At a Glance
The panelists highlight the importance of transparency and strong, clear board processes when it comes to refreshment. Term limits also come up as an effective way to ensure turnover.
From my perspective, the first step occurs during the interviewing process, when whoever is leading the effort clearly states, both to the recruiter if one is involved and to the candidates, that they should not expect this to be a life time appointment. They should talk openly about the board’s refreshment concepts and processes which are built around best practices. The board needs to set that expectation at the outset. Details can and should be enhanced as the process moves forward, first determining what skills and attributes are around the table and what the company’s future strategy and needs will be before deciding who will be invited to join the board. Planning for that future, and having everyone participate in the planning process, paves the way for the time when the board is looking to refresh and grow, people will already be very clear on what that looks like, why it looks that way, and what the timing is. When that planning process is paired with regular and comprehensive board assessments, the table is set for effective refreshment.
I think fixed terms of board directorships is the most credible and practical way to ensure that the board stays constantly refreshed and energized. At this same time, there needs to be balance and there must be flexibility for the board to allow board member with special knowledge and skill sets to enable continuity of transitional leadership at the board level.
The first step is having a clear, specific, and transparent set of rules as to how company board members are selected. Then it’s an imperative step to follow the methodology of conducting a skills review and then a comparison of the existing skills at the board level versus the strategic direction of the company and the skills that will be needed. From there, the issue of gender and ethnic diversity is controversial, but a good result is to eventually have a well-balanced board. A whole range of other factors, such as age, are also relevant. People seem to be concerned with refreshment that board members are just chosen from within the boys club with a tap on the shoulder, rather than as part of a proper search. Another way around this issue to have more frequent re-election by shareholders themselves. But ultimately, absolute transparency in the refreshment and selection process is key.
I am passionate regarding the concept of term limits as a method to refresh the board from my experience of serving for almost 8 years as a non executive director on a UK based FTSE 100 company. As strategy is a key responsibility of a board, and business continues to change and evolve at a rapid place, we need to monitor that the expertise around the board table supports the strategy of the company. With term limits there is a clear expectation before an individual joins the board of a potential length of service, keeping boards fresh, evolving and more likely to have a diversity of experience, gender, age and backgrounds.
First, it’s important to ascertain what the best practices are, and then to have a conversation both in the Nom/Gov committee and with the full board. Then you need to start having a discussion around recommendations from proxy advisors and large institutional investors. If you’re going against recommended guidelines, you need to have a really good reason why. Identify gaps on the board (age, gender, ethnicity, knowledge, credentials, track record), and proactively seek those candidates in the forums where they congregate, present them with a value proposition to join the board, and on-board them. Finally, the key is to have a rigorous board performance review process, which a lot of boards still aren’t doing. How do you go about removing people from the board without a measurable way of tracking performance?
Angela is an Independent Trustee at Guggenheim Investments (Guggenheim/Rydex) and the YMCA Retirement Fund. She is also an Independent Director at Infinity Property and Casualty Corporation. She served previously as a board member at United Way and the Executive Women’s Golf Association.
Colin is currently the Chair of the Singapore Investment Development Corporation (SIDC), Chairman of the Board for Singapore Mainboard listed Intraco Limited, and US National Board Member for the Cancer Treatment Centers of America (CTCA).
Leslie serves on the Boards of Directors of AGL Energy Ltd. And Adelaide Brighton Ltd., where he was the board chair from 2012-2018. He has previously served on the boards of the Australian Energy Market Operator (AEMO), The Carbon Market Institute, and Innovation Australia.
Eugenia is currently a member of the board of directors at Signet Jewelers, Hudson Group, Bunzel Plc, and Vince Holding Corp. She has also served as a board member of Women In Need and WomensForumNY, and was a Trustee at Burberry Foundation.
Laurie is a Board Member and Strategic Advisor at Zoox, and serves on the Board of Directors of Bose Corporation, Church & Dwight Co., Inc., and Noon Home. Additionally, she was a Director on the founding Board of Directors of Tesla.