The health system governance committee would benefit from a general counsel briefing on the relevant-to-nonprofit highlights of the detailed new survey, “Board Refreshment Trends,” published by Institutional Shareholder Services (ISS). Many of the survey results and analysis would be useful to health system efforts to evaluate the effectiveness of various refreshment tools.
Three aspects of the survey findings are of particular relevance to nonprofit health systems. First is the information relating to board tenure; e.g. average length of service; the potential for a “gender tenure gap” that should be managed by the board; the board aging process; the distribution of age levels within the board; the potential for/benefit of structured generational shift in board composition; the practice of adding new directors on an annual basis; and steady but slow gains in diversity. Second is information relating to the popularity and effectiveness of the limited options available to implement director refreshment; e.g., mandatory retirement age (typically in the 72-75 year range); term limits (still relatively rare); and board evaluations (more widespread, if not disparately used). Third is other governance practices that can have a meaningful impact on refreshment goals; e.g. extending tenure through service on board committees, increasing levels of director independence levels (which may receive renewed attention with the 15th anniversary of Sarbanes-Oxley) and changes in board size (e.g., increasing size to accommodate new members of racial, ethnic, background and perspective diversities).
The ISS survey will be particularly helpful to the governance committees of financially sophisticated nonprofit health systems, especially in the absence of any detailed and reliable board formation and director refreshment survey information on peer organizations.