Skip to content

29 March, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • net zero plans

      Investors seek commitment to net zero planning

      Climate change campaigning investors have written to 107 companies, asking for prompt proof of net...

    • Mars ESG News round-up: this week in governance

      Mars CEO defends ESG and purpose; US president vetoes anti-ESG bill; trust can negatively affect...

    • ChatGPT technology Could ChatGPT technology join the board?

      Although governance may stop artificial intelligence replacing anyone on the board today, AI may soon...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • non-compete clause

      When employees become the competition

      How might you be affected by a global move towards the banning of employment contract...

    • data decision

      How to boost decision making

      Innovative digital tools can help boards to deliver against strategic objectives, but it is the...

    • remote working

      Navigating the new world of work

      Firms need to focus on building an inclusive environment and a culture of trust to...

  • Comment
      • View all
    • uncertainty in 2023

      Being a CEO in 2023: how to navigate uncertainty

      Agility, planning in the shorter term and bravery will all stand chief executives in good...

    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • life sciences podcast Reform of NHS levy ‘harms UK competitiveness’

      Boards in the pharmaceutical and life sciences sector face increasingly difficult decisions, according to a...

    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

  • Careers
      • View all
      • Selection
      • Board Moves
    • female ceo Less than a third of FTSE 100 executives are women

      In Europe as a whole, only 7.7% of top companies’ chief executives are female, gender...

    • board size Performance declines as boards grow in size

      Researchers found that investment dropped by 2-3 percentage points as companies passed from 12 to...

    • Silicon Valley governance Silicon Valley improves its governance

      Big technology companies are stealing a march over other top corporates when it comes to...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Diligent report

      Forrester: The Total Economic Impact Of Diligent Board & Leadership Collaboration

      Diligent Board Leadership & Collaboration reduced the risk of confidential material loss, supported decision-making, and...

    • Gender diversity barometer

      Barometer of Gender Diversity in Governing Bodies in Europe

      The 2023 Barometer of Gender Diversity in Governing Bodies in Europe looks at the 16...

    • geopolitical risk airmic

      Navigating geopolitical risk

      Today, the future feels less secure, and optimism is more restrained. Taking decisions in an...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

US boards slow diversity with poor retirement policies

by Gavin Hinks on August 9, 2022

Only 6% of organisations have term limits for directors, and there is reluctance around mandatory retirement policies.

US boards diversity

Image: IvanGalashchuk/Shutterstock.com

US businesses may be storing up obstacles to making their boards more diverse—a major concern for shareholders—as they rein back on mandatory retirement policies.

Research by the Conference Board, a not-for-profit club of business leaders, has warned that the current frequency of electing new board members means companies, especially those in the S&P 500, will face “challenges in increasing the diversity of backgrounds, skills and professional experience on their boards if they continue to elect new directors at the current rate”.

Though the Black Lives Matter protests and movement have had a significant impact on US corporate culture, the Conference Board research reveals the proportion of newly elected directors each year has been at 9% since 2018 in the S&P 500. The Russell 3000 has moved from 9% in 2018 to 11% in July 2022.

The slow churn is exacerbated by retirement policies. Very few companies have term limits—only 6% of the S&P, according to the research—while companies appear to be moving away from mandatory retirement age policies. In the S&P, 70% of companies had an age-based retirement policy in 2018, which has now shrunk to 67%. The Russell 3000 has gone from 40% to 36%.

Companies also seem to be raising retirement age. The share of S&P 500 outfits with a retirement age of 75 rose from 39% in 2018 to 49% this year. The Russell 3000 has gone from 42% to 52%.

Not too good at goodbyes

According to Merel Spierings, author of the Conference Board report, boards have a number of mechanisms available to trigger board turnover, including mandatory retirement age and term limits.

“Most importantly—and what doesn’t get emphasised enough—boards can promote a culture of board refreshment, in which there is no stigma associated with rotating off a board member before one is officially required to leave,” she writes.

The proportion of boards with policies for mandatory retirement based on tenure has seen little change, another impediment to turnover.

Meanwhile, more companies are ordering mandatory board evaluations. The Conference Board found 52% of S&P companies conduct a combined “full board, committee and director” evaluations, up on 37% in 2018.

Board resolution

According to Rich Fields, a board effectiveness expert with Russell Reynolds, evaluations can open up discussions about “often ignored” and “challenging” subjects.

“More importantly, these practices—which the latest data show are gaining popularity—can help boards not just talk about difficult issues, but resolve them, leading to more effective and enjoyable board service.”

Boardroom diversity has become a key issue for many observers. In January last year, the World Economic Forum made it a campaign issue, pointing out that just 1% of Fortune 500 companies were led by black chief executives.

In May last year, research by ISS, the shareholder advisory group, showed that a third of all the directors appointed in the previous 12 months were black, versus 11% in the previous year.

Investors are concerned about diversity in the boardroom in the wake of social crises in the US. Regulators are also about to impose new mandatory climate-risk reporting rules, which will demand new skillsets. US companies may yet need to review their approach to board recruitment.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • Diversity statements are not all ‘cheap talk’, finds study
    September 22, 2022
    George Floyd diversity

    After the murder of George Floyd, many US companies committed to increasing diversity—and some have backed up their words with action.

  • Women take 54% of FTSE 350 board roles but fail to win 'top jobs'
    May 30, 2022
    A group of directors in a boardroom

    Just 19% of chair, chief executive, chief financial officer or senior independent director roles went to women in 2021.

  • Why D&I should top the board agenda
    September 12, 2022
    diversity and inclusion

    If diversity and inclusion (D&I) is not the first item on your post-holiday to-do list, then now is a good time to reflect and ask why.

  • Law experts defend Nasdaq in board diversity battle
    September 27, 2022
    Nasdaq diversity

    US academics point out that the proposed new requirements relate only to reporting and disclosure, not quotas.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

black lives matter, Board composition, board diversity, board effectiveness, board expertise, boardroom diversity, diversity & inclusion, gender diversity, ISS, mandatory retirement, Russell 3000, S&P 500, The Conference Board, US, US boards, women on boards

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Could ChatGPT technology join the board?
  • Larry Fink puts focus on finance and inflation
  • Call for FTSE 100 companies to give guidance on ethics
  • News round-up: this week in governance
  • ESG resilience requires leaders to manage without certainty

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|