Director FAQ: Special Committees

In brief: Whenever a major transaction or investigation is on the horizon, it is time to form a special purpose board committee to ensure independence of analysis and decision making. Such committees (also called ad hoc committees), which must be composed of independent directors with no ties to the matter in question, can go a long way in reducing director liability exposure. This FAQ defines special committees, gives recent corporate examples of the many types of circumstances that may call for them, and provides guidance on practical matters such as charters and minutes, as well as questions to ask about special committees.

This FAQ can help directors to

  • become more aware of circumstances requiring a special purpose committee;
  • learn how to establish a special board committee, how to structure it, and how to dissolve it;
  • manage committee logistics ranging from charters to compensation to minutes; and
  • ask the right questions about special committees.

Most relevant audiences: Board chairs, lead directors, nominating and/or governance committee members, and general counsel