October 7 2020 - New York, NY

Running board meetings: Michael Tannenbaum

Thomas:
Brex in the Black covers all things financial processes. In this episode, we're going to go over board of directors meeting, which was a recent topic in our new blog, Building Brex.
Thomas:
So, Michael, would just want to go through a quick outline of what you posted in this new article?
Michael:
No, for sure. I think this is a topic, and I posted this on LinkedIn too, where there's no class, there's no answer, no one tells you how to do this, you just need to pick it up. So, I think it's super helpful to just go through what I think after doing a bunch of board meetings here, doing a bunch in my past job at SoFi when I was in the private equity and investment banking world, what I saw larger, more traditional companies do from board meetings, so I feel I have a lot of exposure.
Michael:
In terms of the basics, board meetings are quarterly. They're typically two to three hours and you want to do them usually in the second half of the first month of the new quarter to give your finance team time to get the numbers ready. You always want to send out the materials before to optimize time in the meeting. So, those are my quick hits.
Thomas:
Perfect. Then who attends these board meetings?
Michael:
Mm-hmm (affirmative). So, who attends can be one of the areas of drama in the CFO world. I think my answer to this is the full exec team. I fought our founders here pretty hard on this. They wanted to do this senseless round robin, where people come in and present their pitch and move out in some funny circus, and I said no because people want the context. It's sort of weird to exclude certain people from certain conversations and then you don't see what the board is focused on. It feels like it's an assessment of you, rather than a discussion about the business.
Michael:
So a live review of performance for each executive from the board is strange, especially because they typically aren't that involved in the day-to-days of the business. The CEO's job is to do an assessment of the performance of them, the board is actually assessing the performance of the CEO. So, it's helpful for the executives to watch the assessment of the CEO, frankly. So, that's one of the differences.
Michael:
I think there is some space for an executive session, so where the management team would leave and just the CEO and the board would go through their assessment of what's happening without everybody listening. So there is space for that, but otherwise all executives should be invited. If who is an executive isn't particularly clear in your company, then there will be drama with who gets to come to the board meeting. Then there's also the same thing on the investor side, which is there's going to be investors that are on the board, no drama.
Michael:
Then there's investors that are important that don't have a board seat that want to go, and then they want to bring their person who does the research. Then there's the person that was really helpful in the beginning of the company that feels like they own the company and they want to come. So, there's definitely drama with the board, and I think that it's on you as the CFO to tell the CEO what you think.
Michael:
This is actually one of those places where the CEO has to curate the list, it shouldn't be the CFO, but you can give your advice. Usually the CFO can be the bad person, but in this case, the CEO's got to go. I mean, I guess the CFO could, but I think people that are being told they can't go to the board meeting by the CFO are going to be put off.
Thomas:
Who actually runs the meeting?
Michael:
So, the person who is responsible for the success of the meeting is the CFO. Meaning if the schedule's screwed up, if the topics are bad, if the materials are bad, if people don't think the meeting is a good meeting, that's the CFO. If during the actual meeting who is doing most of the talking, fielding the questions, that kind of thing, is typically the CEO. You don't want to overstep. There's always a tricky line, right?
Michael:
Remember, one of the things that I think is most interesting that Enrique's taught me about the board is these people are all investors too, right? So, they're all people who could be putting future money in the company. So yes, they're owners, they're under the tent, they're with you, they want to just get the answer right, but you also want to make sure you're addressing things the way the CEO addresses it with them. They could be leading a rat in the future, all those kinds of things.
Michael:
So I think as the CFO, you are responsible for the success of the meeting, but you're not necessarily the first person to answer and you shouldn't be doing that. That's my opinion. Guess what? This podcast is about my opinion.
Thomas:
What actually happens prior to the meeting? What does preparation look like? Who are you meeting with? So on and so forth.
Michael:
So this is what we do relatively unique here, which is we do a lot of preparation before, and so we don't really use the time during the meeting to talk through business questions or performance-related questions with the board. That's all done in separate sessions, typically with me without Enrique there or without the CEO, and that's where the board says, "Oh, I thought churn was this, or you guys spent this much money, but the cash balance went from here to here. I don't understand, can you bridge this?" Those kind of financial questions.
Michael:
We don't think that that's effective to do in front of other people who don't have that specific question, because then it just becomes can you answer all the financial questions live? So instead, we separate those out and give each people what they want and make sure that everyone fully understands the results and the material coming into the meeting, so we can just have the substantive discussions.
Michael:
We also, I would say, curate specific substantive discussions that we want to have rather than just wait for chance. So meaning, sometimes we provide a strategic discussion topic that we want to have. Should we go remote most recently? How do we handle relationship management at the company? Should we focus on margin or should we focus on revenue growth? Those kinds of questions, and we lay out alternative scenarios, those tend to be better discussions than just wherever the wind happens to blow on a Friday early in the quarter.
Thomas:
Post-meeting, what happens there? How do you take follow ups and topics that don't get covered in the board meeting?
Michael:
Yeah, I mean, I think if there's topics that don't get covered, because again, you're the owner of the meeting, if there's things that are unresolved, you want to work with a CEO to chase those down, you want to make sure that you get the feedback from the board at least once a year on how they think you're doing and what could the board meetings be doing differently? There could be something that they all are expecting that you're not doing. You don't ask, you don't get, right?
Michael:
I think the last thing is, of course, you want to be a class act. You likely didn't do this alone, people helped you prepare the meeting. Always send them the results of the meeting, the summary, what happens, so people know.
Thomas:
That's a wrap for running a board meeting. Thank you, Michael.
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