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Board composition

2020 UK Spencer Stuart Board Index

2020 Snapshot

 30 %

of boards comprise eight or fewer directors

 51 %

of new directors are women

 32 %

of new directors were joining a listed company board for the first time

New directors

In the 12-month period covered by this report (1 May 2019 to 30 April 2020) 203 new directors were appointed to the top FTSE 150 companies (14% of the total). Among the new non-executives, 51% were women (82), 43% (68) were non-nationals and 14% (24) were from black, Asian or minority ethnic (BAME) backgrounds.

53% (85) of new non-executive directors serve as executives in other companies; the rest have portfolio careers. 21% (34) of newly appointed directors sit on at least one other listed company boards.

Among newly appointed non-executives, there is a significant difference between men and women in terms of whether or not they have executive roles elsewhere. 56% of the new cohort of female non-executives currently have executive roles, whereas 44% have a portfolio career; among men the split is exactly the reverse.

Of the 16 new chairs, four were women (Christine Hodgson at Severn Trent, Irene Dorner at Taylor Wimpey, Ruth Cairnie at Babcock, Thérèse Esperdy at Imperial Brands), bringing the total number of female chairs in the top 150 companies to eight. One of the new chairs had previous experience leading the board of a quoted company. No female chairs had been appointed in the prior 12-month period.

Twelve women were appointed to executive director roles in the 12-month period of this survey, half of them CFOs.

Since our cut-off date, three new female chairs have been appointed: Danuta Gray at Direct Line, Gill Rider at Pennon Group and Inga Beale at Mediclinic.

Newly appointed directors (non-executive)
2020 2016
Women 51% 34%
Foreign 43% 41%
BAME 14% 8%
First-timers  32% 27%

First-time directors

Among the new directors, 32% (51) were joining the board of a listed company for the first time. This figure has remained fairly constant for the past four years. For the second year running, women account for more than half of first-time directors (57%, 29), whereas the proportion of non-nationals has dropped to 37% (19) from 52% in 2019. 17% (9) of new directors come from BAME backgrounds.

One-third (17) of first-time directors have a financial services background and 27% (14) are CEOs. Four first-timers were appointed to chair audit committees (each has an audit partner or CFO background).

Our perspective

For the second year in succession women accounted for half or more of all newly appointed non-executive directors. This is testament to the sustained change brought about by the Davies and Hampton-Alexander Reviews. There are also signs that the recommendations in the Parker Review are taking effect, with a growing number of new directors from BAME backgrounds. As more and more companies publicly embrace the Black Lives Matter movement we anticipate a sustained interest in building boards that better reflect the racial balance in UK society. Spencer Stuart has signed up to Change the Race Ratio — a campaign launched in October 2020 to increase racial and ethnic participation in British businesses.

The steady influx of first-time directors reflects the need for directors to avoid ‘overboarding’ and the drive for diversity, incorporating new expertise and perspectives in areas of strategic importance such as technology, customer insight and regulation.

Finding the Right Fit: Assessing First-Time Candidates for Non-Executive Directors

A framework to help boards determine the readiness of a new director.

Becoming a non-executive director

A guide for those considering a board directorship for the first time, expanded and updated.

Becoming a non-executive chair

A guide for directors who aspire to become chair of the board or are becoming a chair for the first time.

Board size

The average board size is 10.1, whereas it hovered at around 10.4 in the years following the financial crisis. The proportion of boards with eight or fewer directors has increased from 21% to 30% this year, partly due to the arrival of 17 new companies in the top 150 with an average of just 7.5 directors between them.

The two largest boards are TUI (20 directors) and Berkeley Group Holding (16 directors). The smallest boards at our cut-off were Trainline (5 directors), Bunzl, Games Workshop, Softcat, Primary Health Properties, Assura, Ashmore Group and Bellway (each with 6 directors). Companies with a primarily UK footprint tend to have smaller boards.

Twenty-nine boards have 10 or more non-executives (including chairs). Eleven boards have four or more executive directors. Seven executives sit on the board of Berkeley Group Holdings and six executives sit on the boards of Ocado and Derwent London.

80% of companies consider all their non-executives to be independent and 94% of all non-executives are classified as independent (this figure has not fluctuated over the past decade).

TUI conforms to the German corporate governance code and is the only company in our sample with employee representatives (of which there are 10; they are excluded from all statistics in this Board Index).

Our perspective

In their quest to have a wide range of expertise and diverse voices, boards have to balance the need to provide committee coverage with the advantages of efficiency and cohesion that come with a smaller group of directors. From our experience conducting board evaluations, it can be challenging for chairs to involve the whole board in open debate when there are more than 12 people around the table.

Length of service

The average tenure of non-executive directors has remained steady for more than a decade. The breakdown in the chart below shows that diverse board directors tend to have lower than average tenure. Most noticeably, 78% of BAME directors have been on their boards for less than three years.

The second chart shows that almost half of all chairs have been in their post for three years or less. 16 chairs have still been in post for more than nine years, despite the Corporate Governance Code requirement that chairs should not stay in position after sitting on the board for more than nine years.

Tenure among board directors

Non-executive directors

Tenure in years

All non-executive directors

4.2

Women

3.6

Men

4.6

BAME

2.3

Foreign nationals

3.8

Nationals

4.4

Chairs

Tenure in years

All chairs

4.5

Women

1.4

Men

4.6

Foreign nationals

4.2

Nationals

4.5

Executive chairs

12.5

Foreign directors are defined as being of different nationality from the company on whose board they sit.

Executives

Tenure in years

CEOs

5

CFOs

4.4

Chair tenure, compared with 2019

2020

2019

Number

Percentage

Number

Percentage

<3 years

73

49%

60

39%

3–6 years

37

25%

48

32%

6–9 years

24

16%

24

16%

>9 years

16

11%

20

13%

Age of directors

The average age of non-executive directors has increased slightly from 60 to 60.3, although the last year’s cohort of new non-executives averaged 56.3 years compared with 57.3 years in 2019.

The youngest board continues to be Just Eat Takeaway.com with an average of 54.4, and the oldest board is Renishaw with an average age of 69.

The boards of business and professional services firms are the youngest with an average age of 58.7 years, while healthcare boards are the oldest with an average of 63.9 years.

The table below provides detail of the gender age split by board role.

Average age of men and women on FTSE 150 boards