This is the eleventh installment in the Year in Governance Series from the In-House Subcommittee of the ABA Business Law Section’s Corporate Governance Committee. Each month, the series will share key tips on a different corporate governance topic. To get involved in the Corporate Governance Committee, please visit the committee’s webpage.
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Executive sessions of a board of directors enable directors to speak freely, voice concerns openly, and arrive at informed decisions without external pressure. Ensuring that these sessions are properly conducted, documented, and legally compliant requires careful attention to both procedural and substantive considerations. A well-run session protects the corporation and builds trust and confidence in the decision-making process.
- Differentiate between three types of executive sessions. The board should recognize three distinct types of executive sessions: (a) directors-only sessions for candid, non-legal discussions about board culture or dynamics; (b) privileged sessions with counsel present to provide legal advice; and (c) committee-level sessions, such as audit committee meetings with external auditors. Each type has different attendance rules, documentation requirements, and privilege implications. Codifying these distinctions in governance guidelines prevents confusion about who should attend and when privilege applies.
- Schedule sessions strategically—and mix it up. Consider placing executive sessions on every regular board meeting agenda to normalize the practice and avoid signaling crisis. For listed companies, regular executive sessions are not optional—listing requirements mandate them. A regular cadence satisfies regulatory expectations while providing consistent opportunities for independent discussion, even when no pressing matters exist. Rather than leaving the sessions until the end (often the default approach), some boards include executive sessions at the midpoint of meetings or immediately following key discussions.
- Use a “CEO in/out” protocol. During executive sessions, first invite the CEO for a portion to exchange candid feedback on strategic matters, then excuse the CEO for truly independent discussion. This approach maintains open communication while preserving independence. Designate the lead independent director or chair as the single voice for post-session feedback to the CEO, which can help to prevent sending mixed messages. Document who attends each portion of the session and when transitions occur, and apply the same discipline for other executives or advisors.
- Go on the record to confirm privileged discussions. When counsel joins to provide legal advice, begin with a clear oral statement such as: “I would like to confirm for the record that the purpose of this portion of the session is to provide the board with privileged legal advice regarding [topic].” This creates a contemporaneous record of intent, which may be helpful in the event of litigation. Make sure that counsel announce when the privileged segment begins and ends, and excuse all nonessential parties before privileged discussions begin, so as to preserve the privilege.
- Match documentation to the session. For general discussions, keep minimal records; the board minutes should simply note something like, “The independent directors met in executive session. No formal actions were taken.” For formal actions, document the resolution (e.g., CEO compensation decision), but not the discussion. For legal advice, have counsel personally prepare privileged legal minutes, mark them privileged, and maintain them in legal department files, not the corporate minutes book. Do not record individual director comments or create detailed transcripts that could become problematic in any future litigation.
- Address CEO succession. Reserve executive session time at least annually for both emergency and long-term succession planning. This is a critical oversight duty. In the minutes, record that succession planning was reviewed and readiness was confirmed, as well as next steps, if any—without summarizing the discussion. If counsel is advising on employment, disclosure, or litigation risk, move that portion into a privileged segment of the session and keep privileged minutes (maintained by counsel) for that discussion.
- Orchestrate the post-session “feedback loop.” Predictably, executive sessions can create significant anxiety for management. Designate the lead independent director (or chair) as the single voice to deliver the debrief after synthesizing the board’s feedback and framing it constructively. The lead director should deliver feedback consistently, covering general themes and any decisions or action items, but should not reveal individual director positions or comments.
- Tailor executive sessions to committee needs. Audit committees must meet regulatory obligations for private sessions with external auditors. Compensation committees may need time with independent consultants to discuss sensitive pay matters. Nominating and governance committees address board composition, independence assessments, and director performance privately. And know when to recuse yourself: if the session addresses investigation of the entire executive team including counsel, the board needs independent outside counsel.
- Implement technology and communication controls. As always, be particularly cautious with email—directors using employer systems may lack the privacy expectation necessary to maintain privilege. Use secure board portals for all session materials and restrict access appropriately. Establish clear protocols about destroying drafts and maintaining only official records. Remind directors that informal texts or personal emails about session topics can expand discovery and jeopardize confidentiality if there is litigation.
- Codify the executive session process in a formal policy. Consider adopting a short executive session guideline that addresses when sessions are held, who attends which sessions, who sets the agendas, what documentation standards apply, and how feedback flows to management. This policy can serve as a training tool and help manage expectations. Keep in mind that executive session materials, while confidential, are discoverable in litigation, and so proper procedures provide essential legal protection.
The views expressed in this article are solely those of the authors and not their respective employers, firms or clients.
