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New Expectations for Directors

The National Association of Corporate Directors has issued new guidelines for enhancing the professionalism of board members. The key recommendations are that directors should:

-- Become active participants and decision makers in the boardroom, not merely passive advisers.

-- Budget at least four full 40-hour weeks of service for every board on which they serve.

-- Limit board memberships. Senior executives should sit on no more than three boards, including their own. Retired executives or professional directors should serve on no more than six.

-- Consider limits on length of service on a board to 10 to 15 years to allow room for new directors with fresh ideas.

-- Immerse themselves in both the company's business and its industry while staying in touch with senior management.

-- Know how to read a balance sheet and an income statement and understand the use of financial ratios.

-- Own a significant equity position in the company.

-- Submit a resignation upon retirement, a change in employer, or a change in professional responsibilities.


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Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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