An "Executive Committee" is any committee composed entirely of directors (with a minimum of two directors), who serve at the discretion of the board. (Corp. Code §7212
.) Persons who are not directors are prohibited from serving on an executive committee. (Corp. Code §7212(b)
Powers of 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 on matters. As provided for in Corporations Code §7212(a)
, some of the committee's authority may include:
setting the compensation of a manager
executive session matters
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 minus the rogue director to address those issues.
. A common form of executive committee is the "Legal" or "Litigation" committee. Such committees are formed to work closely with legal counsel with 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) workload by 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.
. Discussion of association issues by less than a quorum of directors in an executive committee is not a violation of the Open Meeting Act (Civ. Code §§4900-4955
) and does not require a meeting notice. If the committee is composed of a majority of directors then notice must be given.
. 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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