Closed Board Sessions: Friend or Foe?
How Embracing Closed Board Sessions Can Lead to Better Decision-Making
DEAR STAGE 2: We raised our A round earlier this year and a new investor joined the board. They asked that we start scheduling a closed board session as part of each board meeting. Is this normal? How is this session used? ~Considering Closed Sessions
DEAR CONSIDERING CLOSED SESSIONS: Congrats on the A round! Now, let's talk about those closed board sessions your new investor is asking for…
Personally, I love the closed board session and would like to see them used more often. Why? Because it's a powerful tool for alignment, open communication, strategic planning, and increasing feedback. A closed board meeting is exactly what it sounds like - a board meeting that's not open to the public or other stakeholders. For private companies, this typically comes in two flavors: board-only (no other exec team members) and board minus CEO/Founding team.
While a closed board session could be perceived as negative, this ask is completely normal and can be beneficial for you and your company if used correctly. As long as everyone is aware of WHY these sessions are occurring, topics are above board and feedback is shared, they can be incredibly valuable. Our advice: don't shy away from these meetings as a CEO! They're not meant to exclude you, but to create a space for honest discussion and feedback.
Here are a few ways these sessions are typically used:
The Entire Board
Many CEOs invite some or all of their executive staff to board meetings, which can be great for transparency and alignment. However, this can also lead to longer meetings and limit the board's ability to discuss sensitive topics. A board-only session creates space for:
Governance matters: This might include approving a 409A valuation or new option grants. These are necessary and should not be public, so handling them in a closed session keeps the main meeting focused on strategy and operations.
Strategic discussions: The board might use this time to assess the team, plan for future fundraising, or discuss topics that aren't ready to be shared with the full executive team.
The Board Minus the CEO/Founders
As a CEO, you have limited opportunities to get candid feedback. This is one of them.
Encourage your board (investors, independents, observers) to meet for 10-15 minutes at the end of the board meeting to debrief on the meeting itself, company direction/strategy, and your role as CEO/founding team. Then come back into the room to get that feedback!
When you return to hear this feedback, come with an open mind. Listen and take it in. By no means do you need to agree with all of it or act on it right away, but it's a missed opportunity not to get this feedback.
Remember, closed sessions aren't about keeping secrets from you. They're about creating a space where board members can speak freely, provide honest feedback, and discuss sensitive matters without worrying about how it might be perceived by the broader team.
As a CEO, you should view these sessions as a valuable tool. They allow your board to have candid discussions about the company's performance, your leadership, and strategic directions. This can lead to more thoughtful advice and decision-making. Moreover, by encouraging these sessions, you're demonstrating trust in your board and confidence in your leadership. You're showing that you're open to feedback and willing to create space for honest discussions about the company's future. Consider trying it at your next board meeting and setting a time limit to ensure the closed session doesn't dominate the board meeting. A 15-30 minute closed session at the end of each board meeting is typically sufficient.
One final note: it's important to set some ground rules. If your board is excusing you without your prior knowledge or organizing meetings that you are not invited to that’s definitely a red flag. Closed sessions should be scheduled in advance and be “above board”. Make sure you're briefed on any decisions made or actions proposed during these sessions. While you don't need to know every detail of the discussion, you should be informed of any substantive outcomes.
As a CEO, embracing these sessions can lead to better decision-making, stronger relationships with your board, and ultimately, a more successful company. So next time your board asks for a closed session, don't just agree - actively encourage it. It's a sign of a healthy, well-functioning board and a confident CEO.
Until next week!