Board directors should serve shorter terms says former CBA chair

Former Commonwealth Bank and Telstra chair Catherine Livingstone has suggested directors should not be expected to serve on boards for more than nine years, warning that rigidity at the top level of companies is hurting the talent pool.

Livingstone said it was time to reconsider what is deemed an appropriate time for directors to serve on boards, suggesting a six-year stint could be more appropriate to balance experience with attracting fresh faces.

There are no hard limits on how long a director can serve on a company’s board in Australia, and Livingstone highlighted that director tenure had been coming down in the long term.

“Two generations, or 40 years ago, it was not uncommon for directors to be on a board for 15 or 20 years,” Livingstone said in an address to an Australian Institute of Company Directors event on Wednesday morning.

“One generation, or 20 years ago, tenure limits of nine to 12 years had become widespread. Directors generally do and expect to serve their full tenure. But perhaps it’s now time to evolve our thinking again.”

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“There may be individuals who would be great directors but who do not wish to commit to nine years nor be seen to be letting the organisation down by leaving after three or four years,” she said,

“It’s not to suggest that six years should be a new tenure limit, but rather that the fixed-tenure limits being a lower bar and an upper bar results in an unhelpful rigidity.”

Livingstone is currently the chair of rail freight business Pacific National. She has also chaired CSIRO and served as president of the Business Council of Australia.