Board composition has been a governance focus for a while. In addition, recent pronouncements by ISS and The Council of Institutional Investors have expressed concerns about the impact of lengthy tenures on director independence, which could heighten that focus. In recent years, many companies have reconfigured their boards to better align with evolving regulatory and shareholder expectations, as well as have adopted mandatory retirement ages and tenure limits. This trend is expected to continue.

But whether board changes are due to revised governance strategies or simply natural transitions, companies sometimes do not want to sever all ties with an outgoing director. In those cases, it may be worth considering director emeritus status.

 

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