Shake-up Calls Mount as Lack of Diversity on US Boards Laid Bare

US boardrooms are older, more male and filled with longer-serving directors than their European counterparts, data that will give new ammunition to institutional investors urging “board refreshment” to improve American corporate governance. Calls for US companies to improve boardroom diversity and to curtail the tenure of directors have increased since the 2008 financial crisis, prodded by corporate governance campaigners who argue board effectiveness is stymied by cozy relationships between managers and directors.The campaign has gained momentum in the last year after a series of lapses, including the alleged failure of long-serving board members at Chipotle Mexican Grill to react quickly to a string of food safety mishaps, have exposed the lack of movement at many large American companies. “Long-tenured directors present significant challenges to effective leadership,” said Dana Wise, deputy director at CtW Investment Group, which campaigns for corporate governance changes on behalf of US union pension plans. “Directors tend to lose their independence after sitting on boards for so long. Additionally, older, less-diverse directors need to make way for more diverse board members.”

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