Purpose of an Executive Committee
The term "Executive Committee" is not found in the Davis-Stirling Act or the Corporations Code. It found its way into common usage because of the committee's nature. Unlike ad hoc committees and standing committees, which are advisory in nature and don't necessarily have directors on them, an "Executive Committee" is any committee composed entirely of directors (with a minimum of two directors) who serve at the board's discretion. (Corp. Code § 7212) Persons who are not directors cannot serve on an executive committee. (Corp. Code § 7212(b)) Large organizations with large boards of directors will often form an executive committee to address day-to-day issues that may arise between board meetings. For example, Government Code § 65064.4 provides that a board may appoint an executive committee consisting of the chair of the board and not fewer than four nor more than eight other members of the board, which may carry on the administrative and executive functions of the board between full meetings.
For typical HOA boards of 3, 5, or 7 directors, executive committees are not needed for decisions between meetings since board members normally live onsite and can readily meet in person or via conference call. Instead, executive committees are appointed when special circumstances arise, such as:
Rogue Director. Sometimes it is necessary to exclude a rogue director from particular executive session matters because that director has a history of breaching confidential matters or has announced his/her intention to do so. To preserve confidentiality and/or attorney-client privilege, the board may create an executive committee of directors, excluding the rogue director, to address those issues.
Litigation Committee. A common form of executive committee is the "Legal" or "Litigation" committee. Such committees are formed to work closely with legal counsel on potential/active litigation. Litigation committees are needed when (i) a rogue director leaks privileged information, (ii) one or more directors are the subject of litigation, or (iii) the workload of the board is such that utilizing a committee to handle a legal matter is more efficient than involving the entire board. Litigation committees are not required to be composed entirely of current directors. However, if non-directors are appointed to a legal or litigation committee, the committee would not be an executive committee.
Powers of the Executive Committee
Except for nondelegable duties, boards may delegate authority to an executive committee (composed entirely of directors) to act on the board's behalf. As provided for in Corporations Code § 7212(a), some of the committee's authority may include:
- setting the compensation of a manager
- litigation matters
- executive session matters
Miscellaneous
Meeting Notice. Discussion of association issues by less than a quorum of directors in an executive committee is not a violation of the Open Meeting Act and does not require a meeting notice. If the committee is composed of a majority of directors, then notice must be given.
Minutes. Boards must keep minutes of their proceedings (Corp. Code § 8320), which includes committees with decision-making authority, such as executive committees. (Civ. Code § 5210(a)(2))
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