Global headhunting firm Spencer Stuart has released their 2020 Board Index for North America. For the 35th year in a row, the firm has analysed trends amongst the S&P 500, with some interesting results. Boards are facing increased pressure from shareholders to have more diversified leadership when it comes to gender, age, ethnicity and backgrounds.
272 of the 500 companies appointed new independent directors, and 48% of those hired more women onto their board. Overall 59% of the new independent directors were classified as diverse (either in terms of race or gender).
24% of S&P 500 companies committed to diverse boards however only one in four new independent directors were from ethnic minority backgrounds, representing a slight decrease on the year before. Boards still have a lot of work to do in increasing their ethnic diversity. Spencer Stuart also note that a lack of turnover of board roles also contributes to their unequal distribution.
Boards also seem to be putting less of a premium on CEO experience for independent director roles, with 65% of new independent directors in 2020 having never held a CEO role. Finance backgrounds are still often preferred with 27% of new directors coming from the finance function. Independent directors are also getting younger with 17% being under the age of 50.
From a financial perspective;
» Stock grants and cash represent the largest share of director compensation, 57% and 38%, respectively.
» 78% of S&P 500 boards provide stock grants to directors in addition to a cash retainer.
» Only 7% of S&P 500 companies pay non-employee directors for attending board meetings, down from 9% last year and 35% a decade ago.
Whilst there is still much work to be done in improving diversity in the board room, it’s encouraging to see positive changes taking place.