Spencer Stuart’s annual board index is always an excellent summary of the state of corporate governance from the perspective of the boardrooms of the S&P 500.
The 2016 Spencer Stuart report shows incremental change at best over the past decade, with very slight improvements in the number of independent directors (17 percent more than five years ago but 12 percent fewer than 10 years ago). There has been no improvement in minority representation on boards. Women directors are up by 39 percent from ten years ago (though there are still six boards without a single woman), and there are 34 percent fewer current CEOs, and current CEOs are serving on 22 percent fewer boards. But there are also 73 percent more retired/former CEOs, and there is a surprising 50 percent decline in the number of boards where the CEO is the only insider. CEOs serving on other boards is at a “historic low.” All but seven boards in the S&P 500 (99 percent) conduct annual board evaluations.
The percentage of boards with an outside chair has increased 170 percent in ten years. The number of boards with lead director has declined, but is still high, at 87 percent. The decrease may reflect more reliance on splitting the CEO/Chair positions.
Director retirement ages are rising, with more boards allowing boards to serve until age 75 or older. The total average compensation is now $285,065, with the healthcare sector paying their directors the most.
Some interesting stats: a third of new directors are serving on their first corporate board, probably a reflection of internal and external pressure to limit the number of boards a director serves on. And the top three fields for new outside directors are: tech/telecommunications, consumer goods/services, and private equity/investments. Meetings with the outside auditor are a part of the training for 90 percent of new directors and 68 percent have site visits.