S&P 500 companies are casting a wider net to identify and diversify boardroom talent, 2022 Spencer Stuart U.S. Board Index Finds

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Nov 02, 2022, 09:00 ET

Data through April 2022 shows that corporate leadership skills are increasingly valued as 74% of new independent directors came from outside the ranks of CEO, chair/vice chair, COO and president, an increase from 59% ten years ago.

NEW YORK, Nov. 2, 2022 /PRNewswire/ -- S&P 500 boards appointed 395 new independent directors in the 2022 proxy year. Of that number, 74% came from outside the ranks of CEO, chair/vice chair, COO and president, according to a 37^th annual study by Spencer Stuart, one of the world's leading executive search and leadership advisory firms.

The 2022 U.S. Spencer Stuart Board Index found that companies are heeding calls from shareholders and other stakeholders for increased boardroom diversity, including gender, age, race/ethnicity and professional background. 74% of new independent directors came from outside the ranks of CEO, chair/vice chair, COO and president, an increase from 59% ten years ago. 56% of new independent directors are actively employed; one-third (34%) are serving on their first public company board and 18% are next-gen, age 50 or younger; 50% of new directors have experience working internationally (defined as having spent time working in a non-U.S. location), up from 34% last year.

However, while the profile of the new director is changing, the transformation of overall board composition is happening slowly due to persistently low boardroom turnover. New directors represent only 7% of all S&P 500 directors, consistent with prior years.

"Boards have made real breakthroughs on director appointments from underrepresented groups in recent years and continue to expand the diversity of skills, age, gender, race, ethnicity and geography that is added to the boardroom," said Julie Hembrock Daum, who leads Spencer Stuart's North American Board Practice. "We expect this trend to continue, as we're seeing a growing push for diversity among stakeholders, who view each director search as an opportunity to foster a culture that welcomes and respects a range of perspectives."

The Spencer Stuart Board Index reflects data up until April 30, 2022, which is the most up-to-date analysis available in the market. Other top findings include:

The push for greater diversity continues. 72% of new independent directors are from historically underrepresented groups — including women, underrepresented racial/ethnic groups and members of LGBTQ+ communities.

Progress for women gains ground. According to this year's Index, women now represent 32% of all S&P 500 directors, the most ever. This is an increase from 30% last year and 17% a decade ago.

CEOs limit their additional board activity. 59% of S&P 500 CEOs do not serve on a public corporate board in addition to their own board, compared to 54% 10 years ago.

Annual director evaluations and individual director evaluations are on the rise. Today, 98% of boards — all but 10 — report conducting some sort of annual performance evaluation. 47% of boards disclose that they have some form of individual director evaluations, the same percentage as last year and up from 31% a decade ago.

"By adopting a robust board assessment process that includes director self-assessments and peer evaluations and using tools such as a board composition matrix, boards will be less reliant on mechanisms such as mandatory retirement to encourage refreshment. This approach also aligns with investors, who expect boards to regularly review their composition relative to the company's future-looking strategies and risks," said Daum.

The findings included in the 2022 U.S. Spencer Stuart Board Index are based on the S&P 500 as of April 30, 2022, and proxy statements filed between May 1, 2021, and April 30, 2022.

About Spencer Stuart

At Spencer Stuart, we know that leadership has never mattered more. 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, on their stakeholders and the world around them. 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 non-profit institutions.

Privately held since 1956, we focus on delivering knowledge, insight and results through the collaborative efforts of a team of experts — now spanning more than 70 offices, over 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, employee engagement and many other facets of culture and organizational effectiveness, particularly in the context of the changing stakeholder expectations of business today. For more information on Spencer Stuart, please visit www.spencerstuart.com.

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