Boardroom Tenure Is Becoming a Focus for Shareholders
- Research shows 9 years as the key ‘use-by’ term for directors
- More frequent board turnover may improve diversity and value
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Boardroom tenure is increasingly becoming a focus as shareholders want companies to refresh their directors more often to boost their effectiveness and diversity.
The optimum performance for a board appears to be when directors reach about nine years of tenure, said Kate Suslava, an assistant professor of accounting at Bucknell University’s Freeman College of Management. She recently published a study of more than 3,800 companies over 20 years. What she found was that newer directors may not have the necessary experience, while those who serve too long may get complacent or have outdated expertise.