- Diversity. Women hold only 18.5% of Russell 3000 directorships (13% of the Russell 3000 has an all-male board) and just under a quarter of S&P 500 directorships. Almost all board chairs are men (about 95%) and fewer than one in five board committees are led by women. Meanwhile, only 59 companies in the S&P 500 currently explicitly disclose race/ethnicity of individual directors, a number we expect to increase over the next year. Approximately 80% of those disclosed are white, compared to 60% of the country as a whole based on Census figures.
- Board Skills. As companies seek to broaden the pipeline of director talent, prior C-Suite experience is still strongly preferred. However, the percentage of S&P directors who serve as executives below the C-Suite nearly doubled from 5% in 2016 to 9% in 2019. Technology and finance are the most frequently highlighted skills for directors and only one in five S&P 500 companies reported adding a first-time director (with no public company experience) to the board.
- Director Tenure. Average tenure for directors is about 9.5 years in the US, versus only 4 years in the UK, reflecting differing attitudes regarding how long a director can remain on a board and still be independent. Term limits continue to be rare, with only 5% of the S&P 500 utilizing them, and the share of directors aged 70 or older actually increased since 2016.
- Turnover. One of the biggest obstacles to increasing board diversity in the US is simply that director turnover is so low – 40% of the S&P 500 and almost half the Russell 3000 made no board changes last year. In addition, almost half the Russell 3000 continues to use plurality voting where directors do not face annual elections.
Overall, the report highlights the increased pressure from investors, regulators, and proxy advisory firms for boards to improve representation. However, working against that trend are longer tenured directors and little appetite by companies or investors to require resignation due to age or years of service.