“Board refreshment” is currently a hot corporate governance topic. A board of directors’ ability to “refresh” itself on a regular basis can help ensure that the board is comprised of the proper mix of directors to meet both current and long‑term needs of the board, the company and shareholders, and provide the necessary oversight of the company’s evolving corporate strategy and risks. New and fresh perspectives on the board, it is often argued, contribute to the board successfully addressing those needs and oversight responsibilities. Director succession, director tenure, mandatory retirement, proxy access, board evaluations and board diversity, among other factors, are all integral and interrelated components that either contribute to or result from board refreshment.
This corporate governance update focuses on director succession planning and the critical role it plays in board refreshment. Specifically, this update (1) provides general information concerning director succession planning, (2) summarizes the current director succession-related policies and positions of several large asset managers and pension funds, and certain corporate governance advocates, to provide insight into the expectations of those parties with respect to director succession planning and (3) presents practical considerations for boards to help facilitate successful director succession.
This Corporate Governance Quarterly Update, originally published on June 24, 2016, was included in an e-book published by Corporate Compliance Insights (CCI) entitled "Getting Governance Right: A Handbook for Today's CEOs and the Board of Directors." The e-book is available to download on CCI's website; refer to page 18 for Bill and Todd's article.