S&P 500 boards are accelerating the addition of diverse directors, 2019 Spencer Stuart U.S. Board Index finds

A record-breaking 59% of new independent directors are women or minority men

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Oct 23, 2019, 07:00 ET

NEW YORK, Oct. 23, 2019 /PRNewswire/ -- S&P 500 boards appointed 432 new independent directors in the 2019 proxy year, the most since 2004, and 59% were women and/or minorities, up from 50% last year, according to a new study by Spencer Stuart, one of the world's leading executive search and leadership advisory firms. The 2019 U.S. Spencer Stuart Board Index found that boards are listening to shareholders' and other stakeholders' calls for increased diversity in their boardrooms, from gender, to age, race/ethnicity and professional background. However, changes to overall numbers continue at a slow rate due to persistently low boardroom turnover, with the incoming class again representing only 8% of all S&P 500 directors.

"Board composition is being scrutinized as never before," said Julie Hembock Daum, who leads Spencer Stuart's North American Board Practice. "Boards are responding to the attention by increasingly casting a wide net to identify the director talent best aligned with the company's current and forward-looking challenges, opportunities and strategies."

Spencer Stuart's research found:

Female representation among the incoming class of S&P 500 directors rose to 46%, the highest since Spencer Stuart began tracking this data in 1998. Women represent 26% of S&P 500 directors, up from 24% last year.
Just under one in four new S&P 500 directors (23%) are minorities (defined as African-American, Hispanic/Latino or Asian). Minority women represent 10% of the incoming class, up slightly from 9% last year. Minority men represent 13% of the new directors, an increase from 10% last year but still down from 14% two years ago. Minorities comprise 19% of all directors of the top S&P 200 companies, up from 17% last year.
The lion's share of the incoming class (65%) comes from outside the ranks of CEO, chair/vice chair, president and COO. Most are CFOs or other financial executives (27% of new directors) or division/subsidiary heads or top executives of functional units (23% of new directors).
Diverse directors are the driving force behind the changing profile of S&P 500 directors. Only 19% of the women and minority men joining S&P 500 boards are current or former CEOs, compared to 44% of the non-diverse men. Just 11% of the non-diverse men of the incoming class are current or former line or functional leaders, compared to 31% of the diverse directors. Just over one third of the new diverse directors are first-time directors, nearly double the 18% of the non-diverse directors.
Low turnover rates are likely to persist. Mandatory retirement policies are in place at 71% of S&P 500 boards, and these policies impact turnover. Age limits influenced the majority of director departures during the 2019 proxy season. Only 15% of sitting independent directors on boards with age caps are within three years of mandatory retirement.
For the first time, total director pay (excluding independent chair pay) at S&P 500 boards averaged more than $300,000. Pay varies widely, with a $100,000 difference between the average total director pay of the highest and lowest paying industry sectors. Four sectors (healthcare; information technology; telecommunications services; energy) again each averaged more than $300,000 in total pay.

About Spencer Stuart
At Spencer Stuart, we know how much leadership matters. We are trusted by organizations around the world to help them make the senior-level leadership decisions that have a lasting impact on their enterprises. Through our executive search, board and leadership advisory services, we help build and enhance high-performing teams for select clients ranging from major multinationals to emerging companies to nonprofit institutions.

Privately held since 1956, we focus on delivering knowledge, insight and results through the collaborative efforts of a team of experts -- now spanning 56 offices, 30 countries and more than 50 practice specialties. Boards and leaders consistently turn to Spencer Stuart to help address their evolving leadership needs in areas such as senior-level executive search, board recruitment, board effectiveness, succession planning, in-depth senior management assessment and many other facets of organizational effectiveness. For more information on Spencer Stuart, please visit www.spencerstuart.com.

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SOURCE Spencer Stuart