Board Renewal: A Focus On Board Performance

Long-serving boards and board renewal policies may face increasing scrutiny in the 2015 proxy season. Canada's Institute of Corporate Directors (ICD) recently released a position paper, Beyond Term Limits: Using Performance Management to Guide Board Renewal (the ICD Paper) which calls on boards of directors to rethink their board renewal policies and encourages a more proactive and flexible approach to renewal, focusing on director performance and cautioning against over-reliance on term limits.

The ICD Paper questions the effectiveness of term limits to ensure adequate board renewal, and instead encourages boards to center their renewal policy around comprehensive board evaluations. For many boards, annual evaluations may be a routine check-the-box exercise. The ICD argues that rigorous and regular evaluations of board composition and director performance can help identify opportunities for change and improvement on the board. The ICD's view is that a fulsome