Spencer Stuart's recently-released and always highly-anticipated annual Board Index reveals a treasure trove of benchmarking data for the S&P 500 on numerous aspects of board composition, organization, and process-related practices based on the firm's analysis of the most recent S&P 500 proxy statements (filed between 5/23/17 - 5/17/18) and an extensive online survey.
Although just one of numerous key benchmarking areas, this data on new director (including first-time director) appointments is particularly noteworthy in view of the current intense focus on board composition and refreshment - illustrating an ongoing dramatic shift in new director candidate demographics and sourcing:
- S&P 500 boards appointed 428 new directors during the 2018 proxy year, the most since 2004 and an increase of 8% from 2017.
- 57% of boards added at least one new director.
- 65% of the new directors don't fit the traditionally typical profile: Only 35.5% are CEO-level — active or retired CEOs, chairs, vice chairs, presidents or COOs — down from 47% a decade ago; 56% are actively employed.
- First-time directors comprise 33% of the incoming class. They are younger than their board-experienced peers, and more likely to be actively employed (64% versus 53%).
- 25.5% of the incoming directors are financial experts, up from 18% in 2008. 11% are experienced CFOs/financial executives; 10% are investors.
- 17% of the new directors (up slightly from last year) are 50 or younger. More than one-third of these 50-and-under directors have tech/telecommunications backgrounds, and 53% are women.
Also noteworthy: 9% of boards disclosed engaging an independent third-party governance expert to facilitate their board evaluation, compared to 2% last year, with a number of these boards indicating they use an outside facilitator "periodically" or every two or three years. 38% reported evaluating individual directors in conjunction with their annual board assessment.