The Elusive Director Emeritus

March 10, 2010 at 1:17 pm 1 comment

As the challenges and demands on directors amplify and questions of liability linger in the background, those qualified to take on this important role continue to ask themselves whether they should. Not only are professionals more hesitant about being a director but the number of directorships any one individual will assume has diminished. For example, whereas in the past CEO’s would often take on two or three outside director roles, today, in general, that number is one or even zero.

Thus the pool of available directors is diminishing in some categories while the overall breadth of acceptable directors is expanding. Risk experts and Chief Human Resources Officers are just two of the director categories that have recently become more prevalent.

As corporations continue to face the challenges of securing ample talent for their boards perhaps it is time to look more closely at another source of expert governance advice that tends to receive little attention, that of the Director Emeritus.

Generally, the Emeritus title is used to refer to someone who is formally retired from an active role though retaining the title of one’s official position. As it pertains to directors, the Emeritus designation has similar implications although there are differing ways in which it is exercised. At times the title is purely honorary and used for, as an example, a retired founder. More relevant to this discussion is when the Director Emeritus title is bestowed upon an exceptional contributor to the board who has to step down because of a mandatory retirement policy. While the number of companies with a mandatory retirement age for directors is diminishing, as of 2007 there were still 67 percent of companies with a policy mandating director retirement at a specific age. Thus, as the pool of qualified and available directors shifts, companies might avail themselves of the talent and accumulated knowledge already on their board. A Director Emeritus can attend board meetings and be a full contributor save for the fact that they cannot vote.

Industrial automation company Gerber Scientific has a mandatory retirement age of 72 but Stanley Simon who is currently 89 is a Director Emeritus of this company. He was a director of this board from 1967 through 1997. Also, EMC Corporation that does not have a mandatory retirement age for its directors recently named retiring board member W. Paul Fitzgerald a Director Emeritus. Fitzgerald served on the EMC board for 20 years in addition to being the company Chief Financial Officer. His current appointment is expressly to continue to benefit from his deep understanding of EMC’s business.

I am a very strong believer in the benefits of board turnover and the value of change and new ideas in the boardroom. However, I also believe that there is a strong benefit and usefulness of institutional knowledge and experience. The Director Emeritus designation should not be used liberally but for those exceptional individuals whose expertise and wisdom betters the organization this is a designation that can be very useful. It is also important to remember that this is not an automatic but rather by board vote and in this way may even provide some performance incentive to board members!


Entry filed under: Business, Corporate Governance.

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  • 1. Columbus Zoo in Ohio  |  April 5, 2010 at 6:27 am

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