The board's governance committee should take note of an
interesting new consulting firm research paper that
provides observations on the important concern of
"overcommitted" board members.
The paper, prepared by Equilar, examines the key question of
whether experience and industry knowledge gained from serving on
multiple boards is overshadowed by excessive time commitments of a
director. Data suggests that the experience gained from multiple
board seats can be particularly helpful in industries that have
"steep learning curves" for new directors. On the other
hand, industries in transition (such as health care) are seeking
increased time commitment from their board members, who are facing
increased expectations of their oversight obligations. In those
situations, there is greater internal intolerance for directors who
serve on multiple boards.
Concerns with "overboarding" and
"overcommitment" have their roots in Sarbanes-era
governance guidelines. Yet there is no "best practice" or
"magic number" when it comes to determining the proper
number of outside boards on which a director should serve. Assuring
the focus, engagement and commitment of individual board members
should be a key goal of the board's governance committee. This,
given the transformation of the health care sector and the
dramatically expanded agenda of the health care company board. The
Equilar analysis, and similar reports, are useful resources for
governance committee conversations on this increasingly important
issue.
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