New corporate director orientation checklist
Boards put much time and effort into recruiting and nominating board directors. That is just the beginning of the process of inducting new directors onto the board. The corporate secretary has lists of duties to properly welcome and orient the new board directors. After going through the process multiple times, corporate secretaries will undoubtedly establish a system and schedule for orienting new board directors, and modify it as needed.
The duties include sending out a welcome letter, setting up an official orientation and setting up meetings with senior executives. In addition, the corporate secretary will need to update the board handbook and gather any documents that the new director needs or will need to sign and return.
Welcoming New Directors with a Letter
New board directors will appreciate receiving a letter from the corporate secretary welcoming them and outlining what to expect in the near future. The board chair, CEO or executive director may also wish to include a letter welcoming directors to the board.
Veaco Group offers a professional template for a welcome letter and outline of materials for new board directors.
Among their recommendations: Write the board director letter with a tone that's both professional and warm. Offer some welcoming words and attest to the knowledge and expertise that the directors will be bringing to the board. Affirm in writing when the formal voting for their appointment will take place and whether you expect them to attend the board meeting.
Inform them that you will be scheduling a time for the new director to meet the senior executives and other business managers to learn more about the business. Let the director know which materials you are enclosing and which ones they will receive at the formal orientation meeting.
The welcome letter should include a summary of filing responsibilities under Section 16 and whether the new director will need to do the filing, or if someone at the corporation does the filing for all board directors.
The letter should inform the director whether the corporation will grant any initial stocks, as well as a description of board director compensation and any required deferrals.
The welcome letter may include a copy of company programs, a packet of other important documents and a copy of the Corporate Director's Guidebook.
The Formal Orientation Process
Orientation meetings can be as brief as a few hours or they can be elaborate, complete with videos and company tours. Either way, new board directors need lots of information before they attend their first board meeting. Corporations that prefer a short orientation schedule may want to schedule a second meeting for a quick review, some reminders and to answer any follow-up questions.
It's helpful for the corporate secretary to have a template for the director's personal profiles. This document will list contact information such as address, phone numbers, email addresses and other helpful information.
Other forms that the corporate secretary should have ready are the prospectus and the election and deferral forms. Additionally, the secretary should include these documents:
- Recent SEC filings including 10-K and the Proxy Statement
- Federal securities law memo regarding insider trading
- Powers of attorney forms
- Draft Form 3
- Indemnification Agreement
Items for the Board Handbook
The front of the manual should have a board calendar that spans the next two years, and the secretary should remind new directors to add all of the dates onto their personal calendars as soon as possible, emphasizing the importance of meeting attendance.
Another handy document to include is a list of directors and officers with contact information and short biographies. Other helpful information includes:
- Mission, vision and values statements
- Corporate bylaws
- Committee charters
- Committee members and chairs or co-chairs
- Corporate governance guidelines
- Summary or copy of director and officer liability insurance
- Code of conduct policy
- Conflict of interest policy
- Director stock ownership guidelines
- Director independence standards
- Policy for related party transactions
- Statement of director duties, responsibilities and expectations
- Copies of the last two board meeting minutes
- Copies of the last two sets of board reports
Every corporation is unique, so the handbook can include anything else that the board deems helpful or necessary.
Orientation for Committees and Departments
Every corporation forms various committees according to their needs. At a minimum, most boards will have an audit committee, finance committee, compensation committee, and corporate governance or nominating committee. If the orientation is a formal one, each committee may agree to make either an oral presentation or a slide presentation about the work of their committee.
Depending upon scheduling, the corporate secretary may choose to schedule speakers for several important managerial departments, including legal, finance, accounting, corporate strategy, human resources or any other pertinent departments. If time doesn't permit for a formal presentation of departments, the corporate secretary may opt to put together a packet of each department's responsibilities and duties and how they relate to board director service. New board directors need to be aware that they need to remain current with issues relating to each department. They also need to know about the board's approaches to oversight of each department. Briefings from each department may include the following:
Legal
Board directors will need a briefing on litigation, investigations, mergers, acquisitions and compliance risks.
Finance
Finance departments should brief directors on investor relations and strategies, risk management and insurance, capital structure, credit issues, ERISA plans and derivative activities.
Accounting
Directors need to learn about risk assessment, internal and external controls, IT, audits and investigations, and the role of the independent auditor.
Human Resources
The HR department should inform new board directors about the corporate benefits structure, employee investment and retirement planning, corporate culture and executive compensation structure.
Some Final Words on the New Corporate Director Checklist
New board directors will undoubtedly be excited to join the board. Unless they have participated on other boards, the orientation process can be daunting in the beginning. It helps to assign a board mentor who will be available to answer their questions at any time and help to acclimate them to their new duties. Early enthusiasm is an important quality right out of the gate, and one that some board directors lose along the way. Increased knowledge about the corporation and board duties will come with time and experience.
