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As some proxy advisors gather feedback on whether long-serving directors should face a different independence test, investors and governance experts are looking less for a universal cutoff than for evidence that a board has become entrenched.
Long-serving directors can bring vital institutional knowledge and historical perspective. They can also be viewed as overly familiar with management, comfortable with fellow directors and difficult to replace. That tension is becoming more consequential as Institutional Shareholder Services (ISS) moves to examine the impact of tenure on director independence with thresholds of 10, 12, 15 and 20 years.
The results of its benchmark survey released earlier this month show a clear divide among respondents. Over 60% of investors said long director tenure should be considered when assessing independence, while 74% of non-investors said tenure should not be a factor, regardless of length, and that a board’s determination is generally sufficient.
But experts who spoke with DMI cautioned against treating tenure as a definitive measure of independence. Instead, it should prompt closer examination of the board’s composition and dynamics: whether skills are being refreshed, whether directors have become entrenched together and whether the board can replace an ineffective director, when necessary.
No magic number
Of the 115 investor respondents to ISS’ survey who said tenure is always or sometimes relevant, 10 and 12 years were the most frequently selected thresholds.
According to Diligent Market Intelligence (DMI) Governance data, the average tenure of current directors at both the S&P 500 and the Russell 3000 stands at about 7.7 years. About 29% of S&P 500 directors have served for more than nine years, with almost 28% serving a similar tenure at the Russell 3000.
Bruce Kistler, managing director at Okapi Partners, said investors tend to look at aggregate tenure and whether a board is genuinely refreshing.
“If you have some recent refreshment, there’s refreshment happening there,” Kistler said. “But if you keep cycling out the two- and four-year directors and the seven-year and longer-tenured directors stay, then the risk of entrenchment can escalate.”
That does not make a 10-year term an automatic independence failure. Kistler said there is no obvious empirical basis for treating it as the point at which independence begins to decline.
“I really don’t think that there is anything in there that basically says 10 years is where you start to see the independence wane,” he told DMI.
Boardroom dynamics
Yaron Nili, a professor of law at Duke University, made a similar distinction. “I don’t think you can do it in isolation,” he said.
The risk, Nili said, can be behavioral rather than deliberate. “It need not be malicious. It’s just our human nature to start relying on those people.” That risk can become more pronounced when several directors have served together for years.
Most important is whether a director is independent from the CEO. “In reality, you want independence from the CEO, which is a different thing,” Nili said.
As part of ISS' benchmark survey, the proxy advisor asked market participants if assessments on director tenure should consider multiple factors including the length of overlap with the CEO or chair. A proxy statement can disclose service dates and formal relationships. It cannot show whether a director is willing to challenge a misguided strategy favored by the CEO.
Yumi Narita, executive director of corporate governance at the New York City Comptroller’s Office, is similarly wary of average tenure. Companies can point to recent appointments while influential directors remain for decades.
“Many companies use the average tenure as a defense,” Narita said. She looks instead at the longest-serving directors and their roles. “Oftentimes these things cluster,” she said. “I feel like it’s sort of a tip of the iceberg.”
The broader concern about composition can also surface inside the boardroom. PwC’s 2025 Annual Corporate Directors Survey found that 55% of directors believed at least one board colleague should be replaced, up from 49% the previous year.
Shareholder backing
Investor support at the ballot box can also decline as tenure rises.
DMI Voting data show that average support for S&P 500 directors with a tenure exceeding nine years stood at 94.2% for the seven-month period to the end of July this year. This compares to 96.4% backing for directors overall.
Length of service can also be used as a key argument within an activist thesis for board change. In a proxy fight, it may become more relevant once investors have decided that an activist’s economic case is credible. Long-serving directors can then become easier targets because they were present when the problems were seen to have developed. As Kistler put it, “Naturally you want to target the director that was present.”
The right policy
As boards balance fresh perspectives with institutional knowledge, their approach to director tenure becomes an important governance choice. Retirement policies offer flexibility, while term limits provide a clearer guardrail against entrenchment.
Some 60% of S&P 500 companies have such a retirement policy in place, compared with 34% of Russell 3000 companies.
Term limits are less common, appearing at 5% of S&P 500 companies and just over 3% of Russell 3000 companies.
“Term limits are the way to go,” Narita said. Governance rules exist so that “things should not be personal.”
With tenure limits, she added, “it doesn’t matter how much people love you. You’re up in five years. You gotta take your leave.”
