When Too Many Board Seats Become a Corporate Governance Problem 

A few days ago, I met a gentleman who casually mentioned that he served on the boards of thirteen companies. Not content with that achievement, he added that he was also an advisor to about half a dozen others.

The remarkable thing was not the number itself. The remarkable thing was that he still seemed to have enough time to meet people socially, attend events, travel, and enjoy life.

This left me wondering whether he had discovered a secret method of stretching a twenty-four-hour day into seventy-two, or whether corporate governance has become far more symbolic than we would like to admit.

India's corporate governance framework places limits on the number of board positions a person may hold. The rationale is obvious. Directors are not ornamental pieces of furniture. They are expected to oversee management, scrutinise risks, challenge assumptions, review strategy, understand financial statements, and protect shareholders’ interests.

In theory, a board seat is a responsibility. In practice, it increasingly appears to be an ‘asset class’.

The moment regulators impose limits on directorships, markets discover a workaround. If additional board positions are not possible, there are advisory boards, strategic councils, mentors, consultants, senior counsellors, independent experts, special invitees, and a variety of creatively titled arrangements that somehow involve similar prestige and compensation without attracting the same scrutiny.

The result is that formal limits remain intact while the spirit behind them quietly evaporates.

A person may be legally restricted from holding more than a specified number of directorships, yet simultaneously accumulate a parallel universe of advisory appointments. The distinction is technically valid. It is also often economically meaningless.

The company gets a respected name associated with it. The individual gets another fee stream. Everyone is happy.

Except, perhaps, the shareholders.

The uncomfortable question is whether all these positions genuinely require expertise or merely borrow credibility.

Corporate annual reports often celebrate the presence of distinguished directors and advisors. Their credentials occupy entire pages. Former regulators, retired bureaucrats, ex-bankers, consultants, academics, and industry veterans populate these lists.

What is rarely disclosed is how much time they actually devote to understanding the business.

Real Commitment
Consider the arithmetic.

A reasonably diligent director should review board papers, attend meetings, interact with auditors, monitor risk reports, understand industry developments, and occasionally challenge management. Even a modest commitment can require dozens of hours each quarter.

Multiply that by thirteen board positions. Then add another few advisory assignments. The calculation begins to resemble science fiction.

Either these individuals possess superhuman productivity, or many appointments involve considerably less work than investors imagine.

The answer may lie in the incentives.

For the appointment seeker, the attraction is obvious. Board fees, best-in-class travel perks, and often in exotic locations, advisory retainers, stock options, prestige, networking opportunities, and enhanced influence make such positions extremely rewarding. Few opportunities offer such attractive compensation relative to the time ostensibly required.

For companies and promoters, the attraction is equally obvious. A well-known name lends credibility. Investors feel reassured. Regulators see familiar faces. Governance scores improve, at least on paper.

More importantly, experienced appointment seekers often understand an unwritten rule of corporate life. The most sought-after directors are not necessarily those who ask the most uncomfortable questions. They are those who know precisely which questions to ask and how far to push them.

An excessively inquisitive director is rarely popular with management. A director who constantly challenges assumptions, demands explanations, and creates inconvenience can quickly become unwelcome.

By contrast, a distinguished individual who lends credibility while preserving ‘boardroom harmony’ is a much more attractive proposition.

Thus emerges an implicit exchange. The individual receives compensation, status, and additional appointments. The company receives legitimacy, reputation, and a reduced probability of unpleasant disruptions.

Nobody openly discusses this arrangement. Nobody needs to. The incentives speak for themselves.

This is not to suggest that all directors or advisors are ineffective. Many devote enormous effort and add substantial value. Some have prevented disasters precisely because they were willing to challenge management when others remained silent.

But the growing phenomenon of serial directorships deserves scrutiny. Equally important, do companies ‘mandatorily’ require so many directors? Maybe in the context of modern corporations that operate in an environment of unprecedented complexity. Cybersecurity threats, artificial intelligence, climate risks, geopolitical shocks, regulatory changes, and financial vulnerabilities all demand deep engagement. Governance has become harder, not easier.

Yet the supply of apparently ‘omniscient directors’ seems to expand endlessly. The same names appear across banking, manufacturing, technology, pharmaceuticals, infrastructure, financial services, and consumer businesses. One begins to suspect that expertise has become infinitely scalable.

Reality suggests otherwise. Time remains a finite resource.

The true governance question, therefore, is not whether a person satisfies the legal ceiling on directorships. It is whether any human being can meaningfully discharge so many responsibilities simultaneously.

Perhaps regulators should pay greater attention to advisory positions and similar arrangements that effectively replicate board roles without carrying equivalent accountability. Investors, too, should stop counting famous names and start asking harder questions about engagement.

How much time does a director devote to the company?

How many meetings are attended?

How often are management assumptions challenged?

How many difficult questions are asked?

Corporate governance is not improved merely because the same distinguished individual appears in multiple annual reports.

Indeed, when one person seems able to sit on thirteen boards, advise another half a dozen companies, attend conferences, travel extensively, and still find time for leisurely conversations, the issue may not be exceptional time management.

It may be that many of these positions require far less governance than shareholders have been led to believe.