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Paper Explores Use of “Super Directors” to Improve Board Access to Information from Management

An article in the Wisconsin Law Review by academics from Harvard Law School and University of Wisconsin Law School observes that independent directors of corporations remain extremely dependent on company management for information and recommends that boards establish a dedicated function aimed at minimizing dependence on management for information necessary for decision-making. The article observes that corporate independent directors often “lack the time, adequate resources, and the industry-specific knowledge to properly obtain, digest, and analyze the extensive and complex information that modern boards are tasked with evaluating.” The authors describe how activist hedge funds have dealt with this problem by appointing a “super director” who has the ability to devote the time and resources to collect and process information independent of company management and can “transcend the limitations that ordinary directors experience due to their part-time role and limited access to company information.” The “super director” is able to provide his work product to the entire board, allowing the board to base its decision-making on more balanced and complete information. The authors however acknowledge the limits and disadvantages posed by such activist-appointed directors and propose the creation of a “Board Suite”— a dedicated office within a board that would be in charge of independent data collection and dissemination, therefore minimizing the dependence of the board on management for its information. The authors also suggest more universally applicable ways to obtain information from management, including: empowering the lead independent director to step into a “super director” function by increasing the lead independent director’s compensation and  time commitment to the company and prolonging the time directors serve on the board.