Conference Board Report Highlights Issues Surrounding Board Refreshment and Evaluations

A recent report released by The Conference Board, in conjunction with Esgauge and other entities, highlighted insights about board refreshment policies and practices as well as director evaluations at S&P 500 and Russell 3000 companies. The report “Board Refreshment and Evaluations” focuses on how corporate boards can achieve member refreshment (while turnover remains low) as well as how evaluations can be used to promote diversity and refreshment. Companies are moving away from policies that mandate turnover, as these force directors to leave based on tenure or age even when they are still valuable and strong contributors. The report suggests options outside of mandated turnover (ex. term limits and retirement policies) which allow for more flexibility to align the board composition with the company’s strategic needs. Refreshment tools that “focus on triggering discussions of turnover or reinforcing a culture of board refreshment may be particularly valuable.” Additionally, the report found that companies are increasingly disclosing their use of an independent facilitator for board evaluations. Periodic individual director evaluations are an additional tool to promote board diversity and refreshment.