Director overboardedness in South Africa: evaluating the experience and busyness hypotheses

Concerns have been raised by shareholders and corporate governance experts about directors serving on too many boards simultaneously. The contrasting busyness and experience hypotheses have been used in this study to explain the consequences of the phenomenon. South Africa presents a unique case study given pressure on listed companies to improve their board diversity. Owing to a limited talent pool, several diverse directors appear to be overextended. The analysis centred on 1610 directors who served on the boards of the 100 largest companies listed on the Johannesburg Stock Exchange over the period 2011–2016. A broad measure of director overboardedness was computed to include these directorships and positions held at unlisted companies and other entities. Just less than one-third of the sampled directors held three or more board seats concurrently, a guideline often used to reflect overboardedness. They were mostly black women over the age of 60 serving as independent non-executives. Compared to their non-overboarded counterparts, overboarded directors were better educated, had more specialised occupational backgrounds and had longer tenures on the boards on which they served. Contrary to expectation, no significant difference was observed in the percentage board meetings attended by overboarded and non-overboarded directors. It is hence recommended that nomination committees and shareholder activists should consider director overboardedness on a case-by-case basis. As shown in this study, multi-boarded directors could be valuable repositories of experience. Deliberations on busyness should acknowledge the advantages that interlocked directors could bring to the boardroom, especially those from diverse backgrounds.