How many board meetings should you have each year and how long should you stay on a board?
There are, of course, no correct answers to these questions, which were among the many posed to a panel of experienced directors at Company Directors national conference on Hamilton Island last week. Nonetheless, the panel – consisting of Yasmin Allen FAICD, Elizabeth Proust AO FAICD and Peter Yates AM MAICD – provided interesting yet varied answers.
Proust, a veteran director who is chairman of Nestle Australia and the Bank of Melbourne, was the first to answer the question: With preparing board packs taking up so much of management’s time, why are monthly board meetings so sacrosanct and should we be looking at different frequencies for them?
“Partly it is habit and tradition,” she said. “I question the assumption about the tiresome and tedious nature of preparing board papers. It should be part of what the organisation does. I always groan when I open an iPad pack and discover there are 450 pages I have to read. That tells me there is going to be some muddled thinking, unclear papers and some padding in the pack. I know that it is hard, but there is something in getting people to write short, sharp papers rather than long ones.
“We are probably heading towards best practice - being six meetings a year - as long as there is enough time to have video conferences or dinners to develop relationships between meetings. But we do seem to stubbornly stick to, if not every month, having at least 10 meetings a year. The boards that seem to show they are working better have around six or seven meetings a year. However, these might be for more than a day.”
Yates, who chairs several not-for-profits (NFPs) and is deputy chairman of The Myer Family Company and a director of AIA Australia, believed that holding a board meeting every month was a complete waste of time.
“If you are steward [of an organisation], what can actually change each month in respect to your role?” he asked.
For her part, Allen, an experienced non-executive director who sits on the Insurance Australia Group (IAG) and Cochlear boards, noted: “The number of board meetings don’t matter. It is what you want out of board meetings that matters.”
Answering the question on whether there should be a set tenure for how long directors could sit on a board, Proust said: “I don’t think you want hard and fast rules. Perpetual is the only board I am on where there is such a rule. But I have tended to apply it to myself in terms of thinking about the contribution I can make and the time that I should be on a board.
“The real question is: At what point is someone no longer independent? There is no one answer to that question, but it needs to be answered.”
Yates believed tenure was essential in the NFP space. “It’s not because directors may not be independent, but I think the organisation becomes dependent on them. In the NFP space, I don’t think you should serve for more than nine years… In the publicly listed space, I think it depends on the skills mix. It is about the relationship between the skills someone brings and that of the rest of the board.”
Allen, however, believed tenure were important. “You really do need renewal,” she said.
“We have had three directors join the IAG board, all from very different industries and regions in the past two years and that has added more momentum.”
She agreed that boards should not set hard and fast rules on tenure because the unexpected could happen. “For example, you could lose a chairman at the same time a CEO departs or the board might have a high turnover in one year - for instance, if a director has to move offshore,” she said.
“Tenure is something we should be mindful of, but we do not have to be very strict and firm around it. We should work towards it. The Cadbury Report in the UK talked about independence in terms of nine years. I think that independence is more a state of mind, as has been said by many people, but I do think new blood on a board is also very important.”
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