Data through April 2024 shows a steady increase in demand for financial expertise climbing nine percentage points over the past decade.
NEW YORK, Sept. 26, 2024 -- Spencer Stuart, one of the world's leading executive search and leadership advisory firms, today released its 39th annual U.S. Board Index, finding that more than half (59%) of the 406 new independent directors appointed to S&P boards in 2024 had chief executive or financial expertise.
The report found that despite these new appointments, boardroom turnover remains low with the incoming class representing 8 percent of all directors. "Embracing a courageous and proactive approach to refreshment should be a top priority for all boards. To remain successful and mitigate risk in today's rapidly changing landscape, boards must undergo continuous refreshment to welcome a range of skills, experiences, and perspectives that address both the status quo of external influences and the evolving, unique needs of an organization," said Julie Hembrock Daum, co-leader of Spencer Stuart's North American Board and CEO Practice.
"Agility and adaptability will be key to this refreshment process, as sitting directors will need to strategically navigate uncertainty, identify and seize growth opportunities - and arguably most importantly - have the self-awareness to acknowledge when it's time to roll off the board and give way to the next generation."
The 2024 U.S. Spencer Stuart Board Index also uncovered an emphasis on functional leadership (16% of board appointments) over traditional P&L leadership (8% of board appointments this year dropping from 10% in 2023) indicating a preference for directors who bring deep, specialized expertise in areas critical for current business strategies, such as digital or technology transformation, customer engagement, and innovation.
Other top findings include:
- Younger and first-time directors are bringing new perspectives: Next-generation directors (those aged 50 or under) account for 14% of the incoming class, up from 11% in 2023. 34% of the incoming class are first-time directors, an increase from 31% last year.
- Boards maintain their focus on diversity: S&P 500 boardrooms reached a new diversity milestone with half of all directors identifying as female, and/or underrepresented minorities (Black/African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities) and/or LGBTQ+ (using the Nasdaq definition). Additionally, 58% of boards this year — up from 56% last year — reported the implementation of policies like the Rooney Rule to diversify their candidate pools.
- Representation of women on S&P 500 boards sees new high: Women now represent 34% of all S&P 500 directors, a historic high. This is a one percentage point increase from last year (33%) and an 79% increase in 10 years.
- Boards continue to use mandatory retirement as a refreshment tool: 69% of S&P 500 boards have a mandatory retirement age for directors, and more than half (57%) set the age cap at 75 or older. 73% of departing directors were on boards with a mandatory retirement age, and of those directors, one-third retired before reaching the mandatory age.
- More boards are separating the chair and CEO roles: This year marks the highest proportion of boards reporting that the chair and CEO roles are separate: 60%, up from 47% in 2014.
The U.S. Spencer Stuart Board Index reflects data up until April 30, 2024, which is the most up-to-date analysis of S&P 500 governance data available in the market. The findings included in the 2024 U.S. Spencer Stuart Board Index are based on the S&P 500 proxy statements filed between May 1, 2023, and April 30, 2024.
About Spencer Stuart
At Spencer Stuart, we know that leadership has never mattered more. We are trusted by organizations around the world to help them make the senior-level leadership decisions that have a lasting impact on their enterprises, on their stakeholders and the world around them. Through our executive search, board and leadership advisory services, we help build and enhance high-performing teams for select clients ranging from major multinationals to emerging companies to non-profit institutions.
Privately held since 1956, we focus on delivering knowledge, insight and results through the collaborative efforts of a team of experts — now spanning more than 70 offices, over 30 countries and more than 50 practice specialties. Boards and leaders consistently turn to Spencer Stuart to help address their evolving leadership needs in areas such as senior-level executive search, board recruitment, board effectiveness, succession planning, in-depth senior management assessment, employee engagement and many other facets of culture and organizational effectiveness, particularly in the context of the changing stakeholder expectations of business today. For more information on Spencer Stuart, please visit www.spencerstuart.com.
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