“Board Composition: Diversity, Experience, and Effectiveness” from The Conference Board, in collaboration with Debevoise & Plimpton, the KPMG Board Leadership Center, Russell Reynolds Associates, and the John L. Weinberg Center for Corporate Governance at the University of Delaware, provides benchmarking data and trends, and associated insights, on various board composition attributes, including director qualifications and skills; gender, racial/ethnic, and sexual orientation diversity; and board size, as well as director education, across S&P 500 and Russell 3000 companies.
Among the key takeaways is a slow but steady decline in directors with broad business strategy and international experience in favor of directors with expertise/experience in particular areas, such as cybersecurity or technology. The Conference Board cautions:
International experience has declined more than 5% among S&P 500 boards and about 2% among the Russell 3000 since 2018, notwithstanding the fact that many significant risks are increasingly global in nature or in their implications.
This push toward appointing directors with expertise in particular areas who may lack broad-based experience is being driven in part by institutional investor and proxy advisor check-the-box-like policies, as well as recent SEC rulemaking, which, although just at the proposed rule stages, appears to already be pressuring companies to seek out directors with cyber and climate expertise without regard to the nature or magnitude of the particular risk to the company or the potential implications on the quality of board oversight as a whole.
Access additional resources on our Board Composition and Board Practices/Governance Practices pages.
This post first appeared in the weekly Society Alert!