The question of how long people should remain in positions of power is a recurring feature of democratic debate. Brazil discusses presidential and gubernatorial re-election, lawmakers who serve consecutive terms and, increasingly, the lifetime tenure enjoyed by members of the judiciary. The logic behind those debates is familiar: the longer someone remains in a position of authority, the greater the concern about renewal, concentration of power and the ability to remain sufficiently detached from the institutions they are supposed to oversee.
Curiously, the same question is asked far less often in another arena where decisions with enormous economic consequences are made: the boards of listed companies.
An XP Research study of 141 Brazilian companies helps put the issue into perspective. The average tenure of a board director is 7.4 years. That is nearly the equivalent of two presidential, gubernatorial or lower-house terms in Brazil, and almost a full Senate term. About 15% of directors have been on their boards for more than a decade. At the extreme end of the sample, one director has held a seat for 38 years.
A company is, of course, not a democracy. Shareholders are not voters and directors do not govern countries. Boards also need institutional memory, knowledge of the business and experience — particularly in complex industries. But the comparison raises a legitimate question: at what point does continuity cease to be an asset and begin to look like entrenchment?
The question becomes more relevant because longevity is only part of the story. The data also point to the existence of something resembling an elite within Brazilian boardrooms. Of the 1,038 directors identified by XP, just 108 — roughly 10% — sit on more than one of the companies in the sample. Yet this relatively small group accounts for 22% of all board seats analyzed.
There is nothing inherently wrong with that. Good directors are scarce, and experience accumulated across different companies can improve decision-making. An executive who has already navigated acquisitions, liquidity crises, succession processes and industry transformations can bring a perspective to a board that is difficult to replicate.
The problem begins when experience comes together with concentration. The same relatively small circle starts moving between companies, controlling shareholders and industries, creating a system in which reputation and accumulated relationships may matter as much as the renewal of ideas.
That is where the debate over independence takes on another dimension. Despite years of progress in governance standards, only about four in ten companies analyzed by XP have boards where independent directors occupy at least half the seats. In most companies, independents therefore remain a minority.
More revealing is the question of who actually chooses them. Controlling shareholders continue to exercise substantial influence over board composition. At 44% of the companies analyzed, every board member was elected by the controlling shareholder. And even among directors formally classified as independent, 52% were elected by the controller itself.
That does not mean those directors are not independent. Nor does it suggest any wrongdoing. But it does expose the limits of treating corporate governance as a binary classification: independent or not independent.
A director can meet every formal independence requirement and remain entirely autonomous after ten or fifteen years on a board. But investors should at least ask whether time changes that relationship. After repeated reappointments, years of meetings, strategic decisions and close interaction with the same controlling shareholders and executives, is independence exactly what it was at the beginning? And to what extent can someone repeatedly chosen by the very shareholder they may eventually need to challenge remain willing to do so?
That question matters particularly in Brazil, where controlling shareholders still play an outsized role in the corporate landscape. In some sectors, their influence is especially pronounced. Among the banks covered by XP, for example, 92% of board seats were filled by directors elected by controlling shareholders. In oil and gas, the corresponding figure was much lower, at 28%.
For investors, this is not an abstract debate about corporate governance. Listed companies sell shares to the public. They ask Brazilian and foreign investors to entrust capital to structures responsible for overseeing management and making decisions on acquisitions, leverage, executive compensation, succession, related-party transactions and the allocation of billions of reais.
In those moments, the board exists precisely to ask difficult questions.
That is why the next stage of Brazilian corporate governance may not simply be about increasing the number of seats occupied by directors classified as independent. The harder challenge is to assess independence in practice.
That means looking at who nominated or elected the director, how long that person has occupied the seat, how many other boards he or she serves on, and how willing and able that director is to challenge management and controlling shareholders when minority shareholders’ interests are at stake.
XP itself acknowledges that complexity. In its assessment, board effectiveness cannot be captured by a single indicator, but rather by a combination of independence, experience, diversity of perspectives, expertise and engagement.
Politics devotes enormous energy to debating how long someone should remain in power. Capital markets may want to start asking the same question about the people who occupy their boardrooms.
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