Chicago-based global executive search firm giant Spencer Stuart needs little introduction.
An iconic executive search firm
Iconic in the executive search and leadership consulting spaces, the firm took in over $450 million in revenue in 2019 and operates over 50 offices in some 30 countries. They also famously have recruited and assembled leadership teams for some of the best recognized brands in global industry, including AIG, Citigroup, Chrysler, General Motors, and other corporate heavyweights.
When the 2009 global recession forced the U.S. government into the unusual position of having to install directors and other personnel at bailed out companies, it was Spencer Stuart they turned to for seasoned guidance. As The Wall Street Journal reported at the time, Spencer Stuart quickly distinguished itself as the U.S. government’s “go-to recruiter.”
Its 2021 board insights
Last month, for the 36th consecutive year, Spencer Stuart has issued this report on board governance practices of S&P 500 companies. It is a report packed with important and telling findings about the direction of 500 of the largest U.S. companies.
Diversity in S&P 500 board recruiting
The first finding is a significant expansion in the diversity of S&P 500 directors. “Nearly half—47%–of the 456 new independent director class are from historically underrepresented racial and ethnic groups, and 43% are women, including 18% female Black/African American, Asian, Hispanic/Latina, American Indian/Alaska native or multiracial directors,” Spencer Stuart reports.
The growth of women on boards over the past decade is particularly notable. In 2011, 58% of S&P 500 companies had one or two women on their boards. This year’s report finds that the number of companies with one or two female directors has blossomed to 96%.
Incoming board members are actively employed
This report reveals other trends in corporate boards. In years past, for instance, the director role often was commonly held by retired executives. But this too is changing, Spencer Stuart finds. “56% of new directors today are actively employed,” they report.
Mandatory retirement age
In an effort to attract new talent at the director level, 70% of boards now report instituting a mandatory retirement age, though this retirement age has actually inched upwards compared to past years. Currently, over half, 51%, report a mandatory retirement age for directors age 75 or older.
Decoupling of CEO and Chair roles
Also evolving on U.S. boards: While large companies historically commonly combined the CEO and board chairman positions, this trend is increasingly less common with nearly six out of ten, 59%, of S&P 500 companies now splitting the two functions.
More board meetings
In an era where more is being expected of directors, two other findings are perhaps less surprising but notable. Boards met 9.4 times last year, up from 7.9 times in the year prior.
Board compensation stagnates
In exchange, however, director compensation also increased modestly, to $312,279 on average, a one percent increase over the year prior, Spencer Stuart reports.