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Succession Planning in Spotlight Amid Coronavirus Spread

BoardIQ

At Spirit of America Funds, all three independent directors will be 83 this year. And at Reynolds Funds, Needham Funds and Dunham Funds, which each have two independent directors, the average age is north of 80.

Boards like those are no doubt discussing succession planning to prepare for a situation where a director can no longer serve. After all, boards must be ready if the unexpected happens to one of their members, attorneys and directors say.

But the issue of succession planning has taken on added significance now, as the spread of coronavirus intensifies across the United States. Last week, advisers to the White House released estimates predicting that, at the low end, between 100,000 and 240,000 people in the country could die from the virus. The disease poses a higher risk to those 65 and older, a category that about 60% of independent fund directors fall into, according to a database maintained by BoardIQ.

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“The board of directors is very much aware, as is management, of the need to have a good succession plan in place,” says Blank Rome partner Thomas Westle, who is fund and independent board counsel to the $685 million Spirit of America complex.

Directors discuss board succession during their annual self-assessment, and all are vibrant, experienced contributors, Westle says. “It’s something we realize we will have to deal with in the not-too-distant future,” he says, “but at this time we feel the composition is the correct one.”

“Succession Planning in Spotlight Amid Coronavirus Spread,” by Greg Saitz, was published in BoardIQ on April 7, 2020.