Questions Raised About Board Chair Tenure

Recent figures published  show that the total length of time directors in leadership roles have served on boards has grown steadily since 2011. Median tenure among all board chairs in the S&P 500 grew from 10.3 years in 2011 to 11.6 years in 2014. Among independent chairs, total tenure increased slightly, from 12 years in 2011 to 12.2 years in 2014, according to Allyson Hahn, research analyst at Equilar. Comparatively, median tenure among rank-and-file directors grew from 7 years to 7.4 years during the same period. Pressure from investors on the issue of tenure has prompted nominating and governance committees to review board practices more critically. Boards are now trying to determine which has more sway over the succession of board chairs and lead directors: board culture and traditions or the needs of the company. Directors say the circumstances of individual companies and the reasons board chairs and lead directors are appointed are so unique that it is nearly impossible to assess board leadership practices in a fair way before drawing conclusions. Therefore, boards have to decide for themselves whether the member serving as lead director or board chair continues to fulfill the demands of the role, regardless of whether the director is among the longest-serving board members.

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