Diversity
The diversity of industrial boards lags behind the S&P 500 universe, with directors from underrepresented communities (women, Black/African American, Hispanic/Latino and Asian men) representing 41% of directors on industrial boards, compared to 43% of S&P 500 boards overall. Women represent 28% of all industrial board members in 2021, compared to 30% of S&P 500 directors, and tied with the communication services sector for having the second-lowest gender diversity of all primary sectors.
Both the industrial sector and the S&P 500 index fall short of reflecting U.S. demographics. According to the U.S. Census Bureau, 51% of the U.S. population are women and about 42% identify as Hispanic/Latino/a (18.5%), Black/African American (13.4%), Asian (5.9%), American Indian or Alaskan native (1.3%), or multiracial (2.8%).
Twenty-nine percent (29%) of industrial companies disclosed director-specific race/ethnicity details, compared to 28% of all S&P 500 companies. Thirty-nine percent (39%) of industrial sector companies disclosed a commitment to including directors from underrepresented communities in searches for new directors, matching the 39% average of S&P 500 companies.
Diversity of Industrial Boards
Six industrial boards (6% of the sector) have no Black/African American, Hispanic/Latino/a or Asian directors. In contrast, 37 (8%) S&P 500 boards have no Black/African American, Hispanic/Latino/a or Asian directors. All industrial boards have at least one woman. Ninety-six percent (96%) of the S&P 500 index have at least two female directors, and more than two-thirds (72%) have three or more female directors. In contrast, 66% of industrial boards have three or more women directors. Sixteen S&P 500 boards are composed of at least 50% women, including two industrial boards.
New independent director backgrounds
Sixty-three companies — 62% of the surveyed S&P 500 industrial companies — added at least one independent director over the past year. Appointees averaged 58.9 years of age, one year older than the 57.5 average for all independent directors joining S&P 500 boards. First-time directors represented 37% of independent directors joining industrial boards, compared to a 35% overall average for the S&P 500.
Directors from underrepresented communities constitute 68% of the 115 independent directors joining industrial boards over the past year, compared to 72% of directors joining S&P 500 boards. Industrial boards appointed the lowest percentage of women (36% of the sector’s incoming class of independent directors) of all sectors.
Diversity of Independent Directors Joining Industrial Boards
Just under half (49%) of the independent directors joining industrial boards are actively employed, compared to 56% of independent directors joining S&P 500 boards. Industrial boards appointed the highest percentage of division/subsidiary leaders and the second highest of accountants of all sectors.
New Independent Director Functional Backgrounds
|
2021 Industrials |
2021 S&P 500 |
CEOs |
23% |
22% |
Active |
11% |
12% |
Retired |
12% |
10% |
Chairs / presidents / COOs |
3% |
4% |
Active |
1% |
2% |
Retired |
3% |
2% |
Line / functional leaders |
14% |
21% |
Division / subsidiary leaders |
19% |
12% |
Finance / accounting executives |
28% |
27% |
Financial executives / CFOs / treasurers |
14% |
13% |
Investment managers / investors |
3% |
8% |
Bankers / investment bankers |
2% |
3% |
Public accounting executives |
9% |
3% |
Academics / nonprofit executives |
3% |
4% |
Consultants |
1% |
1% |
Legal |
3% |
4% |
Others |
6% |
5% |
Board leadership
The chair and CEO roles are separated at 50% of industrial boards — below the 59% average for the S&P 500 index as a whole. Executive chairs are in place at 15% of industrial boards, matching the 15% for the S&P 500. Independent directors chair 33% of industrial boards (compared to 37% of the S&P 500), while 71% of industrial boards have an independent lead director (compared to 70% of the S&P 500).
Board organization and process
Compared to the S&P 500 index overall, industrial boards and their committees tend to meet less frequently than the S&P 500 average.
Board Organization and Process
|
2021 Industrials |
2021 S&P 500 |
Classified board |
13% |
10% |
Board meetings (avg #) |
8.2 |
9.4 |
Board committees (avg #) |
4.1 |
4.2 |
Audit committee |
|
|
Size (avg #) |
4.7 |
4.5 |
Meetings (avg #) |
7.6 |
8.4 |
Compensation committee |
|
|
Size (avg #) |
4.7 |
4.3 |
Meetings (avg #) |
5.8 |
6.2 |
Nominating / governance committee |
|
|
Size (avg #) |
4.8 |
4.4 |
Meetings (avg #) |
4.5 |
4.7 |
Mandatory retirement |
85% |
70% |
Retirement age (avg) |
73.9 |
73.7 |
Editor’s Note: The data in this report is taken from the 2021 U.S. Spencer Stuart Board Index which is based on our analysis of the most recent proxy reports from the S&P 500. The 2021 edition of the index draws on the latest DEF14A proxy statements from 493 companies filed with the SEC between May 28, 2020, and May 13, 2021.
Data in tables and charts may not total 100% due to rounding.
Industrial Sector Companies
3M Company
A. O. Smith Corporation
Air Products & Chemicals
Alaska Air Group
Albemarle Corporation
Allegion Public Limited Company
Amcor
American Airlines Group
AMETEK
Avery Dennison Corporation
Ball Corporation
C.H. Robinson Worldwide
Carrier Global Corporation
Caterpillar
Celanese Corporation
Cintas Corporation
Copart
Corteva
CSX Corporation
Cummins
Deere & Company
Delta Air Lines
Dover Corporation
Dow
DuPont de Nemours
Eastman Chemical Company
Eaton Corporation
Ecolab
Emerson Electric Company
Equifax
Expeditors International of Washington
Fastenal Company
FedEx Corporation
FMC Corporation
Fortive Corporation
Fortune Brands Home & Security
Freeport-McMoRan
Generac Holdings
General Dynamics Corporation
General Electric Company
Honeywell International
Howmet Aerospace
Huntington Ingalls Industries
IDEX Corporation
IHS Markit
Illinois Tool Works
Ingersoll-Rand
International Flavors & Fragrances
International Paper Company
J.B. Hunt Transport Services
Jacobs Engineering Group
Johnson Controls International
Kansas City Southern
L3Harris Technologies
Leidos Holdings
Linde plc
Lockheed Martin Corporation
LyondellBasell Industries N.V.
Martin Marietta Materials
Masco Corporation
Newmont Corporation
Nielsen Holdings plc
Norfolk Southern Corporation
Northrop Grumman Corporation
Nucor Corporation
Old Dominion Freight Line
Otis Worldwide Corporation
PACCAR
Packaging Corporation of America
Parker-Hannifin Corporation
Pentair plc
PPG Industries
Quanta Services
Raytheon Technologies Corporation
Republic Services
Robert Half International
Rockwell Automation
Rollins
Roper Technologies
Sealed Air Corporation
Snap-on
Southwest Airlines Co.
Stanley Black & Decker
Teledyne Technologies
Textron
The Boeing Company
The Mosaic Company
The Sherwin-Williams Company
Trane Technologies
TransDigm Group
Union Pacific Corporation
United Airlines Holdings
United Parcel Service
United Rentals
Verisk Analytics
Vulcan Materials
W.W. Grainger
Waste Management
Westinghouse Air Brake Technologies Corporation
WestRock Company
Xylem