In this recent post: “Director Commitments Policies, Overboarding, and Board Refreshment,” Glass Lewis discusses the increasing focus by investors and shareholder advocates on directors’ time commitments and associated expectations that companies restrict directors’ other board service to reduce the potential for overcommitment. Notably, the post was issued on the cusp of State Street’s updated proxy guidelines (we reported on recently here) that provide for potential adverse votes against Nom/Gov Committee Chairs at S&P 500 companies that fail to publicly disclose director time commitment policies that meet specific criteria and against directors of non-S&P 500 companies that exceed its overboarding criteria.
According to Glass Lewis, 85% of Russell 1000 companies already have director commitments polices. Of those, 70% reportedly restrict other board service. In response to its inaugural Client Policy Survey (we reported on here), consistent with Glass Lewis’s benchmark policy, the vast majority of investor and non-investor respondents indicated that non-executive directors should serve on no more than five boards. However, both groups of respondents also favored consideration of committee memberships and/or leadership roles to some degree when evaluating commitment levels (p19).
As of January 2024, Glass Lewis is tracking and will display in its Proxy Papers whether Russell 1000 companies have a director commitments policy that includes numerical limits on other board service and will consider disclosed policies in its analysis of overcommitted directors.