2020 Spencer Stuart Industrial Sector Snapshot

In many respects boards of industrial companies in the S&P 500 index — defined as 97 companies in the materials and industrials primary sectors — are similar to S&P 500 boards.

• The average age of independent directors on industrial boards is 63.1 years, compared to 63.0 years for S&P 500 boards.
• The youngest industrial board averages 53.3 years of age, the oldest, 83.8.
• Industrial boards average 10.4 directors, compared to 10.7 members on S&P 500 boards.
• Independent directors represent 86% of all directors on industrial sector boards, compared with 85% of all S&P 500 directors.
• The average board tenure of independent directors on industrial boards is 8.0 years, just below the 7.9 year average for the S&P 500 index.
• The longest-tenured industrial board averages 35.5 years of board service.

Diversity

Gender diversity of industrial boards slightly lags the S&P 500 universe, with women representing 27% of all industrial board members in 2020, compared to 28% of S&P 500 directors.

Every S&P 500 board has at least one female director. Ninety-five percent (95%) of the S&P 500 index have at least two female directors, and two-thirds (67%) of S&P 500 boards have three or more female directors. In contrast, just under 60% of the industrial boards have three or more women directors. Thirteen S&P 500 boards are composed of at least 50% women, including one industrial board.

Representation of Women Directors on Industrial Boards

When it comes to race/ethnic diversity of the boardroom, 18% of the directors of the 42 industrial companies in the top 200 companies are minorities (defined as Black/African American, Hispanic/Latinx and Asian), slightly below the 20% average for the S&P 500 index. The diversity breakdown of industrial boards generally matches the S&P 500: 11% Black/African American (compared to 10% of S&P 500 directors); 4% Hispanic/Latinx (compared to 4% S&P 500); and 3% Asian (compared to 5% S&P 500). According to the U.S. Census Bureau, about 40% of the U.S. population is estimated to be a minority, including 18.5% Hispanic/Latinx, 13.4% Black/African American, 5.9% Asian.

New independent director backgrounds

Fifty-five companies — 57% of the surveyed S&P 500 industrial companies — added at least one director over the past year. Appointees averaged 58.4 years of age, slightly higher than the 57.8 average for all independent directors joining S&P 500 boards. First-time directors represented 28% of directors joining industrial boards, matching the 28% overall average for the S&P 500.

Of the 87 directors joining industrial boards over the past year, 62% are diverse: 49% are women; 13% are minority men. The appointments slightly outpace the S&P 500, where 59% of the incoming 2020 class are diverse, including 47% women and 12% minority men.

Less than half (46%) of the directors joining industrial boards are actively employed, compared to 49% of independent directors joining S&P 500 boards. Compared to the S&P 500 incoming class of independent directors, industrial boards recruited in 2020 a higher percentage of leaders of divisions/subsidiaries and functional units and former government/military officials. Industrial boards appointed relatively fewer directors with financial experience.

Board leadership

The chair and CEO roles are separated at 49% of industrial boards — lower than the 55% average for the S&P 500 index. Executive chairs are in place at 14% of industrial boards, compared to 13% for the S&P 500. Independent directors chair 33% of industrial boards (compared to 34% of the S&P 500), while 71% of industrial boards have an independent lead director (compared to 73% of the S&P 500).

Board organization and process

Compared to the S&P 500 index, more industrial boards have three-year terms (classified boards) and age limits for directors. Industrial board committees — number, size and meeting frequency — are similar to S&P 500 committees.

Editor's note: Data in tables and charts may not total 100% due to rounding.
 

Industrial Sector Companies