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2016 Spencer Stuart Board Index Reveals Women Gain Seats in the Boardroom

Slight decline in the number of new independent directors offset by increased representation of women on public boards

[NEW YORK] - Nov. 17, 2016 - In the 2016 proxy year, despite a small decline in the number of new independent directors elected to S&P 500 boards, the representation of women among new directors hit a new high, according to the 2016 Spencer Stuart Board Index (SSBI). Women account for 32% of new directors, the highest rate since Spencer Stuart began tracking this data. A total of 345 new independent directors, or 7% of all directors, were elected during the 2016 proxy year to the 482 boards included in the index, and 48% of these boards added at least one new director. In 2015, 486 S&P 500 boards added 376 new directors. Nearly one-third (32%) of the new independent directors are serving on their first outside corporate board.

With the rise of shareholder activism, there also was an increase in investors and investment managers joining corporate boards. This year, 12% of new independent directors are investors, compared with 4% in 2011 and 6% in 2006.

“The increase in investors as directors reflects a larger trend toward shareholder activism and increased attention to governance,” said Julie Hembrock Daum, who leads Spencer Stuart’s North American Board Practice. “Long-term investors are increasingly demonstrating common ground with activists on governance topics and becoming more vocal in demanding that boards have processes in place to review and evolve board composition in light of emerging needs.”

Boards continue to feel pressure to separate the chair and CEO roles and name an independent chairman. Forty-eight percent of S&P 500 boards have split the chair and CEO roles between people, and 27% have a truly independent chair. In a governance survey that is part of the SSBI study, 12% of respondents said their board within the last proxy year has separated the roles of chairman and CEO, and 33% said their board has discussed whether to split the roles within the next five years. The most common form of independent board leadership is a lead or presiding director: 87% of S&P 500 boards report having a lead or presiding director, nearly all of whom (98%) are identified by name in the proxy.

In response to investor interest in board leadership structure, more boards are discussing their leadership structure in their proxies, explaining the rationale for maintaining a combined chair/CEO role and delineating the responsibilities of the lead director. Among lead director responsibilities boards highlight: Approving the agenda for board meetings, calling meetings and executive sessions of independent directors, presiding over executive sessions, providing board feedback to the CEO following executive sessions, leading the performance evaluation of the CEO and the board assessment, and meeting with major shareholders or other external parties. Some proxies include a letter to shareholders from the lead independent director.

Spencer Stuart researched its annual Board Index report by analyzing all proxies from S&P 500 companies that were filed by May 15, 2016, and conducting a separate survey of corporate secretaries, which received 96 responses in the second quarter of 2016.

The full 2016 SSBI report will be released in late November and will be available on the Spencer Stuart web site:

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Jim Horton
Marston Strategic Communications LLC
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