Shirley Leung

Term limits key to diversifying boards

Another year is about to end, and we’re still plodding along when it comes to changing the makeup of Massachusetts corporate boards.

To get serious about having boards reflect the broader business world and their customers, this is what companies need to do: Set term limits.


That means instituting policies so that directors don’t serve for life. A chief reason why there are so few women and minorities on public corporate boards is that the incumbents — overwhelmingly white guys — don’t want to give up their seats.

And who can blame them? It’s nice work if you can get it, being part of an exclusive club that pays you to be a member. How good? Try six-figure — and sometimes even seven-figure paychecks for part-time work.

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I bring all of this up after feeling like I was hit in the gut with a one-two punch this week. On Thursday, Globe colleagues Todd Wallack, Sacha Pfeiffer, and Jessica Geller reported that minorities hold only 7 percent of the board seats of the state’s publicly traded companies.

Then on Friday the Boston Club, in its annual census of women on boards conducted by Bentley University, will detail another year of incremental improvement, with female directors accounting for 16.1 percent of seats at the top 100 public companies in Massachusetts.

It’s hard to pop open the champagne for a 1 percentage point increase when women make up nearly half of the workforce.


At this pace, it would take two decades to reach gender equality on corporate boards in Massachusetts.

Take a closer look at why change is glacial. The Boston Club reports that over the last year women filled about one-third of the new board seats of the state’s largest public companies.

Not too shabby until you find out the turnover rate —or the number of openings — is only 7 percent. If we could double the rate, Massachusetts firms could reach gender equality on their boards in a little more than a decade. Instead, directors treat a seat on the board like a seat on the US Supreme Court – a job until you die. Nearly one-quarter of the independent directors in Boston Club’s survey are age 70 or older. The club, which advocates for women in leadership roles, also found that about 16 percent of independent directors have served on their boards for at least 15 years.

“It makes a bigger hill to climb to get more women on boards because there isn’t the capacity,” said Sue Vinnicombe, who studies board diversity, and holds dual professorships at Simmons College in Boston and Cranfield School of Management in the United Kingdom.

Directors function as advisers for companies and help oversee management, hire and fire chief executives, and set long-term strategy. Typically, boards are made up of a mix of insiders — company executives — and outsiders known as independent directors. Studies have shown that companies with diverse boards perform better.

One of the touchiest topics in corporate America is how to gently nudge directors who may have overstayed their welcome. But here’s another way to think about it: While every board needs veterans, it’s just as important to cycle in the new blood who have kept up with all the changes in business.

That’s what Boston Private Financial Holdings had in mind when it set out to remake its nine-member board about two years ago. Many of its directors at the time had tenures approaching two decades, recalled Debby Kuenstner, who sits on the bank’s board and chairs its governance committee.

“It was a decision to first of all refresh the board,” said Kuenstner, whose day job is the chief investment officer of Wellesley College. “We needed some fresh eyes.”

Boston Private Financial chief executive Clay Deutsch got it – and everyone will tell you that it takes an enlightened chief executive to help set the tone for change. “It’s extremely hard to go to a board member, tap him or her on the shoulder, and say, ‘Thanks a lot,’ and ask him or her to step aside,” said Deutsch. “It was our feeling that just some guidelines of good board service would help make the rotation a kind of cultural thing rather than a personal thing.”

So here’s what the board decided: Directors should serve no more than 20 years and should retire at the age of 74. Hardly Draconian, but the results were dramatic. Four members cycled off, and one seat was added. When all was said and done, the board got five new directors — of which four happen to be women. That means female directors make up half the board.

“We didn’t set out to push the gender frontier,” said Deutsch. “We went for best available national talent. We are coming into a transition from a small local company to a sophisticated national company.”

The newcomers include Intel chief information officer Kim Stevenson, Bentley president Gloria Larson, and Mindflash Technologies chief executive Donna Wells.

But having female leadership matters to Boston Private Financial for another reason. More than half of the company’s employees and clients are women. While the concept of term limits in the boardroom is rare in the United States, it is more acceptable in major public companies in the United Kingdom. Firms have adopted corporate governance guidelines that discourage directors from serving more than nine years. That is a big reason why the turnover rate among top public companies in the United Kingdom is about 15 percent, according to professor Vinnicombe. Coupled with other voluntary efforts, the 100 biggest public companies listed on the London Stock Exchange have been able to accelerate change on their boards, with women now accounting for 26.1percent of directorships compared to 12.1 percent in 2011.

The lack of term limits, said Vinnicombe, “is the biggest block to change in the US.”

Change is good for corporate boards and how we get there should involve directors knowing when there time is up.

Women board members
The 100 largest publicly traded companies in Massachusetts
Company Women directors Total directors % women directors
Avid Technology 3 7 42.9%
iRobot Corp. 3 7 42.9%
Boston Private Financial Holdings 4 10 40.0%
Five Star Quality Care 2 5 40.0%
Constant Contact 3 8 37.5%
Bright Horizons Family Solutions 4 11 36.4%
Hologic 4 11 36.4%
American Tower Corp. 3 9 33.3%
CYS Investments 3 9 33.3%
Franklin Street Properties Corp. 2 6 33.3%
Vertex Pharmaceuticals 3 9 33.3%
Akamai Technologies 3 10 30.0%
The TJX Companies 3 10 30.0%
Eaton Vance Corp. 2 7 28.6%
Insulet Corp. 2 7 28.6%
Monotype Imaging Holdings 2 7 28.6%
UniFirst Corp. 2 7 28.6%
Biogen 3 11 27.3%
The Hanover Insurance Group 3 11 27.3%
Athenahealth 2 8 25.0%
Houghton Mifflin Harcourt 2 8 25.0%
LPL Financial Holdings Inc. 2 8 25.0%
MKS Instruments 2 8 25.0%
PerkinElmer 2 8 25.0%
Atlantic Power Corp. 2 9 22.2%
Axcelis Technologies 2 9 22.2%
Dunkin' Brands Group 2 9 22.2%
Haemonetics Corp. 2 9 22.2%
Waters Corp. 2 9 22.2%
Brookline BanCorp. 3 14 21.4%
Brooks Automation 2 10 20.0%
Government Properties Income Trust 1 5 20.0%
Iron Mountain 2 10 20.0%
Raytheon Co. 2 10 20.0%
Select Income REIT 1 5 20.0%
Thermo Fisher Scientific 2 10 20.0%
Boston Scientific Corp. 2 11 18.2%
Sonus Networks 2 11 18.2%
Staples 2 11 18.2%
Aspen Technology 1 6 16.7%
Atlantic Tele-Network 1 6 16.7%
Cabot Corp. 2 12 16.7%
CRA International 1 6 16.7%
Cynosure 1 6 16.7%
Eversource Energy 2 12 16.7%
Forrester Research 1 6 16.7%
Independent Bank Corp. 2 12 16.7%
State Street Corp. 2 12 16.7%
EnerNOC 1 7 14.3%
M/A-Com Technology Solutions 1 7 14.3%
Parexel International Corp. 1 7 14.3%
PTC Inc. 1 7 14.3%
Xura 1 7 14.3%
Berkshire Hills BanCorp. 2 15 13.3%
Abiomed 1 8 12.5%
Ameresco 1 8 12.5%
American Science Engineering 1 8 12.5%
Analogic Corp. 1 8 12.5%
The Boston Beer Co. 1 8 12.5%
HeartWare International 1 8 12.5%
NxStage Medical 1 8 12.5%
Skyworks Solutions 1 8 12.5%
Teradyne 1 8 12.5%
Charles River Laboratories International 1 9 11.1%
Chase Corp. 1 9 11.1%
LogMeIn 1 9 11.1%
Smith Wesson Holding Corp. 1 9 11.1%
TripAdvisor 1 9 11.1%
Watts Water Technologies 1 9 11.1%
Wayfair 1 9 11.1%
Alere 1 10 10.0%
Destination XL Group 1 10 10.0%
Nuance Communications 1 10 10.0%
Boston Properties 1 11 9.1%
Bruker Corp. 1 11 9.1%
Clean Harbors 1 11 9.1%
Analog Devices 1 12 8.3%
EMC Corp. 1 12 8.3%
Altra Industrial Motion Corp. 0 7 0.0%
CIRCOR International 0 7 0.0%
Cognex Corp. 0 8 0.0%
Endurance International Group Holdings 0 9 0.0%
Entegris 0 9 0.0%
Global Partners LP 0 6 0.0%
GSI Group 0 7 0.0%
Hospitality Properties Trust 0 5 0.0%
IPG Photonics Corp. 0 9 0.0%
Kadant 0 6 0.0%
Lionbridge Technologies 0 8 0.0%
The L.S. Starrett Co. 0 7 0.0%
Mercury Systems 0 7 0.0%
ModusLink Global Solutions 0 6 0.0%
NetScout Systems 0 7 0.0%
Pegasystems 0 7 0.0%
Progress Software Corp. 0 7 0.0%
Safety Insurance Group 0 5 0.0%
Senior Housing Properties Trust 0 5 0.0%
Vicor Corp. 0 10 0.0%
Virtusa Corp. 0 8 0.0%
Xcerra Corp. 0 6 0.0%
SOURCE: Boston Club

Shirley Leung is a Globe columnist. She can be reached at Follow her on Twitter @leung.
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