Executive Session Defined
The term "executive session" is a phrase commonly used in the boardroom and on the agenda, but it’s one that many may not understand. The phrase refers to a portion of a board or committee meeting that is held without the presence of staff, other invited persons or – in many cases – the public at large. The exact definition of the term can vary considerably depending on the organization: from being synonymous with the phrase "closed session" to describing an executive committee’s informal meetings on matters under consideration by the full board.
Because the term can have such a variety of meanings, it’s important for boards to adopt a policy specifying when and how to hold an executive session and the rules that should govern it. For example, Illinois state law provides specific purposes for which school boards may conduct a closed session, including the appointment, employment, compensation, discipline or dismissal of employees and the collective negotiating matters between school boards and its employees or their representatives, collective negotiating matters between school boards and the State Board of Education . Obviously, in a state with open meetings laws like Illinois, the purpose of the executive session is to deliberate on matters that the state has determined not to be in the public interest because they would invade the privacy interests of persons involved, or because those matters are highly sensitive to the financial interest of the body or of employees or would adversely affect the litigation of the school board.
Executive sessions are not called by a simple majority vote of the members present – instead, notice of the call of an executive session and its purpose is given at an open meeting, and the vote to actually call the executive session is either unanimous or filed in the affirmative by a two-thirds majority of members present. The rules for executive sessions are established either in open meetings laws (such as in Illinois) or by board policy.
The Legal Basis for Executive Sessions
Many business organizations and agencies are subject to laws that govern open meetings. In some jurisdictions, both the common law and statutory provisions require that entities meeting in a public capacity conduct their meetings on an open basis, except for certain limited purposes. For instance, in Virginia, the Freedom of Information Act (the "FOIA") imposes a general requirement of openness, while also permitting closed consideration of matters such as personnel issues, matters involving the acquisition of real property for public use, and matters involving privacy of individuals under § 2.2-3711. Section 2.2-3708(A) of the FOIA sets forth specific notice requirements for executive sessions. A motion to convene an executive session must state the certification under subsection A, the subject or subjects to be discussed, as listed in the enumerated provisions, and the purpose of the closed meeting. The FOIA also requires that the notice of the meeting record the roll call vote approving the closed meeting. See Va. Code Ann. § 2.2-3712.
Unfortunately, issues with a board’s decision to convene an executive session and to properly limit the business to those items stated in the motion have been a common source of litigation. For example, in Linda v. Bowers, No. 0812-07-4 (Va. Ct. App. March 4, 2008) (unpublished), the Court found that a board’s motion "to go into executive session for the purpose of discussing a student and the student’s academic status" did not give sufficient notice that the board would be discussing possible change of the student’s class schedule. The court found no reason to analyze whether the discussion occurred within the parameters of the motion because the motion failed to comply with the FOIA. Id.
Similar cases have arisen in the context of records disclosure under FOIA. For instance, in Munick v. Virginia Retirement System (the "VRS"), 278 Va. 648 (2010), the Supreme Court of Virginia ruled that a board violated the FOIA by failing to comply with a specific statutory requirement that it provide "the basis for the closed meeting" in the meeting minutes. The "basis" for the closed meeting is required to be included pursuant to Va. Code Ann. § 2.2-3712(D). The court found that, as a matter of law, the VRS board was required to state that a portion of the meeting was held in private pursuant to Va. Code Ann. § 2.2-3711(A)(6) in the meeting minutes. Id. at 661. Informal sessions regarding personnel matters not requiring formal action by the governing board generally have been held not to violate open government laws. An unannounced informal discussion among a committee of the board on the future direction of a pending matter has been held not to constitute a "meeting" or a "quorum." See MacDonald v. Mooneyham, 629 S.E. 2d 463 (Va. Ct. App. 2006); Reason Obscured, Inc. v. Virginia Employment Commission, 234 Va. 54 (1987).
The records disclosure provisions of the FOIA contain a specific exemption from the disclosure requirement for "[a]ll records containing the opinions of individual officers of the public body." Va. Code Ann. § 2.2-3705.5(6). This exemption has been extended by case law to protect documents prepared by or for a board member or officer as part of that board member’s duties. See создании онлайн-казино 442 F. Supp. 2d 485, 492-493 (E.D. Va. 2006).
The attorney client and attorney work product exemptions to the FOIA disclosure requirements have also been the subject of litigation. See, e.g., Turner v County of Spotsylvania, 147 F.R.D. 144 (E.D. Va. 1993). As such, boards should be careful to ensure that opinions provided by counsel and working documents prepared by or for an attorney on behalf of the board are reviewed and released in accordance with the requirements of FOIA and similar statutes in other jurisdictions.
Executive Session Conduct Rules
Executive sessions should be called sparingly. Boards should be mindful that both management and members of the executive team are also interested in discussing sensitive issues with a board but should also be aware that management and members of the executive team may be interested to attend some executive sessions for their personal benefit and information. It is, however, essential that boards clearly distinguish who are the members of the board of directors versus proxy holders, observers and senior executives. Some boards have begun to insist that all directors be present in the board room, which is a much more tangible demonstration of who and what should be admitted to the boardroom. This may not be a feasible option in some scenarios. Whenever possible, the board should make decisions in the open so that both shareholder and constituent interests can be represented. It is almost impossible with rare exceptions to go back to those negatively impacted and explain why those discussions required confidentiality. The key operational and legal rules for conducting executive sessions are as follows: – It is the responsibility of the chair of the board (or designate) to call for an executive session whenever required. – Upon calling an executive session, the chair will direct the secretary of the board to exclude from the room any persons that are not directors. – The board chair will remain in the room with the directors. – In general, it is preferable to keep the number of persons in the executive session to a minimum, but there may be occasions when the board needs the opinion of persons outside the board (e.g., and possibly that of management). A majority of the directors present must agree that the individual(s) requested to remain are invited to stay for the entire session. – If an individual request is made for an executive session, this request will not be denied. The board will appoint a director as a witness to the entire session. – All matters discussed during the executive session must remain confidential unless a majority of the directors present agree to disclose the information or publicly report on the content. – A transcript of the proceedings should be prepared by the elected witness member, which is approved by the chair of the board (or designate) and retained on behalf of the board of directors.
Topics Commonly Covered by the Executive Session
Executive sessions are a powerful tool for insulating and protecting the deliberative process, where board members seek privacy. The purpose of the executive session is to allow trustees to have a candid, uninhibited discussion on certain, typically sensitive topics, such as legal or financial matters, or the performance of key administrators. Executive session discussions may involve factors like strategy formation or the particularities of an acquisition or real estate transaction that require confidentiality.
Because executive session discussions are considered to be privileged discussions, held within the bounds of applicable attorney-client privilege, the deliberative process legislative privilege, or the safe harbor of quasi-judicial proceedings, the policy reason for the rule is that privileged discussions cannot be used against the board members in the event of litigation .
Examples of issues that might ordinarily be discussed in executive session include the following:
• Pending or active litigation
• Board appointment and performance of key administrators (such as the general counsel, chief financial officer, or chief executive officer)
• Confidential student, faculty, and staff matters
• Confidential business matters
• Strategic or financial planning
• Contracts
• Legislative matters
• Risk management, insurance, and indemnification
• Matters for which a vote would defame the character of an individual
It is common — and actually required by law in certain states — to conduct executive sessions. However, there is often a tradeoff between the utility of the private discussions and the transparency value of the public deliberation. What must a board or an agency do to make sure that it meets its legal obligations while preserving the utmost value of a deliberative session?
Executive Session Do’s and Don’ts
When it is time for an executive session, there are some best practices organizations should follow. An executive session by definition has to involve a discussion regarding matters such as the employment, compensation, evaluation, disciplining, or dismissal of an employee of the organization, or other matters pertaining to the privileges granted to officers of the organization. When dealing with these types of issues, the public is not entitled to be included in those discussions. An executive session should be held in the absence of the public. If an organization has invited the public to its meetings, then those public will need to be excluded from the executive session.
Some other best practices include:
- Review and notice: Before an executive session is called, the organization should review and prepare what is being discussed before going into the executive session. It is also recommended that a script be prepared ahead of time which includes the recognition of the executive session.
- Voting: An executive session is not a place where your organization will be voting to approve the minutes or other matters. Votes at an executive session must be disclosed in the public meeting.
- Prepare Minutes: Once the executive session is completed, the organization must document what occurred. However, the agenda, notes and even transcript from an executive meeting need to be maintained as a record closed to the public. Drafting abbreviated minutes would suffice. These minutes can be reviewed, corrected, finalized and approved in the next public meeting. The purpose of the executive session is to address certain matters with the public excluded from those discussions. But, this normally leaves the public asking questions as to what occurred at that executive session. Therefore, it is good practice to write a statement to include in the public meeting instead of addressing it personally. Moreover, it is good to provide the minutes of the executive session at that time as well.
- Preserve Confidential Information: Confidentiality can be a delicate balance. Since the executive session is meant to be private and held in the absence of the public, the organization does not have the same obligations as they would in the open meeting. However, there still are important documents that need to be confidential and held away from the public as there could be some antitrust issues or other state and federal law implications.
Solutions to Executive Session Issues
In addition to establishing policies and procedures for effective and compliant executive sessions, some challenges may arise when holding executive sessions. The dynamics of the board and issues specific to the organization are often the top causes for ineffective executive sessions. Some common organizational issues that can hinder the conduct of effective executive sessions and the corresponding solutions are provided below:
Board Dynamics
Challenge: An ineffective discussion-stopper is a board member who dominates discussions.
Solution: Board chairs should always be prepared to define and limit the scope of discussions at the outset of executive sessions.
Challenge: During discussions on sensitive topics, board members may digress into exceedingly personal stories or anecdotes that stray from the topic at hand, causing the discussion to drift off-course.
Solution: Board chairs as well as other attendees can minimize off-topic discussions by reminding the group to stay focused on the agenda.
Challenge: Board chairs sometimes conduct executive sessions with little or no advance issue-identification or thought, which can lead to poor-quality deliberation resulting from inadequate preparation. Board discussion can be used inefficiently if the board is not presented with the issues requiring discussion in time for the board to prepare to tackle those issues effectively.
Solution: Board chairs should hold internal meetings with executive staff prior to holding lines of business-specific executive sessions, so that topics requiring discussion can be identified, and an agenda can be developed accordingly. Board chairs should also work to communicate in advance why meeting in executive session will be important (i.e., what business is sensitive in nature, and why a frank discussion is necessary). This is particularly important when attempting to control board member behavior in an executive session, such as when board members are reminded not to use the executive session as an opportunity to revisit items already addressed and voted upon by the board .
Challenge: Sometimes, questions arise about whether all relevant members of the board and executive staff are present for the executive session.
Solution: Attendance lists, along with the date and time, and the agenda should be documented. To capture these details correctly, the board chair should appoint someone outside of the board to record attendance at the meeting. Such documentation, however, should be segregated from the minutes and should preferably be kept in a separate, discreet location because it may be attorney-client work product material. In the event that the board receives a request for the minutes of an executive session, it may be prudent to redact this information from the publicly-filed minutes for compliance and public relations purposes.
Challenge: Executive sessions are sometimes challenging to schedule and attend.
Solution: No matter how difficult it is to schedule executive sessions, boards must abide by stated policies and procedures for calling such meetings (as long as those polices do not conflict with any bylaws or relevant statutes). Better technology and scheduling tools have emerged in recent years which provide alternative options for scheduling meetings on short notice. Such tools help board members who do not see each other every day to schedule meetings even if they are in different locations.
Issue-Identification for the Executive Session
Challenge: Organizational leaders struggle with how best to identify which topics should go on the executive session agenda.
Solution: Board chairs should consult the organization’s bylaws, board policies and line of business’ policies and procedures for topic-identification guidance. Board chairs should also engage executive staff in a discussion about organizational issues and how best to address them. The frequency with which an organization convenes an executive session should also help the board chair and the executive staff identify relevant topics.