2020 Spencer Stuart Real Estate Sector Snapshot

Real estate company boards in the S&P 500 — a group of 31 companies — tend to be older and longer tenured than S&P 500 boards.

• The average age of independent directors on real estate boards is 64.4, higher than the S&P 500 average of 63.0 and the second highest of all S&P 500 primary sectors.
• The youngest average age of a real estate board is 59.1 years and the oldest is 70.0.
• Real estate boards average 10.3 members, slightly below the 10.7 director average for S&P 500 company boards.
• Independent directors represent 83% of all directors on real estate boards, below the 85% average for the S&P 500 universe.
• The average tenure of independent directors on real estate boards is 9.5 years, longer than the S&P 500 average of 7.9 years and the longest of all S&P 500 primary sectors.
• The longest-tenured real estate board is 17.8 years.

Diversity

Gender diversity of real estate boards matches the S&P 500 universe, with women representing 28% of all real estate board members in 2020, the same as the S&P 500 overall.

Every S&P 500 company 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 companies have three or more female directors. In contrast, all real estate companies have at least two female directors, and, consistent with the S&P 500, two-thirds (68%) have three or more women. Thirteen S&P 500 boards are composed of at least 50% women; two real estate boards are 50% women.

Representation of Women Directors on Real Estate Boards

New independent director backgrounds

Eighteen real estate companies — 58% of the surveyed group — added at least one director over the past year. Appointees averaged 55.4 years of age, the youngest of all S&P 500 primary sectors. First-time directors represented 41% of directors joining real estate boards in 2020 — significantly higher than the 28% overall average for the S&P 500 and the second highest percentage of S&P primary sectors.

Real estate companies appear to be prioritizing gender diversity with their director appointments. Diverse directors (women and minority men) represented 64% of the 22 directors joining real estate boards over the past year, the second highest percentage of all S&P 500 primary sectors. Of those joining real estate boards in 2020, 59% are women — the highest percentage of all S&P 500 primary sectors. Only 5% are minority men, the lowest percentage of all S&P 500 primary sectors. In comparison 59% of directors joining the S&P 500 index are diverse, including 47% women and 12% minority men.

Similar to the S&P 500 incoming class, 50% of the directors joining real estate boards are actively employed. The profile of independent directors joining real estate boards in 2020 differs from the S&P 500 index, with 32% having line/functional backgrounds, the highest of all S&P 500 primary sectors, and no directors having chair/president/COO experience.

Most (88%) independent directors joining real estate boards over the past year have the following backgrounds: functional unit heads (32%); financial executives (32%); and current or former CEOs (23%).

Board leadership

Sixty-one percent (61%) of real estate companies in the S&P 500 index separate the chair and CEO roles, versus 55% of all S&P 500 boards. Independent chairs are in place at 35% of real estate companies and 34% of all S&P 500 index companies. Eighty-one percent (81%) of all real estate companies have an independent lead or presiding director — the second highest percentage of all S&P 500 primary sectors and higher than the 73% average of the S&P 500.

Board organization and process

As detailed below, real estate boards meet less frequently than the S&P 500 index. Only 3% of real estate companies have staggered, three-year terms for directors, the lowest percentage of all primary sectors. In contrast, 10% of S&P 500 companies have classified boards. While 70% of S&P 500 boards have adopted mandatory retirement policies, only 45% of real estate boards have adopted age limits for directors, the second lowest percentage of all S&P 500 primary sectors.

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

Real Estate Sector Companies