The Investor Responsibility Research Center (IRRC) Institute and Institutional Shareholders Services (ISS) recently issued a joint study titled “Board Refreshment Trends at S&P 1500 Firms,” which analyzes demographic trends from 2008 through 2016 for corporate boards of companies in the S&P 1500 Composite Index (“S&P 1500 Companies”). Highlights of the study include the following:
- Board Tenure. Director tenure is steadily rising. Average and median director tenure were 8.7 years and 7 years, respectively.
- Gender Tenure Gap. However, a notable gender tenure gap persists. Average tenure for female directors in 2016 was 6.4 years, compared to 9.2 years for male directors.
- Age of Directors. As of 2016, the average age of directors was 62.5 years old, which was the highest level during the study period.
- Widening of Gender Age Gap. Like tenure, the study found a notable age gap regarding gender. The average age of male directors was 63.1 years old, while the average age of female directors was 59.8 years old.
- Age Distribution. The number of “older” directors (i.e., those in their seventies and eighties) was the only age group to increase from 2008 through 2016 in headcount; as of 2016, this group occupied 20.4% of all board seats.
- Renewal and Retention Rates.
- Increase in New Directors. The rate of “new” directors nearly doubled from 2008 to 2016—in 2016, almost one out of every 10 directors had no prior board experience.
- Changes to Board Composition. For the first time since 2008, more than 50% of S&P 1500 Companies added at least one new director to their boards in 2015. From 2012 to 2016, the prevalence of “zero change” boards steadily decreased.
- Demographics of New Directors. From 2008 to 2016, women and persons aged 50 to 59 years old made up the majority of the incoming class of “new” directors.
- Ethnicity and Race.
- Slow, Steady, Increases in Gender Diversity. Gains in gender diversity were gradual among S&P 1500 Companies, as the number of female board members increased from 11.9% (in 2008) to 17.8% (in 2016). In 2008, 33% of all boards were all male—however, this number dropped to 13.8% in 2016.
- Low Minority Representation. As of 2016, minority directors filled slightly more than 10% of all board seats. While S&P 1500 Companies with larger capitalizations typically had at least one minority director, S&P 1500 Companies with smaller capitalizations typically had no minority representation.
A copy of the study is available at: https://irrcinstitute.org/wp-content/uploads/2017/01/IRRCI-Board-Refreshment-Trends-FINAL.pdf.