Your board of directors in a different light.

• Author: Couch, Robin L.
• Position: Corporate governance at Dayton Hudson Corp - Business Talk

Care for another prophecy for the new year? Yes-men corporate boards are out. Young, active boards are in. At least that's what the Minneapolis-based retailer Dayton Hudson Corp. believes, and the company is considered an innovator in the hot area of corporate governance.

"Governance is sort of our issue now," admits Treasurer and Vice President Karol D. Emmerich. "We've written some great pieces on it."

What makes Dayton Hudson a leader? For one, the company recently revised its term limits for corporate board members to three years each with mandatory retirement after 15 years or at the age of 68. Until recently, Dayton Hudson's directors served one-year terms. But the takeover binge of recent years forced the firm to re-examine its policy on term limits. To ensure some continuity on the board, the company began laddering the lengths of terms for each of three classes of five directors.

"Having a one-year term is very difficult," Emmerich explains.

"When the raiders were well financed, all they had to do was launch a proxy fight against your board and, if you had 100 percent of your board members up for election each year, they could convince the arbitrageur, who then owned most of the stock, that they ought to elect a new board consisting of the LBO firms or takeover individuals and their friends and families. Some of that happened to us in 1987."

Another new governance concept from Dayton Hudson is its insistence that its directors be at the peak of their careers when serving with Dayton Hudson. If they're not, the company just may ask them to resign their posts.

"We look for board members who are successful in their careers so they don't rely heavily on their Dayton Hudson position for income or prestige," Chairman and CEO Kenneth A. Macke explains in "Directorship" magazine. "It's no accident that |our~ board is relatively young." Indeed, according to the firm's latest proxy, the average age of the directors is a little over 54, with the youngest director at age 40.

"Most of our directors are either CEOs or COOs and therefore are actively involved in their businesses on a daily basis," Treasurer Emmerich adds. "For our corporation, that's the perspective we want. Now, I wouldn't say that's necessarily appropriate for every corporation. Some firms function very well with retirees as directors, for instance. But we feel that's not appropriate for us."

Dayton Hudson enforces its policy by asking directors to tender their resignations...