Costco Wholesale shareholders will decide next month whether many long-serving members of the company’s board are too entrenched in their seats.
A proposal submitted by one or more unidentified shareholders would establish a rule that at least two thirds of the directors should have served for less than 15 years. The proposal, included in a proxy statement the company filed Tuesday, says that eight out of 14 Costco directors now exceed that tenure.
Make that eight out of thirteen — 89-year-old William H. Gates, who joined the board in 2003, submitted his resignation last week.
The shareholder proposal argues that when a large number of board members have served too long, they lose their ability to effectively check on the company’s management.
Shareholders will vote on the proposal at Costco’s annual meeting, to be held Jan.29.
Costco’s board recommends voting against the proposal, saying that mandatory limits would “deprive Costco of qualified, experienced and effective directors.”
Long-serving directors’ knowledge and institutional memory “are particularly important for the Company’s uniquely long-term horizon in dealing with its customers, employees and suppliers,” Costco says. That long-term approach includes paying higher than average wages at its warehouses.