Photograph by Getty Images/Blend Images RM
By Jean Chatzky
October 13, 2015

Do we need term limits? The query came from a meeting room in Washington, D.C., just a few blocks from the Capitol. But the question—from Christie Hefner, a delegate at Fortune’s Most Powerful Women summit, wasn’t posed about the Senate or the House of Representatives. It was about corporate boards. Her point: Unless we see structural changes along the lines of term limits or mandatory retirement, it will be tough to move the needle when it comes to women on the boards of public companies. It has been stuck, Hefner pointed out, at around 15%.

“I’m a fan of term limits,” said Nancy Peretsman, managing director and executive vice president of boutique investment bank Allen & Company. (Peretsman serves on the board of Priceline (PCLN) but no longer accepts public board assignments. Instead, she makes a hobby of helping place others on boards. “Some people do it [as their field of work,]” she said. “I do it as a hobby.”) But although she’s pro term limits in general, Peretsman believes an exception should be made for committee chairs where longevity is critical.

Pat Russo, chairman-elect, Hewlett Packard Enterprise (HPQ) and a director at General Motors (GM), Alcoa (AA), and Merck (MRK), agreed with Peretsman. “I think it’s going to take a combination of things [to affect change in board make-up],” she said. Term limits are one option, but she believes pushing for restrictions as far as average director tenure will be more successful. It will allow for longevity in those positions that require it and give a way for boards to nicely bid adieu to people who have served but should go. Russo also argued that some of the boxes governance committees feel they need to check when filling seats need to change. “This notion of having to have a sitting CEO,” she said. “That’s by definition limiting.”

The outlier in the bunch? Mellody Hobson, president of Ariel Investments, and a director at Dreamworks (DWA), Starbucks (SBUX), and Estée Lauder (EL). She believes term limits can be detrimental to the overall company. “There’s a chemistry to a board. It takes time to build,” she said. “And when you put a new board member in, it takes time to adjust.” It also, she said, takes considerable time to learn the workings of often very complicated companies. “I’ve been on my boards 10 years, 12 in one case. It takes a long time to get your hands around the business.”

What’s the solution? There isn’t a clear one, but Peretsman suggested that age limits—another proposal—in and of themselves don’t help. Older, sometimes retired, people in corporate America have something that many people don’t have, which is time, she said. “If you catch [too long a period of service] on longevity rather than age, you may solve some of the problem.”

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