Independent Directors Are Two Years Older Than a Decade Ago
- The average age of S&P 500 independent directors is 63.1, two years older than the 2007 average of 61.0. In that same period, the median age increased from 61 to 64.
- S&P 500 independent directors range in age from 28 to 92. Nearly half (49%) are 60 to 69 years old, and 19% are 70 to 79. 4% of directors are younger than 50.
- The majority of boards have an average age in the 60s: 45% of boards have an average age of 60 to 63, and 39% have an average age of 64 and older. 12 boards have an average age of 70 or greater.
Ages of Independent Directors
Breakdown by Average Age
Female Representation on Boards Rises To 22%
- Women now constitute 22% of all S&P 500 directors, increasing from 17% in 2012 and 16% in 2007. On average, boards have 2.4 female directors, compared with 1.7 in 2012.
- 80% of boards include two or more women, which represents a significant increase over the past decade. The number of boards with two or more female directors was 61% in 2012 and 55% in 2007. 27% of boards include three women directors, compared with 15% of boards in 2007.
- As of our May 19, 2017, cut-off date, 31 S&P 500 companies had a woman serving as CEO, compared with 24 in 2016. Female CEOs now represent 6.2% of S&P 500 chief executives, the most ever. This compares with 4.1% in 2012 and 3.1% in 2007.
- Companies led by women tend to have more female board directors than those led by men: 33% of directors on boards of companies with a female CEO are women, versus 22% for companies with a male CEO. When the female CEO is excluded, however, the gap narrows: 26% of the remaining directors are women.
- Four boards have no female directors, two in the technology sector, one in healthcare and one in industrials.
Video: Board composition highlights
A DEEPER LOOK: Board diversity at the top 200 companies
Small increase in minority representation since last year
- Despite increased attention to the topic of board diversity, minority representation (defined as men and women who are African-American, Asian or Hispanic/Latino) is only slowly increasing on the top 200 S&P 500 boards (by annual revenue). The percentage of minority directors on the boards of these 200 companies rose slightly to 17% from 16% last year. Ninety percent (90%) of the top 200 companies have at least one minority director.
- Representation of African-American and Hispanic/Latino directors at the top 200 S&P 500 companies has not significantly changed over the past five to 10 years.
- 8.9% of directors are African-American, compared with 8.7% in 2012 and 9.1% in 2007. 76% of boards have at least one African-American director, a decline from 78% in 2007.
- 4.3% of directors are Hispanic/Latino, down from 4.6% in 2012 and up from 3.8% in 2007. 42% of boards today have at least one Hispanic/Latino director, a decline from 47% last year but more than in 2007 (35%).
- 3.4% of directors are Asian (including directors of Indian descent), versus 2% in 2016, and 33% of boards have one or more Asian directors. Year-over-year comparisons have been adjusted to reflect a methodology change to classify directors of Indian descent as Asian, consistent with U.S. Census Bureau methodology.
Minorities as % of Directors at Top 200 Boards*
Top 200 Boards with at Least One Minority Director
*Beginning 2017, Asian category includes individuals of Indian descent, consistent with U.S. Census Bureau methodology.
Few top 200 companies led by minorities
- As of our May 19, 2017, cut-off date, 18 of the top 200 S&P companies, 8.5%, were led by African-American, Hispanic/Latino or Asian CEOs, four more than in 2016.
- Some companies led by minority CEOs have more minority directors than other companies, while at other companies, the CEO is the only minority director. 23% of the directors of the companies with minority CEOs are minorities, compared with 16% of directors of companies with a non-minority CEO. Minority representation in the boardrooms of minority-led companies drops to 16% when the CEO is excluded.
Just over half of the top 200 companies have directors from outside the U.S.
- Just over half of the top 200 S&P 500 companies, 52%, have at least one non-U.S. director.
- A total of 171 directors of non-U.S. origin serve on the boards of the top 200 S&P 500 companies, accounting for 7.3% of all directors.
- International directors represent 39 different countries, but half of non-U.S. directors come from the following four countries: the U.K. (23%), Canada (11.5%), Germany (10%) and France (8%).
- Major U.S. companies are much less likely to have non-national directors on their boards than boards in other countries, especially in Europe. In Switzerland, for example, 61% of Swiss Market Index directors are non-nationals (Spencer Stuart 2017 Switzerland Board Index).
Fewer CEOs Serve on an Outside Public Company Board
- 37% of S&P 500 CEOs serve on at least one public company board in addition to their own board, a 14% decrease from 2016 and the lowest we have seen. In 2007, more than half of CEOs, 52%, served on at least one additional public board.
- 33% of CEOs serve on one public board, and 4% serve on two. CEOs serve on an average of 0.4 other corporate boards, compared with 0.8 in 2007.
Video: Board composition highlights
For the First Time, the Majority of Boards Split the Chair and CEO Roles
- 51% of S&P 500 boards split the chair and CEO roles between two individuals, compared with 48% last year. The trend toward separating the roles has been growing steadily for more than a decade. In 2007, 35% of boards divided the roles.
- 28% of boards, versus 27% in 2016, have a truly independent chair — a director who meets the applicable NYSE or NASDAQ rules for independence. The number of independent chairs has remained steady over the past several years, but a decade ago, just 13% of boards had independent chairs.
- 6% of board chairs are the former company CEO.
- Among the 106 boards where the chair is separate but not independent, 97 (92%) have identified a lead or presiding independent director.
Chair’s Relationship with the Company
More Than Half of Independent Chairs Are Retired Senior Executives
- 56% of the 137 independent chairs of S&P 500 companies are retired chairs, vice chairs, presidents or CEOs, compared with 51% last year. Only six independent chairs, or 4%, are active executives in a chair, vice chair, president or CEO role outside of their independent chair responsibility. This includes three private company CEOs, two public company CEOs and one chair of a public company.
- 13% of the independent chairs are investors or investment managers, and another 12% are financial executives and bankers/investment bankers.
- Independent chairs are three years older on average than their fellow directors: 66.4 versus 63.1.
- Nine women serve as independent chairs, 7% of all independent chairs.
Independent Chair Backgrounds
- Independent board chairs have an average tenure of 4.1 years. 58% have been in the role for three years or less, including 28% who have served as chair for one year or less. On the other end of the spectrum, 29% have served in their roles for six or more years.
- 85% of the independent chairs previously served as a director on the board before becoming chair, serving 7.9 years on average before moving into the chair role. Last year, 92% of independent chairs were on the board prior to becoming chair.
Independent Chair Tenure
Average: 4.1 years
N = 137 independent chairs
Most Boards Have a Lead or Presiding Director, But Numbers Declining
- 84% of S&P 500 boards report having an independent lead or presiding director; 2% of these boards rotate the role among independent directors or committee chairs.
- The number of lead and presiding directors has declined slightly over the past decade as more boards named independent chairs. 94% of S&P 500 boards had a lead or presiding director in 2007.
- Lead directors have become preferred over presiding directors during the past 10 years; of the 412 boards with one of these positions, 74% have lead directors and 26% have presiding directors, including those identified as “chair” of executive sessions; this compares with 40% and 60%, respectively, in 2007.
- 47% of the independent chairs are also named as the lead or presiding director. Another five boards report having a lead/presiding director in addition to the independent chair.
- Nine S&P 500 boards do not report having a form of independent board leadership — neither an independent chair nor a lead/presiding director. Often, this is a temporary situation during a leadership transition or restructuring.
Lead Versus Presiding Directors
- Among the 336 boards (82%) that disclosed how long their lead/presiding director has been serving in the role, the average tenure is 3.8 years. 29% have served in the role one year or less, 41% have served for two to four years, and 30% have been serving for five years or more. 9% have a tenure of 10 or more years.
- Retired CEOs, presidents and/or chairs are most likely to serve as a lead or presiding director; 48% of lead/presiding directors are retired senior executives. 12% are investors or investment managers, and another 11% are active or retired other corporate executives. Only 9% of lead/presiding directors are active CEOs, presidents and/or chairs.
Lead and Presiding Director Backgrounds*
N = 404 lead or presiding directors identified by name
*All active and retired unless where specifically stated.