensuring that every director has his or her say.
• Presenters should assume all directors have read the briefing materials, remind directors of those 2 or 3 suggested focus points, then initiate discussion.

Minutes: Advanced board management technology should enable automated preparation of draft minutes.

Analytics: Well-planned virtual board and committee meetings can be shorter but more effective because there is less time spent on “presentations” and more on in-depth discussion. Pay attention to how the board and committees are using their time. Time-use analytics can inform planning of future virtual meetings.

Conclusion: In the Time of COVID-19, look to advanced technology to further elevate ways of working, making governance professionals more efficient and boards more effective.

COVID-19 is driving rapid migration to digital technologies. Nowhere is that truer than in corporate governance.

As you manage your company’s board work, you do not want various versions of spreadsheets, WORD document and PowerPoint decks stored on numerous coworkers’ hard drives. You need to accelerate your organization’s board-related digital capabilities – you need to employ a fully integrated board management solution. You need Foresight.

Foresight’s advanced technology allows you and your board to do much more – more cost-effectively and much better. And because it is cloud-based, you and your board can work securely and effectively from almost anywhere.

Foresight allows you, your company’s executives, and your board to:

• Automate meeting and agenda planning for board and committees
• Easily distribute meeting briefing materials to designated meeting participants – using Foresight’s integrated board portal capabilities
• Generate draft “ready-for-editing” minutes
• Create and manage meeting follow-ups
• Generate board-related metrics

Foresight’s benefits include:

• Board-related metrics to assess and elevate board effectiveness
• A unique agenda hierarchy that helps management and the board align on annual priorities and goals
• Saving General Counsel and Corporate Secretarial teams hours of work and rework
• Potential to save outside counsel and consulting fees for corporate governance work

Make your life easier when you really need easy. Make your board better when it really counts.

We built Foresight^® expressly to enhance your board-related workflows: preparation, document, and evaluation.

Board and committee agenda-building is a key component of board meeting prep. It’s an iterative process. Foresight is more efficient and reliable than the word processing and spreadsheets most corporate governance professionals use now. It reduces tedious work, freeing time for your high-impact work.

Foresight users can quickly build draft agenda, then share those with colleagues and committee chairs for review. Users can check their draft agenda for compliance with state law, SEC requirements, and exchange listing standards. Foresight also generates draft minutes to document meetings as well as analytics to help boards assess their effectiveness. It also allows you to track follow-up tasks, so they do not get lost in the shuffle.

As you shelter in place, learn more about how Foresight can improve how you work!