The Investor Responsibility Research Center Institute (IRRCi) has been a leading source of high quality, impartial information on corporate governance and social responsibility since 1972. The Institute is known for its research on investor issues and recently published a survey report on board refreshment and age diversity in S&P 500 boardrooms.
In this episode, Jon Lukomnik, Executive Director of the IRRC Institute, joins host TK Kerstetter to discuss their survey findings, as well as various mechanisms boards use to manage refreshment, including board evaluations, term limits, etc.
The average tenure for S&P 500 companies [that don’t conduct board evaluations] is 11.6 years. Let me put that into context because sometimes numbers are bloodless. We’re about to celebrate the 10th anniversary of the iphone. That means the average director on those boards was selected in a world before mobile shopping, geolocation—anything that involves basically the way most of America consumes today. You have to ask yourself, if they haven’t done an evaluation and those directors were appointed then, are they still the right directors for that board?
Kerstetter asks Lukomnik to discuss other hot-button issues that boards should be sensitive to. From succession planning to strategy, Lukomnik sums up today’s list of investor concerns, all the while discussing several solutions for boards.
“Sometimes we over-lawyer things, and [companies] think of the Ks and Qs and the proxies as compliance communications,” said Lukomnik. “They’re not. They’re opportunities to communicate to the investors what the strategic plan for your company is and how well you’re executing it.”
To learn more about the IRRCi survey discussed in this episode, click here.