Alphabet and Berkshire Boards Targeted Over Veteran Directors

In its latest annual survey ISS is asking clients for their opinions of boards that have failed to appoint a new director in five years, where the average tenure exceeds 10 or 15 years, or where more than 75 per cent of directors have served 10 years or longer. Its findings could form the basis for changes in its investor voting guidelines. A Financial Times analysis of data from ISS Analytics, the company’s research arm, reveals that more than one in four of the 2,900 US boards closely tracked by ISS would fail on at least one of the mooted measures. Alphabet and Berkshire are the biggest companies to fail on two measures, but the list of double-offenders also includes retailer Bed Bath & Beyond and Intercontinental Exchange, owner of the New York Stock Exchange. On Berkshire’s board, Bill Gates, at 11 years, is one of the company’s freshest appointments, while four others have served more than 20 years. At Alphabet, five directors have served more than 15 years, including Google founders Larry Page and Sergey Brin. At both groups, more than three-quarters of directors have served more than 10 years, and average tenure is more than 12 years. But both have appointed directors in the past five years, unlike 100 other companies in ISS’s data set. Alphabet and Berkshire declined to comment. Questioning the effectiveness of “male, stale, frail” boards reflects growing investor interest in improving director diversity, with shareholders increasingly demanding a portion of new directors. Sanctions that ISS could consider include voting against the chair of the nomination committee. If a consensus emerges, it could be several years before voting guidelines are changed. (FT)

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