Focus on average board tenures allows some directors to serve uninterrupted for lengthy terms.
Data from Activist Insight Governance show a large number of long-tenured board members, including more than 2,000 Russell 3000 group directors who have served for more than 20 years on a single board*.
Despite concerns that long tenure may compromise the independence of directors and institutional investor support for regular rebalancing of boards, a significant number of companies have boards that are heavily weighted toward longer-tenured directors.
Although the average board tenure for Russell 3000 companies is 8.8 years, according to the data, that may be masking a problem. Over 10,000 directors have served for more than eight years, and as many as 983 companies in the Russell 3000 group have boards where a majority of directors have served for more than eight years. 32 companies have boards where all directors have served for at least eight years.
In addition, 2,293 directors have sat on a Russell 3000 group board for more than 20 years.
Many tenure policies are flexible, allowing boards to refresh at their own discretion. According to Activist Insight Governance, only 19 S&P 500 companies have imposed tenure limits on their board members in their governance guidelines.
Director tenures (Russell 3000)
*All data as of August 15.
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Article by Activist Insight