These executives can be useful sounding boards for the CEO whose company is growing and diversifying so rapidly that he finds himself constantly in uncharted waters. Smaller companies often have requirements different from those of more mature companies. In time, those investors plan to leave the board so they can sell their shares with minimum insider restraints. Luckily, many top players on Wall Street retire in their late 40s or early 50s and are interested in serving on boards where their advice is valued and where they can make a significant personal investment in the stock. Whether large or small, companies do not want directors who sit on too many boards.
Management wants a substantial commitment of time and attention from directors.
A good rule of thumb is that an active CEO should not sit on more than two or three outside boards, whereas a recently retired person with a high energy level might belong to several more. Having someone on a board for more than ten years is often counterproductive for a corporation, as is having the same CEO for too many years. In today's world of rapid change, what a company requires of its board is forever evolving. On the other hand, mandatory age limits are also counterproductive. With the vigor of people today in their 60s, 70s and even 80s, it is a waste of real talent to eliminate that group from consideration by setting an arbitrary age limit for board service.