Dumping Dead Weight
from What Directors Think 2003
SURVEY SAYS: How Am I Doing?
83% say directors should be evaluated individually on a regular basis.
I think it might be a good idea conceptually, but I don’t want to see a lot of regulation. I think after 10 years a board member has just about exhausted his usefulness in that particular situation. After working with the same group of people for a long time, you get locked into doing things in a certain way and you don’t get any new ideas.
Robert L. Smialek, 59
Retired CEO, Applied Innovation, Dublin, Ohio
General Cable
There was a time—when I was governor of Michigan—when I thought it made sense to have term limits for legislative bodies. But we ended up making more problems than we solved. Term limits don’t work well in the legislative arena, nor do they for directors. I believe there are some upper age limits that might be good to employ. But generally, no, I don’t believe in term limits.
John M. Engler, 55
President of State and Local Government and Vice President of Government Solutions for North America, Electronic Data Systems Corp., Herndon, Virginia
Munder Capital Management, Northwest Airlines, Universal Forest Products
I almost go the opposite direction on this issue, because my personal experience is that to have boards really interact and work well together takes two to three years. I’d be looking to make sure anybody I bring on board would be committed to serving at least two terms, meaning a total of at least six years. Businesses are complicated enough. Understanding other board members’ contributions, and understanding their strengths and weaknesses so that you can take advantage of that, takes time. On one hand, you can ask, “When do they become senile?” On the other hand, you can ask, “When do they become effective?”
Doug Marsh, 58
Vice President of Business Integration and U.S. Institutional Investor Relations, ASML US Inc., Tempe, Arizona
ATMI, MEMC Electronic Materials
Directors ought to review their own situations on any board where they’ve served 10 years. One of the reasons I got off the Kansas City Power & Light board is that I’d been there 12 or 13 years and felt it was time to get other people and other ideas and challenge some of the things I had come to accept.
Robert J. Dineen, 73
Retired CEO, Marley Co., Northbrook, Illinois
Layne Christensen, Owens-Illinois
I used to be in favor of the idea, but I’ve changed my mind because I have seen term limits cause the removal of some extremely talented directors. If you’ve got a tremendously talented board member, the idea of them having to leave because they’ve served X number of years—that to me is just a tremendous waste of talent.
How do I stay motivated? I learn visually, so I need to read to understand and comprehend data. I carry a briefcase with materials from the boards I serve on, and I make a point to read those documents at home or in some other environment where I can look at them with undivided attention. I make copious notes about things I think the board should pursue. And I make a point to visit members of the senior management at times that aren’t in conjunction with board meetings. I find that to be a great motivator. Those conversations allow a free-flow exchange on a one-on-one basis with people in senior management. That allows me to ask questions I wouldn’t ask in a board meeting, because they’d take time away from the broader discussions. Those meetings keep me motivated. They make me refocus, and they cause me to have better appreciation of the issues management is facing.
Aubrey B. Harwell Jr., 61
Chief Manager, Neal & Harwell, Nashville
Piedmont Natural Gas
We don’t have term limits on our board, but our directors can’t be over age 67, and I think generally that’s a good thing. We have a tremendous amount of talented individuals in America in every occupation, and I think it’s good to keep rotating people. I think somebody who serves too long on a board becomes a little stagnant. What worked yesterday may still work today, but you’ve got to be willing to try new ideas.
Glen Keppy, 56
Owner and Operator, Keppy Family Farms, Davenport, Iowa
CHS Inc.
Most of the people I know who possess the characteristics that provide the most value to a board retain them for life. Two arguments for term limits have been that some boards have deadwood that needs to be pruned or that boards need renewal as their companies grow and change, with changing opportunities, problems, and needs. Term limits, however, may address the wrong individuals. Another argument for term limits is that a very long association may undermine objectivity and independence. But again, this is a matter of character. In general, I prefer more active but selective pruning and renewal linked to board evaluations and feedback before a director is renominated.
Wendy Lane, 52
Chairman, Lane Holdings, Needham, Massachusetts
Laboratory Corp. of America
I don’t believe there should be term limits. The board knows when someone has lost interest and should suggest to the particular director that he might be at a point where he would choose to resign. If he refuses, appropriate board action should be taken.
James J. Groberg, 75
Senior Vice President, CFO, and Director, Volt Information Sciences,
New York City
