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Improving Director Onboarding Beyond Traditional Orientation

According to lawyers from Wachtell Lipton Rosen & Katz, “onboarding new directors is becoming a more extensive and significant undertaking than it has been in the past.” The lawyers write in an article that the traditional orientation for corporate directors --   document review, site visits, and meetings with key employees – is ripe for improvement. Effective onboarding processes are key for fund boards, particularly for new directors from outside the industry who may face a steeper learning curve initially. In the corporate context, the authors suggest such a director should spend time getting up to speed with a director who has significant industry experience. New director orientation, which can be led by a committee or a dedicated mentor for new directors, is an ongoing process. Some boards invite new directors to sit in on all committee meetings during their first year of board service in order to get a full understanding of the range of issues facing the company, the Wachtell lawyers note. For incoming fund directors, standard onboarding activities -- meetings with adviser or sub-adviser personnel, briefings on the funds and service providers, on the adviser and its investment philosophy, policies on board portal software, note-taking, emails and confidentiality – can be supplemented with more substantive training from outside sources, including independent counsel. New fund directors will also want to develop familiarity with their fiduciary and regulatory duties under the securities laws, and D&O insurance and indemnification. The Wachtell lawyers encourage attending industry conferences and other events to facilitate ongoing director education. Peer feedback can help boards measure their effectiveness in onboarding. “Annual director evaluations that measure board and director effectiveness will help boards gauge the success of their continuing education programs. Individual directors as well as boards can continually improve.”

 
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