Boardroom INSIDER for… FEBRUARY

 

HOW “STALE” CORPORATE BOARDS BECAME 2015’S HOT PROXY SEASON TOPIC

(February, 2015) In the corporate governance world, the term “board refreshment” has gone overnight from obscurity to a hot wedge issue for proxy season 2015.  “Refreshment” is a catch-all term for growing concerns over long board tenures, stale skills, loss of director independence, and lack of board diversity.  An article in the February issue of online governance newsletter Boardroom INSIDER looks at why board refreshment is suddenly exploding as a proxy-season topic — and wonders why it took so long.

Long-tenured directors “may bring historic savvy to their board role,” writes BI publisher and governance speaker Ralph Ward.  “But this savvy has a sell-by date.”  Slow board turnover not only clogs the pipeline with retired CEOs (who may lack company-specific skills), but keeps younger, more diverse candidates (who may have fresher, in-demand talents) waiting outside the boardroom door.

Further, Ward notes that activist investors have exploited this vulnerability to propose their own slates of directors with strong success at such companies as Darden and PepsiCo (and many more this proxy season).  The activist slate bios often seem so strong and relevant compared to the incumbents that “boards need to take a look at their current lineup for refreshment — before someone else does it for them.”

Also in the February Boardroom INSIDER:

pinkSix ways board risk oversight has matured.
pinkBest practices for shaping the CFO/board relationship.
pinkQ&A: The family business CEO succession squabble.