The tenure debate: trusted or timed out?
Long tenure for board members is typically viewed with scepticism from a corporate governance perspective, but our research into tenure and returns challenges that view.
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The tenure of CEOs, Chairs, and other board members—how long these key leaders serve at the helm—has long attracted scrutiny in corporate governance. Traditional thinking holds that extended tenures may endanger oversight and independence, with concerns rising about possible entrenchment and loss of objectivity.
However, recent research, including that by Alex Hill in Centennials1, suggests that longer tenures can foster stronger performance because leaders accumulate deep organisational knowledge, establish enduring relationships, and build resilient cultures over time. Such continuity supports informed decision-making and sustained success, offering benefits that are often overlooked in common debates about board refreshment. We find evidence to suggest that longer cumulative tenures are associated with better performance. This is particularly the case where there is some form of independent board leadership, like a non-executive Chair or a Lead Independent Director (LID
This article adds to the body of evidence on whether experience and organisational familiarity could reinforce effective decision-making and long-term company performance. We examine the positive aspects of longer tenures among CEOs, Chairs, and other board members across over 5,000 global constituents of the MSCI ACWI IMI. We consider the cumulative tenure at the company of each person (including prior non-leadership or non-board roles, even if non-continuous) and the relationship to 10-year cumulative total shareholder returns, as an indicator for corporate performance.
In all markets except Asia (including Japan), we find evidence to suggest that longer cumulative tenures are associated with better performance. This is particularly the case where there is some form of independent board leadership, like a non-executive Chair or a Lead Independent Director (LID)2. Whether the CEO, Chair, or broader board tenure is most influential depends on the geography and the sector. In the US and the UK, the correlations are the strongest with sizeable samples for in-depth analysis, so we take a closer look at these regions below. While the relationships are notable, it should be acknowledged that board tenure is one factor among many others that will contribute to total shareholder returns.
Table 1: Statistically significant correlation coefficients3 for tenure indicators and total shareholder returns by region, where there is a non-executive Chair or LID
North America: long tenures, strong performance
North American companies provide compelling evidence of the benefits stemming from extended board and leadership tenures. Unlike many regions, North America does not enforce tenure limits in any part of the board, allowing natural tenure patterns to develop. Considering over 2,000 companies in this region, the analysis reveals several trends:
- Statistically significant correlations emerge for the cumulative tenure of CEOs (rho = 0.378), Board Chairs (rho = 0.375), and the whole board (rho = 0.380), indicating that companies with more seasoned CEO, Chairs, and other board members tend to outperform peers.
- For the top performing companies, over a third of board members exceed a 10-year tenure, with fewer than 25% classed as new appointees (less than five years served) - see table 3.
Sector-specific analysis further highlights this effect (table 2). In technology, consumer discretionary, basic materials, financial, healthcare, and industrial sectors, the positive relationship between tenure and performance appears even more pronounced. For example, the correlation for all board member tenure and 10-year returns rises to rho = 0.558 among technology firms.
Table 2: Statistically significant correlation coefficients for tenure indicators and total shareholder returns by sector, North America, where there is a non-executive Chair or LID
While the relationship between tenure and returns is more pronounced where there is some form of independent leadership, we still see positive and significant relationships between tenure and returns when there is an executive Chair only.
When we look at companies with executive Chairs, tenures tend to be longer across all positions, and we can start to gauge the thresholds at which performance starts to plateau. For CEOs and Chairs, evidence points to this plateau emerging in excess of 20 years’ tenure. For all board members, returns seem to deteriorate once average board tenure surpasses 11 years. Overall, North America demonstrates that allowing leadership tenures to be driven by company needs, rather than arbitrary limits, can help sustain business success.
Table 3: Tenure indicators by performance quintiles for North America, by companies with executive Chair only versus Non-Executive Chair OR Executive Chair with LID
United Kingdom: lagging longevity, lacklustre returns
Tenure is a more regulated matter in the UK (for example, with a ‘comply or explain’ rule for tenure exceeding nine years for independent directors). Even within this environment, analysis shows a positive correlation between average cumulative board tenure and company performance (rho = 0.249, see Table 1). Moreover, there is a significant positive relationship between the proportion of board members with more than 10 years’ service and returns (rho=0.164). However, just 12% have cumulative tenures of 10 years or more – less than half their North American counterparts (26%).
Table 4: Tenure indicators by performance quintiles for the UK, companies with Non-Executive Chair OR Executive Chair with LID
Interestingly, there is no significant relationship between Chair tenure and total shareholder returns in this region. Chair tenures in the UK are comparatively short, an average of six years, less than half of the tenure amongst comparable companies in the US. The relative scarcity of long-tenured Chairs may suggest unrealised potential for greater long-term value. For CEOs, with tenures somewhat more comparable to North American counterparts, there is a significant positive relationship between tenure and total shareholder returns (rho=0.276).
Conclusion
Across global markets, we find that longer average tenure is associated with better returns. The trends are clearest in North America and the UK. Deep company knowledge, established relationships, and continuity of vision are valuable assets that accrue over time, supporting effective decision-making and robust performance. Well-balanced boards that combine a core of experienced CEOs, Chairs and other directors, with targeted refreshment, appear best placed to succeed. Based on regions where we have seen significant correlations between tenure and returns, some rules of thumb emerge where:
- CEOs are most effective with 15–20 years’ tenure.
- Board Chairs are most effective with 15–20+ years’ tenure.
- Average board member tenure surpasses 11 years before company performance declines.
- Under a quarter of directors should be new appointees (under five years’ service).
- Over a third of the board should have 10+ years’ service – whether in board leadership positions or elsewhere in the organisation.
Boards should be empowered to harness and retain experienced members, with regular assessment and renewal ensuring ongoing effectiveness. Ultimately, fostering the right balance of tenures—anchored by seasoned decision-makers—can contribute to positive outcomes for companies and their investors.
Given these initial findings, we intend to extend this research to understand in more depth the impact of LID tenure, independent non-executive director tenure, and concurrent tenure between executive and non-executive directors on total shareholder returns across regions. In addition, we aim to explore the results in other regions in more depth —particularly the absence of a positive relationship between tenure and returns in Asian markets.
1 Published in 2023, the research investigates organisations that have outperformed their peers for over 100 years, exploring the twelve traits that have set these organisations apart.
2 In the UK, this includes Senior Independent Director roles too.
3 Spearman’s rho correlation coefficient at the 95% confidence level. We use Spearman’s rho because the data did not approximate a normal distribution after transformation, therefore a non-parametric test was more appropriate.
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