The mix of people on a Board and their skills sets are a significant determinant of the success or failure of a company. Just as a company changes and evolves over time, the members and skill sets around the board table need to match these changes.
The Board should be continually reviewing its currency through the Board Performance Evaluation process. Whilst the NZX Listing Rules require a Director to stand for re-election at least every 3 years, and do not place any restriction on the number of terms a member can serve, Board membership should not be considered to be open-ended.
The NZSA Position
When a Director has served 3 by 3-year terms, a total of 9 years, we would expect that Director and the Board to have a discussion around their continued tenure. This should reflect on the skills the Director brings to the Board table in relation to the skills the Board has determined to be appropriate for the business. It should also reflect on the institutional knowledge of the Director and the need to retain this knowledge.
If the Director and the Board believe the Director should seek a further term we would expect to see the discussions reflected in the Notice of Meeting.
Our decision whether to support a further term will be based on the information provided and predicated on the principle of ensuring optimum Board performance.