Directors believe refreshing the board’s ranks is important
51 percent of surveyed directors believe it is important to refresh the boards ranks periodically. An additional 16 percent view it as critically important.
March 11, 2014 at 07:52 AM
5 minute read
The original version of this story was published on Law.com
Sure, it's always important for the board and in-house counsel to work together to achieve optimum solutions. And just as there should be a clear succession plan in place for general counsel, is it also just important to replace board members in a timely, effective manner? One survey says that happy boards are refreshed boards.
According to the 2013 “What Directors Think” survey, undertaken by NYSE Governance Services in association with SpencerStuart and released on Feb. 27, 51 percent of surveyed directors believe it is important to refresh the board's ranks periodically. An additional 16 percent view it as “critically important.”
Getting there, says the survey, requires objective assessment of the board's activity and goals. 85 percent of directors called board assessment and evaluations “effective tools” to encourage board refreshment, while only 49 percent believed an age ceiling is effective and only 24 percent supported term limits.
So how, then, do boards select new members if they strive for high turnover? The survey says, perhaps surprisingly, that financial expertise is even more important than industry experience or CEO experience. 79 percent of directors claimed that financial experience was either critically important or important when selecting a new board member, as compared to only 75 percent for industry experience and 57 percent for CEO experience. Only 4 percent of respondents said financial expertise was “not important.”
Directors are also seeing the benefits of an increased emphasis on risk. 39 percent of directors believe they could improve their risk oversight if they better understood the risk oversight process itself, and 33 percent were in favor of a separate risk committee to improve risk oversight.
Unsurprisingly, one of the most cited areas of risk noted in the survey was in the cybersecurity realm. Information technology experience ranked as the fourth-most important attribute for a potential board member, with 54 percent of respondents calling it important or critically important. In addition, the survey said, IT security was among the top five items directors would choose to top next spring's agenda.
The survey, in its 11th year, collected the opinions of directors on the boards of U.S. publicly-traded companies. 592 directors participated in the survey.
For more numbers to know in the legal world, check out some of the best Facts and Figures we have collected over the past month.
Sure, it's always important for the board and in-house counsel to work together to achieve optimum solutions. And just as there should be a clear succession plan in place for general counsel, is it also just important to replace board members in a timely, effective manner? One survey says that happy boards are refreshed boards.
According to the 2013 “What Directors Think” survey, undertaken by NYSE Governance Services in association with SpencerStuart and released on Feb. 27, 51 percent of surveyed directors believe it is important to refresh the board's ranks periodically. An additional 16 percent view it as “critically important.”
Getting there, says the survey, requires objective assessment of the board's activity and goals. 85 percent of directors called board assessment and evaluations “effective tools” to encourage board refreshment, while only 49 percent believed an age ceiling is effective and only 24 percent supported term limits.
So how, then, do boards select new members if they strive for high turnover? The survey says, perhaps surprisingly, that financial expertise is even more important than industry experience or CEO experience. 79 percent of directors claimed that financial experience was either critically important or important when selecting a new board member, as compared to only 75 percent for industry experience and 57 percent for CEO experience. Only 4 percent of respondents said financial expertise was “not important.”
Directors are also seeing the benefits of an increased emphasis on risk. 39 percent of directors believe they could improve their risk oversight if they better understood the risk oversight process itself, and 33 percent were in favor of a separate risk committee to improve risk oversight.
Unsurprisingly, one of the most cited areas of risk noted in the survey was in the cybersecurity realm. Information technology experience ranked as the fourth-most important attribute for a potential board member, with 54 percent of respondents calling it important or critically important. In addition, the survey said, IT security was among the top five items directors would choose to top next spring's agenda.
The survey, in its 11th year, collected the opinions of directors on the boards of U.S. publicly-traded companies. 592 directors participated in the survey.
For more numbers to know in the legal world, check out some of the best Facts and Figures we have collected over the past month.
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