Boards are reshaping themselves. They are doing so in the face of a complex business environment characterized by continuous and rapid change and increased risk. And as investors demand greater diversity and the highest quality in the boardroom, boards are reassessing themselves and changing.
To meet these needs, boards are adding directors with diverse backgrounds in emerging and fast-developing industries, including technology and digital. They are casting a wide and deep net to identify and recruit talented new board members, and many are looking to increase their gender and ethnic diversity as well. But the chronic low rate of director turnover has resulted in only incremental change in the composition of U.S. boards. Given the continued low rate of turnover, boards are likely to change at a modest pace.
With the disruption and change that boards are facing, Spencer Stuart’s Houston office presents the 2019 Houston Spencer Stuart Board Index, which examines trends in board composition, practices and compensation among Houston’s leading companies. The 83 companies included in this year’s index are headquartered in the Houston area, and are publicly traded on the NYSE or NASDAQ.
Here are a few highlights from the report:
Fewer new directors: Thirty-six (43%) of the 83 companies in the index elected new board members, compared with 42 of the 84 (50%) in the 2018 index. Companies added 51 new independent directors, a 29% decrease from 72 in 2018.
More women in the boardroom: Women now constitute 23% of Houston board members, compared with 20% in 2018. Houston companies added 24 new independent female directors, the same as in 2018.
Houston boards trail the S&P 500 on mandatory retirement. Fifty-eight percent of Houston boards report having a mandatory retirement age, the same as in 2018. By comparison, 71% of S&P 500 boards report a mandatory retirement age.
Fewer boards separate the chair and CEO roles. Sixty-four percent of Houston companies separate the chair and chief executive officer roles, compared with 71% in 2018. By comparison, 53% of S&P 500 companies separate the chair and CEO roles.
Cash retainers remain well below the national average. The average cash retainer decreased slightly from $84,720 in 2018 to $83,142 in 2019, well below the S&P 500 average of $126,200.