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Evaluating Board Performance: A Guide for Early Stage Companies
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www.seraf-investor.comAnyone is free to use this Google Sheet. It is designed to be used in conjunction with our companion eBook.Rating Key: We recommend 4 levels of rating on each topic you evaluate. For example, you could use the following: (1 = Strongly Disagree, 2 = Disagree, 3 = Agree, 4 = Strongly Agree)Evaluating Board Performance: A Guide for Early Stage Companies is designed as a way to evaluate the effectiveness of an early stage company board. By using this guide, you can ensure that your board follows best practices. The areas covered by this guide are optimized for the evaluation of early stage companies; supplemental topics may be appropriate for use with later stage companies.
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Director's Guidebook: How to be an Effective Board Director in Early Stage Companies
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Evaluation TopicRatingComments / Recommended Actions to Improve Performance
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Structure and Culture of the Board
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The membership of the board includes a sufficient number of directors, with a range of expertise, perspectives, and personal backgrounds to meet its responsibilities.
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The board is familiar with the company's core strategy, finances, markets, competition and business plan.
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The board reviews, approves and monitors the company's strategic plan.
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There is general alignment amongst the directors on the long term strategy of the company.
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Board member interaction, both during and outside of board meetings, is
positive and productive.
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Board Meeting Mechanics
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Communications and materials are provided well in advance of board meetings and are clear and sufficiently in depth.
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Directors are adequately prepared for board meetings and contribute in a productive manner at board meetings.
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The frequency and timing of board meetings is sufficient to properly oversee the company.
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Agendas for the board meetings are established with appropriate input from the board.
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Board meetings are well-organized and efficiently run.
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Key issues that need to be discussed on a regular basis with management are consistently covered in board meetings.
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Board meetings are conducted so that there is time for meaningful discussion on key challenges faced by the company.
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Executive Sessions provide an adequate forum for raising questions among the non-management members of the board.
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Evaluating, Compensating and Working with Management
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There is a good working relationship between the board and the CEO.
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Directors maintain an appropriate balance - being both supportive of and challenging the management team.
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The board evaluates the CEO's performance on a regular basis and delivers an annual review to the CEO.
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The board works with the CEO to evaluate the senior management team's performance.
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The board works with the CEO to develop a succession plan for the entire senior management team, including the CEO.
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The board approves personal and company goals recommended by the CEO, and the board monitors and determines whether the goals have been achieved.
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The board ensures that compensation of the CEO and senior management includes appropriate incentives to achieve the company's strategic goals while managing the company within acceptable levels of risk and that compensation is fair and reasonable.
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Oversight of the Company's Financial Condition
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The Board reviews financial statements on a regular basis and has open access to the Chief Financial Officer for questions and background information.
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Management reports adequately to the board on the overall financial health of the company and reviews both short term and long term fund raising plans.
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The Board engages in a thoughtful discussion with Senior Management on the annual budget prior to approving the budget.
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The board reviews the company's exit strategy (e.g. Acquisition, IPO) on at least an annual basis.
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Board Committee Assessment
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The board has an appropriate number of formal committees for the stage of the company.
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The Audit Committee reports to the board on the results of committee activities and issues that arise with respect to the quality or integrity of the company’s financial statements and the company's independent auditors.
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The Compensation Committee recommends to the board compensation plans which are based on sound compensation philosophy, principles and practices. The committee oversees the company’s equity compensation plans. Other responsibilities include oversight over Executive Compensation, Board Compensation, review of the CEO’s goals and objectives, and performance, and recommends the CEO’s goals for board approval.
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Director Self-Evaluation
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How do your professional background, skills and knowledge, and personal characteristics help you be an effective director?
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Please share one or two examples of how you have made important individual contributions to the board and the company in the past year.
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I appropriately prepare for, and attend the majority of board and committee meetings.
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I participate in board and committee discussions as an independent, critical thinker, providing constructive criticism and creative solutions.
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I understand that board and committee discussions must be kept confidential.
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I make myself available to consult with and advise the CEO on a regular basis.
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