Taking the board of directors on the road

A new level of board of director engagement has emerged. Directors’ involvement in a company’s strategic planning requires more than just a ratifying role. Beyond a one-time on-boarding program that familiarizes directors with the company’s business on-site, holding occasional board meetings ‘on the road’ can offer directors an additional layer of context for long-term strategic planning.

Board visits to business locations beyond the firm’s corporate headquarters give directors opportunities to gain firsthand experience of their company and its culture. An agenda that is planned well in advance can be designed to go beyond traditional corporate headquarters conference-room board meeting presentations. The board’s experience in-market can be carefully crafted to present a number of outside views on the business, from significant customers and government regulators to industry or economic experts, other thought leaders, and of course local management.

With early input from the board and CEO, a corporate secretary’s team can work with senior members of the business on location to create a full agenda for the board visit. These on-site programs for any type of company ensure directors directly experience the company’s ever-changing operating environment. The meetings can highlight trends in globalization, regulation, emerging technologies, competitors and economic and political volatility.

Planning early: gaining consensus on where, when and why to travel

A road trip for the full board of directors is likely to require an extended time commitment. Extra travel will often be needed, and a more comprehensive agenda with outside guests and additional participants could also require more total meeting time.

If away board meetings are not yet an established part of a board’s normal routine, directors should agree on allocating additional time for these periodic trips well in advance. Board meeting dates are likely already set one to two years in advance, so this is another complicated aspect of planning to avoid director scheduling conflicts. With time-constrained directors and already full schedules, securing commitments to carve out time for the trip presents a high initial hurdle.

Beyond the board committing as a group to make the extra time, directors will also want to debate the merits of going on the road for periodic meetings. The budget for an away board meeting is an important aspect for the board to consider. Some proposed locations for away meetings might literally be around the world, while others may be purposely closer to the company headquarters to balance out the directors’ time commitment as well as the expense involved.

For boards that have not yet established a routine for away board meetings, suggesting potential locations and sample agendas for trips may be a helpful way to generate the right conversation. Provide examples of key stakeholders in essential business locations that could participate and enhance a board discussion.

Site visits can be planned around locations for anticipated strategic capital investment, divestitures or fast-growing regions, segments or lines of the business. Alternatively, boards may choose to take a risk-oriented approach, with travel meetings focusing on locations that have complex regulatory or compliance challenges. Another possibility is that boards use the opportunity to digest and learn from earlier failed strategic efforts.

Because away board meetings will only be periodic, and travel plans and other logistics need to be scoped out well in advance, an up-front discussion can center on a long-term, strategic approach to the company’s business initiatives. This type of board discussion will help validate the value of the program the board is looking to derive from committing to the travel.

Getting your board directors on the road – one way or another

It’s not clear how many directors travel for full board meetings at away locations. Full board meetings on location, with directors having the benefit of traveling together as a board, may be only one of a few ways to envision the on-site experience, however. The 2014-2015 National Association of Corporate Directors (NACD) Public Company Governance Survey finds that 55 percent of board members make site visits, though not necessarily as a group.

The value directors report seeing in on-site visits to company locations includes being able to see firsthand who is doing the work and creating value for the company. Site visits provide directors with valuable real-world knowledge and help them to be more proactive and engaged when evaluating options for strategic approaches.

‘Boards want to see and talk to people other than senior executives,’ notes Alan Rudnick from corporate governance advisory firm Masters-Rudnick & Associates. ‘They want to talk to people who work in these non-headquarters environments. They would like to see and get a sense of everyday employees and people in management, besides those who come to routinely present at traditional board meetings.’

One company’s corporate secretary describes organizing a board of directors’ trip to the Amazon jungle, in a location accessible only by boat or helicopter. The company had secured the legal rights to build a new strip mine and was making a strategically important and sizable investment. Because of how vital the investment was to the company’s long-term strategy, the members of the board’s newly formed public issues committee decided to make a total of three separate trips to the site: before signing off on the investment, midway through construction, and once construction had been completed.

Committee members experienced the full scope of the Amazon project, including the environmental and reputational impacts of constructing the proposed mine. They reported back to the full board of directors on the challenges of ‘doing it right’, consistent with the company’s values. The board ultimately made an informed decision to proceed with the capital investment. Rudnick notes that directors today are – quite correctly – more focused on corporate culture. ‘Until you go to that country or business unit and see it for yourself, you just can’t get a feel for that environment, the challenges employees face, and how things are being handled,’ he says.

At companies that are increasingly global and whose board composition reflects that, directors feel more familiar with a market after having had the opportunity to visit it. Building collegiality among board members by traveling together to these locations also likely provides additional benefit.

Creating a robust agenda and management planning together

For a global and increasingly complex business, there are numerous options for where to take directors on the road, and plenty of reasons why. Nonetheless, over time, a corporate secretary’s office can work with the CEO and the board to build in similar program elements to the agendas for away board meetings. Directors typically provide feedback by comparing one trip to prior ones, and this will help refine the planning process.

After getting a green light from the board to plan an away meeting in a particular location, the corporate secretary’s group should work with senior executives in-market to create a broad list of potential presenters, outside speakers, guests, events, product demonstrations, site tours and other elements that can be incorporated into the agenda. This ‘whiteboard’ approach will help isolate the most important aspects of the trip and shape key themes for the board meeting. Any feedback that can be secured along the way from individual board members and the CEO will help the planning team better focus its approach well in advance.

The full board visit is an opportunity for local management to host and showcase past accomplishments and strategic objectives for the future. It also comes with the pressure of getting it all just right, choosing customers and/or regulators that will have valuable and informed perspectives to share, and engaging impressive, insightful and board-worthy speakers (who can also be relied on not to back out at the last minute because of an unforeseen emergency and thereby disrupt an intricate, minute-by-minute multi-day agenda). Ideally, the board should get an authentic snapshot of the local business that highlights its successes and outlines its biggest challenges.

The travel meeting is also an opportunity for the board to complement its broader succession planning efforts and evaluate local talent from a variety of perspectives. In addition to outsiders, the board should seek time to meet with various local employees.

Given the value of giving directors opportunities to observe and interact with more senior-level executives from the local business division who are likely to present at traditional board meetings or attend other planned events during the trip, striking the proper balance between these contacts and those with promising junior-level employees will inevitably require a great deal of time and attention from the management team.

Meeting styles

The board agenda may include product demonstrations or factory tours, which could pull in a wider group of participants. In addition, directors may prefer to meet one-on-one in a formal meeting style, or informally over a meal, with high-potential employees in either individual or group settings. Some companies may even choose to arrange a town hall setting for directors to meet with an audience of local employees.

Senior managers and their teams in a chosen location are likely to experience great disruption in getting their day jobs done alongside the long lead times and comprehensive agendas involved in planning for a board visit. The NACD survey results suggest senior management at many companies may find the planning and disruption so considerable that they opt instead for more informal visits by individual directors.

The corporate secretary’s team can alleviate some of the angst for the local host team by setting expectations and reviewing the results of prior away board meetings. Highlighting the board’s interest in visiting this specific market ideally will also build excitement for the local team, providing extra motivation that will compensate for time diverted from regular work.

Because they are a part of each traditional board meeting, members of the corporate secretary’s team can provide insights about the board to local teams that might only host a meeting once every several years. Reviewing recent away board meeting agendas and outcomes will improve the likelihood of coming up with successful formats and trying out different approaches for agenda items that simply were not well received in the past. The corporate secretary’s team should ensure a balance between the local team’s enthusiasm and the need to meaningfully address challenges and risks faced by the local business as part of the board’s agenda during the away-meeting trip.

Having the corporate secretary’s team do a site visit early in the process will help set expectations with local management and refine content. This type of trip forces the team of management organizers to plan out logistics, travel times and what is feasible in the course of a daily agenda, step by step.

Checklists and logistics

A planning checklist is likely to grow longer and longer with each away board meeting and accumulated experience. Getting the dates of the trip on directors’ calendars early must remain at the top of the list. There are a host of other early planning items, which typically fall to a corporate secretarial team to manage up front.

Securing ample hotel room reservations and meeting space is a critical early planning item. Carefully consider any competitor or industry meetings or other significant events that may be booked at the same hotel. Incremental administrative and technology support needs will undoubtedly arise. A host of senior executives will be at the hotel or local office location for several days, and directors will not have access to the facilities they’re accustomed to having at regular headquarters-set board meetings.

Understanding the budget for an away board meeting from the onset and anticipating any limitations is crucial. Staff who ordinarily support the meeting at home may not be able to make the trip because of expense issues. If directors choose to include spouses on a board trip, this will lead to a series of other budget and planning considerations.

In some meeting locations, business travel visas and other security protocols may need to be secured with ample lead time. Depending on their prior travel histories, directors and/or their spouses may need to complete lengthy applications far in advance. Senior management and other staff making the trip will also need to plan accordingly.

Additional security arrangements, well beyond the level required for a typical headquarters board meeting, may be needed for directors and company executives traveling to away meetings. Senior members of the company’s security team should be consulted early in the planning process.

Companies that opt to periodically take their board meetings on the road should anticipate an additional time commitment for directors, a longer planning cycle to make the most of a robust agenda, and an incremental expense. Away board meetings can be designed as an opportunity for directors to fully experience markets and business segments firsthand, through the lens of numerous stakeholders. Directors and the board as a whole ultimately benefit from deeper engagement and enhanced context for the long-term strategic planning process.

Bart Goldstein, the guest editor of the Spring 2015 issue of Corporate Secretary, is a governance consultant, president of the Westchester-Fairfield chapter of the Society of Corporate Secretaries and Governance Professionals and former corporate secretary and senior associate general counsel at MasterCard.