The executive committee is a sub-set – or sub-committee – of the board of directors. Boards cannot always gather quickly to respond to urgent matters; the executive committee’s function is to fill that gap. It functions as a steering committee and reports back to the full board on its activities and decisions. In many ways, the executive committee is the ‘nucleus’ of the board, but it does not stand alone. It is answerable to the board and every independent director so it should carefully consider its recommendations. Below are seven key differences between boards and their executive committees.
- Role: as noted, the executive committee’s role is to act quickly when urgent matters arise. But that’s not its only role. It also functions as a steering committee, making high-level strategic decisions. It may be called on to manage serious high-level workplace matters, provide organisational oversight and assist with board development.
- Responsibilities: the executive committee’s duties will be laid out in detail by the board, but typically include: acting on the board’s behalf; conducting research into emerging trends, technologies and markets; evaluating the CEO and aiding with board development; and managing workplace culture and change management.
- Size: executive committees are small by design; their function is to arrive at decisions quickly. To that end, most committees range in size from three to seven members. Larger groups may become unwieldy and slow down the decision-making process. Smaller groups may lack the authority to make effective decisions. The move to remote working has changed the governance landscape, but it doesn’t end in the virtual boardroom. Collaboration is an essential part of the board cycle outside of meetings. It is part of the preparation, review, and ongoing engagement between directors, executives and company secretaries.
- Composition: an executive committee typically ranges in size from three to seven members and comprises a chair, vice-chair, secretary, treasurer and any extra members the board deems necessary. These will be drawn from a mix of senior executives (such as managing directors) and board members and usually includes the CEO. The board appoints members, and it is good practice to have at least one non-executive director.
- Frequency of meetings: while the full board may only meet bi-annually or quarterly, executive committees should meet more often. Typically, their meetings are at least quarterly, if not bi-monthly or even monthly. Ad-hoc meetings may also be required if a situation requiring an immediate response arises.
- CEO relationship: CEOs often serve on executive committees, serving as a liaison between the CEO and the board. However, the committee usually takes the lead in CEO recruitment. The committee evaluates the CEO’s performance and reports to the board. It must conduct these evaluations with the utmost probity.
- Accountability: despite its function as an advisor to the board, the executive committee is also accountable to the board. Its role is not to supplant the board’s deliberative and decision-making roles. Instead, it is to enhance them and provide guidance when needed. The committee’s decisions must ben endorsed by the board to become binding on the organisation.
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