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New directors

2023 UK Spencer Stuart Board Index

2023 Snapshot

 46 %

of new appointments were women

 31 %

of new appointments are first-timer listed company directors

 55 %

of new directors have a CEO or general management background

New directors

In the 12 months covered by this report, 222 new board members were appointed to the top 150 companies, representing a 15% board renewal rate.

The majority of new non-executive directors (68%) have a portfolio career, meaning they hold only NED roles. 64% of new NEDs have at least one other board role.

27% of new directors have a CEO background, 27% of new directors are a general manager/divisional CEO, and 24% have CFO backgrounds.

The average age of new NEDs is 58.8 years, compared with 60 years for all board members.

Similar to the wider group, 32% of new directors have previous executive experience in financial services. 29% of new directors have a consumer background, compared with 20% among all directors.

New directors on the board

FTSE 150 board composition vs. general population

Minority ethnic group
Our perspective — The flight to plc experience

Against a backdrop of unprecedented and destabilising events over the past 12 months, many boards have been opting for experienced and proven hands over new and more diverse talent. This year’s data has found that within the new cohort of non-executives appointed to the top 150 boards, minority ethnic, female and first-time non-executive directors were down 44%, 15%, and 30% respectively year-on-year.

Now that most boards have achieved and surpassed targets set for diversity, chairs are looking holistically at board composition to get the balance right between new and experienced directors (by definition, many new directors and particularly first-timers are less experienced in the plc world). Experience still counts for a lot in crisis situations, and today’s uncertain business context may explain an apparent flight to experience.

Boards are wise to hold on to experienced directors where they can, particularly those who have serve on multiple boards. However, the speed of change is such that staying on the board for the full nine-year term limit should not be the default for everyone. Arguably, non-executives are at their best after three years, yet in some instances, it can be in the board and an individual’s interests for a director to cycle off the board after a second term to make way for someone whose experience is more relevant to support the current strategy.

It is interesting to note that there has been a similar decline in the proportion of “next-generation directors” in the US. For more information, see the 2023 S&P 500 New Director and Diversity Snapshot from the 2023 U.S. Spencer Stuart Board Index.

New chairs

Twenty-two new chairs were appointed in the past year (representing a renewal rate of 15%).

  • Sixteen chairs had joined the board before their appointment (ten as chair designate, four as SID, and two as NED).
  • Three are first-time chairs: Alison Brittain (Dunelm), Srinivasan Venkatakrishnan (Endeavour Mining), and Dave Lewis (Haleon).
  • Four new chairs are women: Alison Brittain (Dunelm), Deanna Oppenheimer (IHG), Dorothy Thompson (Rotork), and Annette Court (WH Smith).
  • One identifies as minority ethnic: Srinivasan Venkatakrishnan (Endeavour Mining).

Newly appointed chairs are on average younger (62.4) than the wider group of chairs (65.2).

New executive directors on the board

13% (19) of CEOs were appointed in the past year. Three are women, and none have self-identified as having a minority ethnic background.

Of the 90% of boards with sitting CFOs, 16% (22) have been appointed in the past year. In this group, there are seven new women CFOs. One new male CFO self-identifies as minority ethnic. (At our cut-off date, five boards were in the process of making an appointment, eight did not have the CFO on the board, and two had no CFO.)

First-time NEDs

The proportion of first-timers among the new director cohort has dropped after a peak in 2022 (see chart below).

Out of 181 appointments 56 are first-time directors, compared with 71 out of 162 appointments in 2022. The proportion of women among first-time directors has declined from 54% in 2022 to 45%, whereas the proportion of foreign directors has remained the same at 48%.

52% of first-time directors are serving executives of another company, compared with 63% in 2022.

14% of first-time directors have declared that they have a minority ethnic background (five out of eight of whom are women).

This year’s cohort of first-time non-executive directors is, on average, younger than the 2022 group (54.7 vs 56.2), and 5.3 years younger than the average of all NEDs (60 years).

Proportion of newly appointed NEDs taking on a board role for the first time

The majority of first-time directors have experience in the same industry as their board (51%). The most common industry background among first-time directors is consumer (33%), followed by financial services (28%).

The most common functional background among first-time directors is general manager (32%), followed by CFO (21%) and CEO (14%).

Functional experience of new directors and first-timers