Director turnover is down, female representation is up on Silicon Valley Boards
Wednesday December 07 2011
SAN MATEO, Calif. — Nov. 29 — Director turnover on Silicon Valley boards has slowed to its lowest level since 2005, when Spencer Stuart began tracking the data. This follows a trend seen more broadly among S&P 500 companies and is one of several findings revealed in the 2011 Silicon Valley Board Index, Spencer Stuart’s study of the board composition and practices of 100 leading Silicon Valley technology companies.
Director turnover has been decreasing gradually since 2008, when 50 percent of boards elected new directors. This year, only 29 percent of Silicon Valley companies added new directors, welcoming a total of 42 new board members.
“For the past several years, the number of new directors elected to Silicon Valley boards has been declining. Among the S&P 500, meanwhile, new director intake has fallen by 25 percent in the past five years. This may be due to the downsizing of some boards, the increase in retirement ages and directors holding on to board seats during the economic downturn,” said Jonathan Visbal, Spencer Stuart consultant and study co-author.
At the same time, female representation on boards has reached a new record, for the second consecutive year. Fifty-seven percent of boards have at least one woman director, up from 56 percent in 2010. Women represent 9.1 percent of the total number of directors on Silicon Valley boards, an increase from 8.6 percent in 2010 and the highest percentage since Spencer Stuart began tracking the data. Among newly elected directors, 19 percent are women.
“Silicon Valley technology companies continue to mature and, as a result, their boards are becoming more diverse and independent,” said Nayla Rizk, Spencer Stuart consultant and study co-author.
Among other notable findings in the 2011 Silicon Valley Board Index:
- Nearly three-quarters of Silicon Valley boards now split the chair and CEO roles. Seventy-three percent of Silicon Valley boards — a new high — have a separate chair and CEO, up from 70 percent in 2010.
- Silicon Valley companies are less likely than the S&P 500 to elect directors annually. Today, 76 percent of S&P 500 companies elect directors annually. By comparison, 65 percent of Silicon Valley boards hold annual director elections.
- The use of stock option programs as a component of director compensation continues to decline. The percentage of Silicon Valley companies providing options declined sharply to 60 percent from 72 percent in 2010.
- The trend toward restricted stock grants reversed somewhat. While restricted stock grants have gained popularity as a component of director compensation in recent years, the percentage of Silicon Valley boards providing restricted stock or restricted stock units fell to 58 percent from 65 percent in 2010. However, the total value of annual equity awards increased by 16 percent to $178,600 from the 2010 average of $153,700.
- Overall director compensation increased by 14 percent. Even as some components of compensation have become less common, overall director compensation has increased in the past year. The average total compensation for Silicon Valley directors is $251,630.
The Silicon Valley Board Index is now in its ninth year. To view the full study and other information on board composition, compensation and governance trends, visit the Spencer Stuart website, www.spencerstuart.com.
About Spencer Stuart
Spencer Stuart is one of the world’s leading executive search consulting firms. Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries, functions and talent to advise select clients — ranging from major multinationals to emerging companies to nonprofit organizations — and address their leadership requirements. Through 52 offices in 28 countries and a broad range of practice groups, Spencer Stuart consultants focus on senior-level executive search, board director appointments, succession planning and in-depth senior executive management assessments. Spencer Stuart’s Silicon Valley office opened in 1991 to respond to the growing demand for senior-level leadership and leadership services by the diverse group of technology companies in the region. For more information on Spencer Stuart, please visit www.spencerstuart.com.
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