The total number of board seats fell overall in the Fortune 500, as did the number of first-time board directors
The number of Fortune 500 board appointments increased in 2016 along with the percentage of board seats that turned over, according to the Heidrick & Struggles Board Monitor.
While board composition continues to be one of the more fiercely debated governance issues facing public companies, with proponents of diversity and experience both becoming more vocal, boards are getting better at refreshment, according to Jeffrey Sanders, Heidrick & Struggles’ vice chairman and co-managing director of the firm’s board and CEO practice.
There were 421 board appointments in the Fortune 500 last year, compared to 399 in 2015. Last year’s total is significantly above 348, the median number of board appointments since Heidrick & Struggles started collecting this data in 2009.
The total number of board seats overall fell from 4,698 in 2015 to 4,609 in 2016, meaning that 9 percent of board seats turned over in 2016. In 2015, 8.5 percent of board seats turned over.
‘We’re seeing boards do far more to make sure that their composition and the skillsets that they bring forward better reflect the strategy of their business and what is going to be required to effectively govern the business,’ Sanders says, speaking to IR Magazine in the video interview below.
Watch part one in our video series with Jeffrey Sanders below.
Two-thirds (66 percent) of board appointees last year were either former or sitting CEOs or CFOs, which represents a decrease of eight percentage points compared to last year.
Sanders suggests that this is to make room for new or underrepresented skills in the boardroom, singling out HR directors and general counsel as examples of roles that are being added.
There was also an increase in the number of appointees with digital and social media experience last year, as well as those with cyber or financial risk experience, according to Heidrick & Struggles’ research.
However, the number of first-time board members fell significantly compared to 2015. One in four appointees (25 percent) were first time board members, compared to the 36 percent of first-timers in 2015.
‘I would think about it [the boardroom] as having a blend,’ Sanders says. ‘Having some people that really bring governance and [who] know how to manage in a board setting. And then bringing fresh ideas and talent in to that group.’
The percentage share of female board appointments fell in 2016, the first time this has happened in seven years. Yet, the number of ethnically and racially diverse board members increased.
IR Magazine will explore the gender diversity trends in part two of this video series, out next Wednesday. Part three will look at ethnic and racial diversity.