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The Spencer Stuart “Nominating/Governance Chair Survey” presents insights into the perspectives of nominating and governance committee chairs from S&P 500 and MidCap 400 companies.
Conducted in the first quarter of 2023, the survey delves into the evolving priorities and practices shaping board composition and effectiveness. Key findings include:
1. Board Composition and CEO Succession
The survey underscores a renewed focus on board composition and CEO succession. 56% of respondents highlighted board composition as a top priority, up from 37% in the previous year.
CEO succession planning closely follows, with 52% emphasizing its significance.
This reflects a growing recognition of the strategic importance of having the right skills and expertise in the boardroom to drive long-term success.
2. Financial Expertise
The survey indicates that financial expertise remains a core recruitment priority. With the Sarbanes-Oxley Act reaching its 20th year, the survey identifies the need for a new generation of financial experts on boards.
This year, 38% of respondents consider financial expertise a key focus.
3. Drivers of Board Refreshment
The survey reveals a shift in drivers of board refreshment. While mandatory retirement or term limits historically influenced refreshment, outcomes from board and director evaluations have gained prominence.
This year, 25.5% of respondents highlighted this approach, marking an increase from the previous year’s 14%.
4. Technology and Cyber Expertise
The survey indicates a growing demand for directors with technology backgrounds, despite a decrease in specific technology expertise demands from the previous year.
Respondents are now seeking digital and cyber expertise, reflecting the evolving nature of business and the need for tech-savvy leadership.
5. Diversity and Inclusion
The survey emphasizes the continued importance of diversity and inclusion.
While fewer respondents (19%) cited gender or racial/diversity as primary recruitment drivers compared to the previous year (37%), diversity remains a key consideration for building effective boards.
The survey suggests that nominating and governance committees are shifting toward more proactive and skill-oriented approaches to board composition.
This aligns with the evolving demands of modern business environments, where diverse skills, technological literacy, and a long-term perspective are essential.
The findings highlight a drive to create boards that are not only well-prepared for today’s challenges but also, for future uncertainties.