10 Tips for Director Orientation and Onboarding: The Year in Governance

This is the second installment in the Year in Governance Series from the In-House Subcommittee of the ABA Business Law Section’s Corporate Governance Committee. Each month, the series will share key tips on a different corporate governance topic. To get involved in the Corporate Governance Committee, please visit the committee’s webpage.

A message from Kathy Jaffari: “As Chair of the Corporate Governance Committee, I would like to extend my sincere appreciation to the authors for this publication. The Corporate Governance Committee has ongoing opportunities for writing and volunteering with various projects, whether it’s an article you want to publish or a CLE that you want to present. Our Committee is dedicated to helping you promote informative resources for corporate governance practitioners. You may contact me at [email protected] to get involved.”

Director orientation and onboarding are two complementary but distinct processes that provide the foundation a newly appointed director needs for success. Orientation is a one-time event that introduces the director to the company, while onboarding, which typically lasts three to six months, helps the director dive deeper into critical topics and become more integrated into the business. Together, orientation and onboarding ensure new directors have a foundation for satisfying their fiduciary duties and the knowledge they need to become valuable contributors on the board.

1. Governance Requirements: Requirements for referencing director orientation in your organizational materials depend on stock exchange listing rules. The New York Stock Exchange requires director orientation to be included in the company’s corporate governance guidelines. Nasdaq does not. Regardless of requirements, it’s common for a company’s nominating committee to be responsible for ensuring adequate director orientation and onboarding as prescribed in the committee charter.
2. Responsibilities: Director orientation and onboarding processes are typically the responsibility of the Corporate Secretary’s office. The Corporate Secretary, while working with other internal leaders, is best positioned to build out orientation and onboarding materials while also serving as a liaison between the new director and the leadership team. Orientation and onboarding materials are often previewed with the CEO and/or the nominating committee, depending on governance requirements and leadership preference.
3. Orientation Timing: Director orientation should ideally be provided before a new director’s first board meeting and should be scheduled as soon as possible following appointment to the board. Providing materials and resources prior to the first board meeting helps ensure the director is well prepared and “oriented” to the company’s business and leadership.
4. Onboarding Timing: Director onboarding generally occurs over the course of the first few months following appointment to the board as the new director becomes more familiar with the company and its business. When developing an onboarding schedule, keep the board and committee calendar in mind to ensure that onboarding sessions complement upcoming topics on board and committee agendas.
5. Orientation Key Deliverables: Core orientation materials include a broad overview of the business, financial performance, forecasts and industry trends, and key governance and risk-related topics. New directors can benefit from a binder with foundational documents including charters, bylaws, board and committee schedules, corporate governance guidelines, company filings, organizational chart, code of conduct, and other important policies and governance documents.
6. Onboarding Key Deliverables: Core onboarding materials include meetings and presentations from key senior executives, materials related to committee assignments, tours of corporate headquarters or site visits, and meetings with individual directors. Encourage new directors to provide feedback on the areas of the business they are interested in learning more about to enhance planning and engagement.
7. Customization: A director’s experience varies; some are on multiple boards, and for some, this is their first board appointment. Understand the needs of your director and customize an orientation and onboarding program to fit their background. For example, providing an overview of director fiduciary duties will take less time for a well-seasoned director, while a first-time director would benefit from a robust presentation.
8. Relationship Building: Throughout both orientation and onboarding processes, plan introductions to the leadership team, key employees, and other board members. Provide insight into the current relationship dynamics between management and the board, as well as the dynamics of the board and each board committee. It’s helpful to set up meetings with each committee chair as well, even if the new director has not been appointed to a board committee.
9. Meetings with Outside Advisors: As part of onboarding, a new director will benefit from meeting with certain outside advisors. Depending on standard committee appointments, meetings with the company’s independent auditor or independent compensation consultant can be informative. If the board has specialized committees (e.g., sustainability, cybersecurity, risk), connect the new director with key external advisors to provide a deeper understanding of these areas.
10. Planning for Director Education: Request feedback during the orientation and onboarding process, and pay attention to a new director’s understanding and engagement. Recognizing what topics your new director was comfortable with, or not comfortable with, will help inform what topics they need more education on in the future.