Director Tenure Diversity and Its Impact on Governance

Debate about the ideal tenure length for directors has been reignited with the recent international proposals to limit the terms of independent directors. The underlying motivation for such proposals is to ensure that “the purpose behind the independent director rule is not lost.”[1]  While some firms already have term limits, such limits tend to be rather long.[2] Because the average length of director tenure has been increasing, practitioners and regulators have begun questioning whether there is such a thing as optimal board tenure. Firms and regulators understand and acknowledge the benefits of long tenure, such as knowledge continuity … Read more