A report from Spencer Stuart provides an insightful outlook on trends in corporate board composition, including the move toward more diverse boards, younger directors, and increasing turnover driven by director departures and mandatory retirements. The report also observes the diverse talents and experiences of newer corporate directors. Boards “are increasingly adding directors with backgrounds in technology, digital transformation and technologies, consumer marketing, and other areas of emerging importance,” the report says. Financial backgrounds remain highly valued, the report says, especially the experiences of CFOs and other finance and investment executives. The report also notes the following trends on S&P 500 boards:
- Of the 428 new independent directors added to S&P 500 boards in the 2018 proxy year, only 35.5 percent were active or retired CEOs, board chairs, or similar, down from 47 percent a decade ago.
- First-time public company directors constituted 33 percent of the 2018 class of new S&P 500 directors. These first-time directors are younger than their peers and more likely to be actively employed (64% versus 53%), are less likely to be CEOs or chief operating officers and are more likely to be minorities.
- 24 percent of first-time directors in 2018 are minorities, versus 19 percent of all new S&P 500 directors.
- 40 percent of new directors in the 2018 proxy year are women, an increase from 36 percent in 2017.
The report suggests that boards adopt an ongoing refreshment strategy, position new directors for success, and encourage and facilitate constructive interaction among board members.