Executive sessions are an element in board governance, but they should be used sparingly and with caution. Tom Wallace, partner with KOPPLIN, KUEBLER & WALLACE explains, “Executive sessions allow directors to discuss sensitive matters in a confidential setting but doing so regularly or without clear purpose can undermine governance and sabotage organizational success.”

Wallace cites the following as key considerations for executive sessions:

1. Preserve Trust and Transparency: Excluding the GM/COO risks damaging trust, creating an environment of suspicion and straining board-management relationships.
2. Ensure Informed Decision-Making: The GM/COO’s operational insights and experience are critical for well-rounded discussions. Decisions made without their input can lead to suboptimal outcomes with negative ramifications.
3. Maintain the GM/COO’s Authority: Regular exclusion signals a lack of confidence in the GM/COO, potentially weakening leadership credibility within the organization.
4. Avoid Board-Management Divides: A partnership between the board and management is essential. Isolating the board risks decisions being made that are misaligned with operational realities that only the GM/COO understands.
5. Mitigate Groupthink: The GM/COO’s diverse perspective helps reduce the risk of board members reinforcing each other’s views and unchecked thinking.
6. Clarify Accountability: While it is appropriate to exclude the GM/COO during his or her performance evaluation discussion, broader exclusions can blur accountability, leading to unclear expectations and reduced effectiveness.

When it comes to executive sessions, Wallace recommends using them minimally and purposefully. Only convene executive sessions when necessary, with a clear purpose and rationale. A best practice is to communicate the intention of the executive session to ensure the GM/COO is aware of its occurrence and the reasoning behind it.

“Boards that balance confidentiality with inclusivity will better navigate challenges and achieve strategic goals,” Wallace concluded.

Notable – February 2025