Spencer Stuart U.S. Board Index Finds S&P 500 Boardrooms Prioritizing CEO Experience and Financial Expertise

Appointments of active and retired executives with CEO experience in 2023 have returned to 2018 levels, reversing several years of decline. 

NEW YORK, Sept. 20, 2023 /PRNewswire/ -- Spencer Stuart, one of the world's leading executive search and leadership advisory firms, today released its 38^th annual U.S. Board Index, finding that more than half (57%) of the 388 new independent directors appointed to S&P boards in 2023 had chief executive or financial expertise.

The 2023 U.S. Spencer Stuart Board Index also found the recruitment of retired or active CEOs rose this year to 30%, up from 23% last year. Boards recruited more directors with financial backgrounds, accounting for 27% of new director appointments, up from 23% last year. This is in contrast with the previous four years, when boards were increasingly appointing functional and P&L leaders as directors.

Other top findings include:

• Boards maintain their focus on diversity: 67% of new independent directors and 48% of all S&P 500 directors are diverse, using the Nasdaq definition of directors who self-identify 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+.
• Representation of women on S&P 500 boards continues to rise: Nearly half of new directors (46%) are women. This is a 92% increase in the past decade. Women now represent 33% of all S&P 500 directors, the most ever, and a one percentage point increase over last year (32%) and an 83% increase in 10 years.
• More new directors have international experience. S&P 500 boards continue to strengthen their global outlook. Among new independent directors appointed in 2023, 54% have spent time working at an international location — a four-point increase from last year.
• 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 set the age cap at 75 or older. Just over half (51%) of directors leaving S&P 500 boards in the past year were three or fewer years from mandatory retirement age.  
• New directors are older on average than previous years — up from 57.3 years to 58 years. The percentages of next-generation (age 50 or younger) and first-time directors declined. The share of next-generation directors dropped more than a third from 10% to 6% of the incoming class of new directors; 31% of new directors are serving on their first public company board, down from 34% last year and 38% a decade ago.
• Boards are broadening their committee focus: 70% of boards have more than the three NYSE-mandated committees (audit, compensation and nominating or governance). In addition, finance and executive committees are the most common, found at 26% and 25% of companies, respectively. A growing number of boards also have a standalone science and technology committee: 15% compared with 9% five years ago.

"Facing an increasingly complex business environment and heightened demands, boards are focusing on their composition and taking a strategic approach to director appointments," said Julie Hembrock Daum, who leads Spencer Stuart's North American Board Practice. "They are being even more intentional about ensuring that their new directors have skills relevant to the company's future-looking strategies and risk, are expanding the CEO lens in the boardroom, and are enhancing their disclosures around the rationale for the mix of directors needed on boards."

The U.S. Spencer Stuart Board Index reflects data up until April 30, 2023, which is the most up-to-date analysis of S&P 500 governance data available in the market. The findings included in the 2023 U.S. Spencer Stuart Board Index are based on the S&P 500 proxy statements filed between May 1, 2022, and April 30, 2023.

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SOURCE Spencer Stuart