What to Expect from Your Year-Ending Board Meeting

Posted On December 22, 2015
by Pat Burke

The final meeting of the fiscal year is your Board’s most important gathering. It is the time the Board sets directional headings for the upcoming year along with the time the talk is compared to the walk.

The head of each department will report actual results as compared to budget. For some, it is a time to pop a few buttons. For others, it’s a time to pop a few aspirin. The most important takeaway from this session is the over-performers sharing the secrets of their success with the laggards.

All departments submit their best estimate of the upcoming year’s performance. Management analyzes this information and adjusts it for obvious sandbagging or irrational exuberance and adds its best estimate of corporate overhead. The result is a budget, which is then submitted to the Board. The Board will only approve the budget if, in its best judgement, the budget represents the most likely results if the Company performs at the highest possible capacity.

Armed with the budget information, the Board is next tasked with establishing performance goals for the C-level Executives. These goals are often the basis for the Executives earning bonus compensation. Base compensation is usually determined by the CEO based on industry standards.

Since the financial and operating goals are set and the team is in place and ready to perform, the Board must now determine if there is adequate capital to execute. The bank’s complicity is required and will generally be granted if the prior year’s performance allowed the Company to stay within its bank covenants. This is also the time when a proposal from a new bank may be entertained.

Although not officially part of the year end Board meeting, this might be a nice time for management to thank the Board for its help and maybe even buy the members a steak and a good glass of cabernet.

With decades of board-level experience and advice under one roof, Burke & Schindler is your valuable partner in managing and growing your business. Contact an advisor today.