Board Committee Structures

COMMITTEE FUNDAMENTALS

Why Board Committees Matter

BOARD COMMITTEE FUNDAMENTALS

PURPOSE OF COMMITTEES:
☐ Deep dive into specific areas
☐ More efficient use of board time
☐ Specialized expertise applied
☐ Better governance/oversight
☐ Required for public companies

COMMITTEE BENEFITS:
☐ Detailed review impossible in full board
☐ Specialized directors focus on specialty
☐ Recommendations improve decision quality
☐ Governance best practices
☐ Investor/auditor expectations

COMMITTEE AUTHORITY:
☐ Committees recommend; board decides
☐ Some matters delegated fully
☐ Specific charter defines scope
☐ Minutes kept and reported to board

WHEN TO CREATE COMMITTEES:
☐ Seed-Series A: Typically informal
☐ Series B+: Formal committees beneficial
☐ Pre-IPO: Full committee structure required
☐ Public: SOX/Exchange requirements

COMMON PRIVATE COMPANY COMMITTEES:
1. Audit/Finance Committee
2. Compensation Committee
3. Nominating/Governance Committee
4. Special Purpose Committees (as needed)

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AUDIT COMMITTEE

Audit Committee Structure

AUDIT COMMITTEE

PURPOSE:
Oversight of financial reporting, internal controls,
and relationship with external auditors.

COMPOSITION:
☐ 3+ members recommended
☐ All independent directors preferred
☐ At least one "financial expert"
☐ No management members

RESPONSIBILITIES:
Financial Reporting:
☐ Review financial statements
☐ Review accounting policies
☐ Discuss with management and auditors
☐ Review quarterly and annual reports

External Audit:
☐ Appoint external auditors
☐ Review audit scope and fees
☐ Meet privately with auditors
☐ Review audit findings

Internal Controls:
☐ Assess internal control effectiveness
☐ Review significant deficiencies
☐ Oversee remediation efforts

Risk Oversight:
☐ Review enterprise risk management
☐ Discuss significant risks
☐ Cybersecurity oversight
☐ Compliance oversight

MEETING CADENCE:
☐ Quarterly (minimum)
☐ Before each board meeting
☐ During annual audit
☐ Special meetings as needed

AUDIT COMMITTEE CHARTER ELEMENTS:
☐ Purpose and authority
☐ Composition requirements
☐ Responsibilities
☐ Meeting frequency
☐ Reporting obligations
☐ Annual self-assessment

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COMPENSATION COMMITTEE

Compensation Committee Structure

COMPENSATION COMMITTEE

PURPOSE:
Oversight of executive compensation,
equity programs, and succession planning.

COMPOSITION:
☐ 3+ members recommended
☐ All independent directors
☐ No management members
☐ At least one with comp experience

RESPONSIBILITIES:
Executive Compensation:
☐ CEO compensation (recommend to board)
☐ Other executive compensation
☐ Employment agreements
☐ Severance arrangements

Equity Programs:
☐ Equity plan administration
☐ Option grants (within authority)
☐ ESOP pool management
☐ Equity philosophy/guidelines

Performance Assessment:
☐ CEO performance evaluation
☐ Performance metrics alignment
☐ Bonus plan design
☐ Long-term incentive design

Succession Planning:
☐ CEO succession planning
☐ Emergency succession
☐ Key executive development

MEETING CADENCE:
☐ Quarterly (minimum)
☐ Q1: Annual compensation decisions
☐ Ad hoc for grants/offers
☐ Annual planning session

COMP COMMITTEE CHARTER ELEMENTS:
☐ Purpose and authority
☐ Composition requirements
☐ Responsibilities
☐ Authority for approvals
☐ Use of consultants
☐ Annual self-assessment

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NOMINATING/GOVERNANCE COMMITTEE

Nominating/Governance Committee Structure

NOMINATING/GOVERNANCE COMMITTEE

PURPOSE:
Oversight of board composition, governance practices,
and director nominations.

COMPOSITION:
☐ 3+ members recommended
☐ Independent directors preferred
☐ May include CEO (non-voting)
☐ Diverse perspectives helpful

RESPONSIBILITIES:
Board Composition:
☐ Assess board skills/gaps
☐ Director recruiting/succession
☐ Board diversity initiatives
☐ Director orientation/education

Governance:
☐ Governance best practices
☐ Board policies and procedures
☐ Related party transactions
☐ Corporate governance guidelines

Board Effectiveness:
☐ Annual board evaluation
☐ Committee effectiveness
☐ Director performance
☐ Board dynamics

Director Matters:
☐ Director independence
☐ Committee assignments
☐ Director compensation

MEETING CADENCE:
☐ Semi-annual minimum
☐ More frequent during searches
☐ Annual governance review
☐ As needed for nominations

NOM/GOV CHARTER ELEMENTS:
☐ Purpose and authority
☐ Composition requirements
☐ Responsibilities
☐ Director criteria
☐ Nomination process
☐ Annual self-assessment

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SPECIAL COMMITTEES

Special Purpose Committees

SPECIAL PURPOSE COMMITTEES

WHEN USED:
☐ M&A transactions
☐ Financing transactions
☐ Conflicts of interest
☐ Litigation matters
☐ Special investigations

TRANSACTION COMMITTEE:
Purpose: Oversee significant M&A or financing
Composition: 2-3 independent directors
Duration: Until transaction complete
Authority:
☐ Negotiate terms
☐ Engage advisors
☐ Recommend to full board

SPECIAL LITIGATION COMMITTEE:
Purpose: Evaluate shareholder demands
Composition: Disinterested directors
Duration: Until matter resolved
Authority:
☐ Investigate claims
☐ Engage independent counsel
☐ Recommend action

EXECUTIVE COMMITTEE:
Purpose: Act between board meetings
Composition: 2-3 directors (often chair + CEO)
Duration: Ongoing
Authority:
☐ Limited to urgent matters
☐ Cannot make fundamental changes
☐ Reports to full board

SPECIAL COMMITTEE BEST PRACTICES:
☐ Clear charter/mandate
☐ Independent members (for conflicts)
☐ Authority to engage advisors
☐ Regular reporting to board
☐ Documented deliberations
☐ Defined end point

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COMMITTEE ADMINISTRATION

Committee Operating Procedures

COMMITTEE ADMINISTRATION

MEETING MANAGEMENT:
Before Meeting:
☐ Draft agenda (chair responsibility)
☐ Distribute materials (5+ days advance)
☐ Confirm attendance
☐ Brief chair on key issues

During Meeting:
☐ Record attendance
☐ Follow agenda
☐ Document discussions
☐ Record votes/decisions

After Meeting:
☐ Draft minutes (within 48 hours)
☐ Chair review and approval
☐ Distribute to committee members
☐ Report to full board

MINUTES FORMAT:
☐ Date, time, attendees
☐ Agenda items discussed
☐ Key discussion points (not verbatim)
☐ Actions/decisions
☐ Next meeting date

ANNUAL ACTIVITIES:
☐ Charter review and update
☐ Self-assessment
☐ Report to board on activities
☐ Calendar planning for next year

Committee Timing by Company Stage

Committee	Seed	Series A	Series B	Pre-IPO
Audit	-	Optional	Required	Required
Compensation	-	Optional	Required	Required
Nom/Governance	-	-	Optional	Required
Special	As needed	As needed	As needed	As needed

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