Instituting term or age limits for directors is a way to ensure you have the right board members to help your family business grow and thrive in todayâs competitive marketplace. Requiring directors to step down once they have served a predetermined number of terms or reached a certain age takes emotions out of the equation because the board members know in advance when theyâll need to step down.
A recent study reported that in public companies, age limits are more prevalent than term limits. Deloitteâs 2016 Board Practices Report, which queried 189 public company members of the Society for Corporate Governance, found that while 81% of the respondents from large-cap companies and 74% of those from mid-cap companies imposed age limits on their directors, only 5% and 6%, respectively, used term limits.