Moving Away From A Mechanistic Evaluation Of Board Term Limits

Earlier this month, Robert Pozen, senior lecturer at Harvard Business School contended that a simple reliance on board term limits as an evaluation tool of corporate performance is based on "faulty logic".[1]

Concerns around extended tenure of directors typically include anxieties over compromised director independence and the development of a friendliness with management.

According to Spencer Stuart, the average tenure of directors in Canada rose from eight years in 2009 to nine years in 2014.

Mr. Pozen, however, highlights the disconnect in assuming that "lengthy director service means cozy relationships with management".  He notes the high rate of turnover amongst executive ranks as a mitigating factor against the establishment of cozy relations.  He also points to a study conducted by the University of New South Wales which defines an "experienced director" as one with more than fifteen years of service on a board.  The study concludes that experienced