(Bloomberg) — Bridgewater Associates is giving the board that oversees its business more clout, the latest sign that founder Ray Dalio is serious about loosening his grip on the world’s biggest hedge fund.
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The firm has established a so-called operating board of directors, replacing a group that had been serving less formally since Dalio stepped down as chief executive officer in 2017. It also added three new independent members to the board earlier this year.
Mike McGavick, the former CEO of insurer XL Group and a onetime candidate for U.S. Senate, became a director in June. He was followed a month later by Sian Beilock, a cognitive scientist and president of New York’s Barnard College; and Margo Cook, the former president of Nuveen, TIAA’s $1 trillion asset-management unit. The 12-member body is led by McGavick and Mark Bertolini, the ex-CEO of Aetna Inc.
“This marks the next important step in the transition of leadership and ownership of Bridgewater from Ray to the great and well-established team of people who have been effectively running and overseeing Bridgewater,” Dalio, together with his co-chief investment officers, Bob Prince and Greg Jensen, wrote in a Dec. 28 letter to employees posted on the firm’s website.
In addition to Dalio, Prince and Jensen, other insiders on the board are Jim Haskel, senior portfolio strategist and editor of the Bridgewater Daily Observations; Noah Yechiely, head of equity research; and Osman Nalbantoglu, co-head of the investment engine; as well as CEO David McCormick.
The group already has plenty to do, starting with the likely search for a successor to McCormick, who’s raising money for a probable run as a Republican candidate for the U.S. Senate in Pennsylvania.
Also weighing on the board is Bridgewater’s performance. Like many of its macro peers, the firm’s Pure Alpha II flagship fund has struggled for the past decade, returning an annualized 1.6% for the 10 years through November. The fund has had a strong December, gaining 7.8% through Wednesday, putting it on pace to have its best year since 2018.
Read more: Bridgewater Gains 7.8% in December as One Big Month Saves Year
Revamping the board and tapping outsiders to spearhead governance was supposed to complete the succession puzzle that Dalio, who founded Bridgewater in 1983, has been trying to solve for a decade. Previously, the Westport, Connecticut-based firm converted to a partnership, brought in several institutions as investors, settled on McCormick as CEO and named Nir Bar Dea as his deputy.
Dalio, 72, has said he wants to begin the “third phase” of his life. He’s still interested in managing money at Bridgewater but no longer wants to be encumbered by the responsibilities of running the $150 billion firm. McCormick’s decision to explore a future in politics has complicated that handover.
In the note to employees, Dalio, Prince and Jensen said Bridgewater plans to establish terms of an official transfer of control to the new board by Feb. 14.
“Given the importance of this moment, which reflects the culmination of years of hard work and preparation, we wanted to share this exciting news with you now,” they wrote.
The letter makes no mention of plans for replacing McCormick, 56. The former Army Ranger and senior official in the Bush administration joined the firm in 2009 and developed the skills needed to manage a culture of “radical transparency” — Dalio’s term for practices such as public evaluations of employees, open confrontation and constant surveillance.
One possibility is that Dalio takes a more hands-on role temporarily. Another is Jensen returning to his former role as CEO.
Bridgewater’s directors have some experience with the thorny challenges of succession. Bertolini was a board member at Verizon Communications Inc. during its CEO search in 2017 and 2018. He also sits on the board of Massachusetts Mutual Life Insurance Co. Cook became an independent director at EQT AB, the Swedish private equity firm, earlier this year.
For now, Dalio remains the sole director of Bridgewater’s parent company and has voting control, according to the letter to employees.
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