Board Service Providers as a Solution for Board Overload: Part 1

A comment on Shapira, Eckstein, and Shillo's "Board Overload" paper

Most corporate governance practitioners are familiar with the problem of over-boarding. That is, directors who serve on too many boards at the same time. As Jessica Erickson explained, there is a long-standing concern that “board members can better monitor the corporations for which they serve if their attention is not divided between a large number of other directorships.”¹ Robert C. Clark similarly noted that:

Some rating agencies urge clearly defined standards against over-boarding. ISS, for example, insists that directors who are not CEOs should not serve on more than six public company boards. (Directors who are CEOs are limited to three boards, including their own.) The rationale is that heavily committed directors cannot do a good job. Proponents believe the principle is so important that it ought to be a clear bright-line rule, even if doing so results in some over-inclusion and under-inclusion. For example, it stifles the fully retired but smart and energetic CEO who has no regular job but wants to serve on eight boards of fairly simple and unproblematic public companies, but it excuses the full-time professional who has an especially demanding job and also imagines he can effectively serve on the boards of three large, complicated, and troubled public companies.²

Over boarding concerns drove the NYSE to impose a disclosure requirement regarding audit committee membership, which provides that:

If an audit committee member simultaneously serves on the audit committees of more than three public companies, the board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company's audit committee and must disclose such determination either on or through the listed company's website or in its annual proxy statement or, if the listed company does not file an annual proxy statement, in its annual report on Form 10-K filed with the SEC. If this disclosure is made on or through the listed company’s website, the listed company must disclose that fact in its annual proxy statement or annual report, as applicable, and provide the website address.³

In addition, the commentary to that provision counsels that:

Because of the audit committee's demanding role and responsibilities, and the time commitment attendant to committee membership, each prospective audit committee member should evaluate carefully the existing demands on his or her time before accepting this important assignment.

A forthcoming Washington University Law Review article by Asaf Eckstein, Roy Shapira, and Ariel Shillo tackles a related—but, I think, seriously underappreciated governance problem; namely, that boards of directors are being asked to do far more than their structural capacity allows. Their insight is the subject of this commentary. At the risk of spoiling the end, I end up highly recommending it, while offering some friendly amendments.

Shapira, Roy and Eckstein, Asaf and Shillo, Ariel, Board Overload (March 11, 2026). Forthcoming, Washington University Law Review, European Corporate Governance Institute - Law Working Paper No. 911/2026, Available at SSRN: https://ssrn.com/abstract=6395198 or http://dx.doi.org/10.2139/ssrn.6395198