Governance & Restructuring

Six Ways to Manage an Unruly JV Board

There are six specific actions JV CEOs can take.

JV Board meetings are often painful for JV CEOs. Shareholders locked in endless debates, constant requests for more information, perpetual indecision, and long conversations about immaterial matters over material ones – the list of challenges goes on and on.

EXHIBIT 1: Sample Contributors to JV Board Meeting Dysfunction

Group BehaviorsIndividual BehaviorsOther
Endless information requestsNot having read pre-readMeetings that are too long or short to be productive
Lack of focus on strategic or material topicsFailing to attend meetingsInappropriate allocation of time across meeting topics
Failure to execute on actions previously committed to takeArriving late or leaving earlyToo frequent or infrequent of meetings
Failure to make decisionsSilence or lack of participationFrequent director turnover
Unwillingness to compromise or alignSide conversations
Doing other work during meeting
Verbal attacks at other meeting participants
Negative comments about other meeting participants
Folded arms or facing away from conversation
Audible or visual signs of displeasure

Source: Ankura Analysis
© Ankura. All Rights Reserved.

It’s no surprise that many JV CEOs tell us they feel trapped during Board meetings, faced with a growing list of problems and seemingly powerless to calm the waters.

But JV CEOs do not need to be victims of Board room chaos. There are six specific actions JV CEOs can take – often in collaboration with the JV Board Chair – to tame challenging Boards and help bring order to chaos. While none of these actions will eliminate all JV shareholder dysfunction, they can help Board interactions become more productive.

Action #1 – Align on an Appropriate Agenda

Having the “right” Board agenda is foundational to running a successful Board meeting. JV Boards tend to focus on near-term topics like operational and financial performance down to the line-item level but exclude or underemphasize high-level topics like JV long-term strategy and people matters because of time constraints. When Boards focus on less material matters, JV CEOs are left without needed approvals and input into areas where the Board can add the most value.  Crafting a proper Board agenda can help strike the right balance between operational and strategic topics, as well as shareholder priorities and CEO priorities.

JV CEOs and Board Chairs should collaborate to develop the agenda. While the Board Chair may drive the agenda, JV CEOs should be consulted on the agenda and help define priorities, communicate needs, and set up the Board meeting for success. The CEO will likely have more insight into the business’s performance and needs and can provide this knowledge for the agenda.

One Middle Eastern oil and gas JV, for example, started with two competing agendas – one created by shareholders and another by management. Only after an agenda-setting meeting, including both shareholder and management members, were these agendas reconciled.  The parties also used the meeting to align (at least directionally) on the depth of information that management would present to the Board. In this case, the meeting included the Board Secretary (who was charged with pulling together the agenda), Directors from both shareholders, the JV CEO, and a few other members of management. In most JVs, though, it should be enough for only the CEO and Board Chair to meet and create the agenda, assuming the Board Chair obtains input from shareholders.

The agenda should also emphasize strategic topics over routine updates. JV CEOs and Board Chairs should consider removing agenda items that can be addressed in pre-reading or committees instead. For example, a JV CEO and Board Chair could decide that a recent audit report, indicating no major risks to the JV, can be addressed in pre-reading materials or reviewed by an audit committee, rather than debated heavily in the Board. Or, they might brief the Board on high-level health, safety and environmental (HSE) metrics but assign a HSE committee to investigate more specific incidents and oversee HSE matters for the Board. Meanwhile, long term strategy, investment plans, and talent strategy should usually remain on the Board agenda and be given enough time for discussion.

JV CEOs and Board Chairs can also consider developing an annual cadence of topics to be addressed at Board meetings. For example, strategy and targets can be addressed in the first quarter Board meeting, key risks in the second quarter Board meeting, compensation and people framework in the third quarter, and the budget in the fourth quarter. Agendas should also include both standing items (e.g., reviews of performance against budget or targets) and ad hoc items that are addressed on an annual or as-needed basis.

Finally, the JV CEO and Board Chair should specify the amount of time needed for each agenda item and whether an item is intended for the Board’s information, discussion, or decision. They should try to define the agenda as early as they can, allowing JV management enough time to prepare appropriate materials for the Board.

Action #2 – Prepare with Stakeholder “Pre-Meetings”

A common “bad” outcome from a JV Board meeting is failure to make a decision on a key topic because either (a) shareholders want more information or (b) shareholders (or shareholders and management) are not aligned. While these outcomes are sometimes unavoidable, JV CEOs can drastically reduce how often they occur by investing time with key stakeholders before Board meetings happen.

For example, the CEO of an Australian mining JV began scheduling time with the Lead Director[1]It is a best practice in joint ventures for each shareholder to have a designated Lead Director who sits on the JV Board. The Lead Director should be the shareholder’s single point of … Continue reading from each of the JV’s shareholders a week before each Board meeting. He did this after he was surprised, on multiple occasions, by the shareholders’ positions and requests during Board meetings. During the pre-meetings, the Lead Directors were able to ask the JV CEO clarifying questions about agenda items. The meetings also helped the CEO and Directors align on potential decisions and directions so they could prepare their respective organizations for the Board discussion. Since implementing this practice, the CEO noted that the tension between management and the shareholders decreased dramatically and that shareholders were able to make decisions more quickly.

Another CEO, the leader of a large South American mining JV, began gathering all committee chairs and the Board chair in a “chairs meeting” a day or two before Board meetings. During these meetings, the chairs clarified which forum (Board or committee) was reviewing, endorsing, or deciding certain cross-functional issues. This measure freed up Board meeting time by eliminating lengthy discussions about which forum should deal with a particular JV issue. It also strengthened alignment on exactly which decisions needed to be made and clarified when shareholders needed more information on a topic.

For a lighter approach, the JV CEO could just meet with the Board Chair before meetings. A weightier approach would have the JV CEO meet with each individual Board member before a Board session or, alternatively, meet monthly or even weekly (not just before Board meetings) with each Lead Director. Regardless of the method, JV CEOs should ensure that anything shared with one Director is shared with all others to avoid creating information asymmetries.

Action #3 – Set the Tone for the Board Meeting Up Front

JV CEOs can also promote effective Board meetings by making a statement at the beginning of the meeting, either on a regular basis or in connection with pivotal moments in the life of the JV. This statement, separate from a report or other substantive presentation, sets the tone for the meeting and highlights priority areas where management needs input from the Board.

For example, the CEO of a 50/50 chemicals joint venture, who was struggling to get his Board to focus on the JV’s future strategy, made an appeal to the Board at the beginning of one Board meeting. In his speech, he directly told the Board what he needed from them to be successful – specifically, deciding on proposed expansions and how to fund them – and what would happen if the Board did not reach these decisions. By explaining the financial and organizational impacts of inaction, the CEO catalyzed an open discussion on his top-priority items for the rest of the meeting.

The exact details of this statement will vary depending on the JV CEO’s personality, relationship with the Board, and nature of the JV’s issues. For example, an authoritative CEO with a deferential Board can be more prescriptive about Board room behavior than a CEO whose Board members are senior, hierarchical, and see the CEO as responsive to their needs. But in any case, a JV CEO always can ask for a few minutes at the beginning of the meeting to clarify priorities and define what a successful meeting would look like.

Action #4 – Create Conditions for Open Discussion

JV Board meetings often balloon into large group gatherings. One Middle Eastern oil and gas JV held its meetings in a small auditorium due to the roughly thirty members of JV management, ten Directors, ten alternate Directors, and five observers from shareholder companies in attendance. Board meetings with over fifty people (or even ten people) are not ideal venues for open, frank dialogue. Nor do they instill a sense of accountability in meeting participants.

JV CEOs have little control over the number of shareholder attendees, but can decide how many members of management should attend. A JV CEO might be tempted to bring many members of management to a Board meeting to expose management to the Board and to support in answering detailed questions from the Board. However, this approach has several drawbacks. First, having too many management attendees can reduce the overall intimacy of the meeting needed for honest discussion. Discussions might also become bogged down in unnecessary details when Board members have access to lower-level management members. Finally, members of management lose time for value-add work when sitting in lengthy Board meetings that might not be relevant for them.

A JV CEO can consider several alternatives instead. In many JVs, the CEO attends the Board meeting alone and remains completely effective. In others, the JV CEO will invite select members of management to attend the Board meeting only when their subject matter area is being discussed. For example, the CFO may join only when the Board is discussing the budget or financial results, but will leave when the Board discusses audits, personnel matters, or operational challenges. Another option is to include some members of management in the Board meeting itself, but to hold an “Executive Session” at the end of the meeting. These sessions, typically limited to just official Board members and the JV CEO, allow private discussion of topics that might be too sensitive for other management attendees (e.g., succession planning, legal matters).

Action #5 – Reflect After the Meeting

JV CEOs can ask the Board Chair to reserve the last five to ten minutes of a Board meeting for reflection on how the meeting went. Attendees should discuss what went well during the meeting and decide what can be improved in future meetings. This can either be an informal discussion or, if preferable given Board dynamics, an anonymous survey the Board completes while still in the meeting room. These reflections can help both Directors and JV management identify and eventually change disruptive behavior. Self-reflections help Board members get in the habit of consistently improving and tweaking governance practices to meet JV objectives.

Action #6 – Invite Outside Perspectives

As a final measure, JV CEOs should consider bringing external voices into the Board room and governance system. When Board Directors are not convinced by JV CEO appeals alone, external benchmarking against peer JV Boards can be a powerful tool to help spark change.

In particular, bringing in an external party to perform a JV governance review and assessment is one of the most effective ways to overhaul Board practices. For example, Ankura’s JV Governance Index includes 100-plus best-practice standards for good JV governance – including testable contractual terms and governance policies, practices, and behaviors. Ankura’s standards provide both a qualitative evaluation and a quantitative comparison to peers of a JV’s overall governance model, Board size and composition, Board workings and procedures, shareholder voting thresholds, and other aspects of joint venture governance. The standards reflect both good practices seen in corporate Boards (e.g., Board independence, periodic Board and Director evaluations), and JV-specific best practices (e.g., conflict of interest protocols describing how Directors should balance fiduciary and shareholder duties). This is easily translated into a scorecard (Exhibit 2) that displays how an individual JV’s governance compares to overall group benchmarks and on particular dimensions.

EXHIBIT 2: Sample JV Governance Index Scorecard and Benchmarks

Benchmarks include 101 incorporated and unincorporated JVs from various industries including but not limited to Oil and Gas, Chemicals, Metal and Mining, Aerospace and Defense, Financial Services

© Ankura. All Rights Reserved.

For simpler options, experts can also observe and comment on a Board meeting, or conduct JV Board Director effectiveness training, similar to what governance institutes provide to corporate Boards.

These tactics for taming an unruly JV Board are effective, but certainly not exhaustive. CEOs, for example, can also use committees and working groups for additional support and hold Board offsites for deep dives on certain topics. By starting with one or more of these six tools, though, JV CEOs can move much closer to achieving JV Board excellence with much less pain.

A special thank you to Gertjan de Koning, CEO of Veramaris (a JV owned by DMS and Evonik) for his contributions to and feedback on this article.


How We Help: Governance & Restructuring

We understand that succeeding in joint ventures and partnerships requires a blend of hard facts and analysis, with an ability to align partners around a common vision and practical solutions that reflect their different interests and constraints. Our team is composed of strategy consultants, transaction attorneys, and investment bankers with significant experience on joint ventures and partnerships – reflecting the unique skillset required to design and evolve these ventures. We also bring an unrivaled database of deal terms and governance practices in joint ventures and partnerships, as well as proprietary standards, which allow us to benchmark transaction structures and existing ventures, and thus better identify and build alignment around gaps and potential solutions. Contact us to learn more about how we can help you.

About the Authors

Tracy Branding Pyle

Tracy Branding Pyle is a Managing Director at Ankura who specializes in helping organizations navigate complex transactions, and, in particular, joint venture-related transactions. She works with a wide array of U.S. and international companies across industries to help them structure, negotiate, approve, and launch joint ventures to set these ventures up for success. She additionally advises on governance of individual joint ventures and portfolios of joint ventures to help companies to minimize risk, increase efficiencies, and find value. Prior to joining Ankura, Tracy practiced law at Hogan Lovells, where she advised clients on joint ventures, public and private mergers and acquisitions, and corporate governance matters. Tracy is based in Washington, DC.


Leave a comment

Your email address will not be published. Required fields are marked *

Subscribe to the

Joint Venture Alchemist Newsletter

Sign up below to receive the latest joint venture updates from Ankura.

"*" indicates required fields