Changing corporate board membership is the best way to open seats to a more diverse set of directors, John Thompson, chairman of Microsoft Corp., said Thursday during a panel discussion at a Council of Institutional Investors conference in Chicago.
“It's is important that board refreshment occurs,” Mr. Thompson said, referring to the regular changing of members.
“The closer (a company) is to the consumer market the more important it is you have a diverse board,” Mr. Thompson said.
Henry Jones, vice president of the board of the $301.5 billion California Public Employees' Retirement System, Sacramento, asked a question from the audience about how corporations can accelerate diversity on boards.
“It's more about board refreshment than anything else,” Mr. Thompson said.
“Times are a changing,” said Robert Miller, a director at Dow Chemical and American International Group, another panel member, in agreement.
On the issue of corporations having an independent chairman, Mr. Miller said, “I would do what the British do: It's a requirement the two roles (of CEO and chairman) be separate.”
But he added, “I don't think there is an overarching need for separation.”
Wendy Lane, a director of MSCI and Willis Towers Watson, said lead directors need to be paid more if they are expected to provide independent leadership for a board that has a CEO as chairman.
In a separate talk, Mellody Hobson, president of Ariel Investments, and Kathleen Kennedy Townsend, a managing director of Rock Creek Group and who has been working on state-sponsored retirement plans for private-sector workers, clashed on the value of 401(k)s and financial literacy in education.
“Asking kids how to invest, I think it's really an unfair burden to put on their shoulders,” Ms. Townsend said, speaking from her seat in the audience.
“If you look across the (retirement) systems (at) who has done the best, who has the best retirement system, it's basically people who have defined benefit plans,” Ms. Townsend said.
Participants “don't have to know at all about how to invest. They put their money in a (defined benefit) system (and) it was invested by professional investors. … What is best for people — it would not be how to invest in a 401(k)”
Ms. Hobson responded saying, “I could not disagree more. A 10-year-old kid can know baseball statistics backward and forward. You cannot tell me that learning about what's the difference between a stock and a bond is an undue burden on a child.”