Time's up: director tenure moves to the front burner: term limits and age limits are blunt instruments for addressing the real issue: creating and maintaining a high-performance board with the right mix of competencies.

• Author: Aiello, Matt
• Position: HEIDRICK & STRUGGLES GOVERNANCE LETTER

O ver the past 10 years directors have devoted an enormous amount of time and attention to a long list of pressing concerns, from compliance to risk oversight, succession planning, and more. Now, another long-simmering issue has become one of the latest flash points in board governance: director tenure. Insistent questions about length of director service have been pushed to the fore by four trends that have converged to give the issue new momentum.

First, the bar for independence on the part of directors has been raised considerably. Formerly, an independent director was simply a board member from outside the company. Subsequently, independence also meant that the external director had been appointed by the board, not the CEO. Today, the argument goes, someone who has been on the board for 15 years, working with the same CEO, can become too cozy with management and, for all intents and purposes, can cease to be genuinely independent.

Second, boards, institutional investors, and advocates for good governance increasingly frame director tenure as a question of board "refreshment."

They recognize that as a company and its strategy change over time, a reliable mechanism must be found for bringing new ideas and fresh perspectives to the board--an understanding of markets, geographies, business models or functions that have become newly critical for success.

Third, facing the dizzying emergence of new technologies, many boards want and need to tap into the pool of candidates who are on the cutting edge of these revolutions--many of whom are relatively younger than the average director. Just a few years ago, for example, cybersecurity, digital marketing, and big data hardly registered on board radar screens. The convergence of social, mobile, cloud, and information technologies now offers additional complexities. Older board members, especially those who are no longer active executives, may have less feel for these transformational and potentially perilous waves now washing over every industry. Tenure-limiting mechanisms are seen as a means to make way for candidates who are completely at home in this new world.

Fourth, limiting tenure, either by age or term, has also been strongly advocated as a way to make room on boards for traditionally underrepre-sented pools of talent, such as women and people of color. By increasing board turnover, tenure-limiting mechanisms increase the opportunities to create more diverse boards. On the evidence of the...