Board Structure: Data
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The document analyzes trends in corporate board structures and diversity among directors in the U.S., noting a decline in the number of companies with staggered board structures and a gradual increase in female representation on boards, though the U.S. still lags behind other nations. It highlights varying director compensation based on company size and documents the prevalence of busy directors serving on multiple boards. Lastly, the research suggests that overlaps in committee memberships may facilitate knowledge sharing, although they raise questions about directors' workload.
Board Structure: Data
- 1. David F. Larcker and Brian Tayan Corporate Governance Research Initiative Stanford Graduate School of Business BOARD STRUCTURE DATA SPOTLIGHT
- 2. NUMBER OF DIRECTORS There are approximately 40,000 directors of publicly traded companies in the U.S. 2009 2010 2011 2012 Number offirms 4,650 4,972 4,624 4,249 Number ofdirectors 42,642 45,242 42,557 39,547 Data from Equilar; calculations by the authors
- 3. NEW DIRECTOR BACKGROUNDS Directors have a diverse set of executive, financial, and other experience. Spencer Stuart Board Index (2017)
- 4. WISH LIST FOR DIRECTOR BACKGROUNDS Boards are looking to add directors with broad skills and leadership expertise. Diversity candidates are very important. Spencer Stuart Board Index (2017)
- 5. DIRECTORS WITH CEO EXPERIENCE Directors who are active CEOs are being replaced by retired CEOs and directors with other corporate executive experience. Spencer Stuart Board Index
- 6. FEMALE DIRECTORS Spencer Stuart Board Index The average percentage of female directors on boards is low, but growing.
- 7. FEMALE DIRECTORS MSCI (2017) Still, the U.S. lags many developed nations in female board representation Country % Female Country % Female Norway 42% Ireland 20% France 41% Austria 19% Sweden 38% Greece 18% Italy 36% India 14% Finland 34% Singapore 13% Belgium 30% Thailand 12% Australia 29% Hong Kong 11% United Kingdom 27% Poland 11% Canada 26% Turkey 11% Spain 24% China 10% Denmark 24% Taiwan 10% Israel 23% Brazil 8% Netherlands 22% Chile 8% United States 22% Mexico 8% South Africa 21% Russia 7% Switzerland 21% Japan 5% Germany 21% Indonesia 3% Malaysia 20% South Korea 2%
- 8. DIRECTOR COMPENSATION Equilar, S&P 1500 Board Profile Committee Fees (2013) Director compensation varies with company size. Mix of pay (cash vs. equity) does not.
- 9. DIRECTOR COMMITTEE FEES Audit committee members receive larger annual retainers than other committee members. Equilar, S&P 1500 Board Profile Committee Fees (2013)
- 10. STAGGERED (CLASSIFIED) BOARDS The number of companies with a staggered board structure has declined. SharkRepellant
- 11. BOARD INDEPENDENCE Boards have become (modestly) more independent over time. Spencer Stuart Board Index
- 12. BOARD CHAIRMAN Companies have gradually moved to separate the chairman and CEO roles. Spencer Stuart Board Index
- 13. SEPARATING CHAIRMAN AND CEO Companies primarily separate chairman and CEO roles during a succession event, often on a temporary basis. Larcker and Tayan (2016)
- 14. COMBINING CHAIRMAN AND CEO However, companies also often combine the two roles as part of a succession. Larcker and Tayan (2016)
- 15. “BUSY” DIRECTORS Number of Directorships Directors % Seven or more 10 0.0% Six 23 0.1% Five 119 0.3% Four 464 1.2% Three 1,794 4.5% Two 6,035 15.3% One 31,102 78.6% Total unique directors 39,547 100.0% Data from Equilar; calculations by the authors Fewer than 10% of directors are considered “busy”—defined as serving on three or more public company boards at the same time. Potentially “busy” directors
- 16. DISTRIBUTION OF COMMITTEE WORKLOAD 2002 2007 2012 Audit committee size 3.6 3.8 3.7 Compensation committee size 3.5 3.8 3.7 Nominating/Governance committee size 3.8 3.8 3.7 Overlap audit and compensation committees 1.7 1.7 1.4 All compensation on audit committee 18% 13% 9% All audit on compensation committee 14% 13% 9% Same directors on audit and compensation 10% 8% 6% Audit chair on compensation committee 36% 39% 32% Compensation chair on audit committee 32% 42% 35% Same directors on audit, comp, and nom/gov 4% 6% 4% Larcker, Tayan, and Zhu (2014) Are directors who sit on multiple high-work committees also too “busy”?...
- 17. AUDIT AND COMPENSATION COMMITTEE OVERLAP … or do overlaps help to share knowledge across committees? Larcker, Tayan, and Zhu (2014)
- 18. BIBLIOGRAPHY Note: Data varies across sources depending on the attributes of the companies included in the sample, such as size and industry. Equilar directorship data. Fiscal year ending June 2012 to May 2013. Equilar. S&P 1500 Board Profile Committee Fees: Parts 1 and 2. 2013. David F. Larcker and Brian Tayan. Chairman and CEO: The Controversy over Board Leadership. June 24, 2016. Stanford Closer Look Series. David F. Larcker, Brian Tayan, and Christina Zhu. A Meeting of the Minds: How Do Companies Distribute Knowledge and Workload across Board Committees? December 8, 2014. Stanford Closer Look Series. MSCI. Women on Boards: Progress Report 2017. December 2017. NACD. Public Company Governance Survey. 2014. SharkRepellent, FactSet Research Systems, Inc. S&P 1500 Staggered (Classified) Board Trend Analysis 1999-Present. 2018. Spencer Stuart. Spencer Stuart U.S. Board Index. 2007-2017.