Spencer Stuart recently previewed their annual public board governance analysis in the November 2011 Harvard Business Review, comparing board demographics in 1987 and 2011. Some highlights and my thoughts on the implications:
* Directors are older: boards whose average director age is 64 or older: 1987, 3%; 2011 37% . This may have as much to do with director liability issues as it does with the increased oversight responsibilities associated with being a public company director. It takes more time to be a public company director– more formal meetings, more preparation, and more informal consultation. Older directors have more time and also have the flexibility to accept the liability risks as their other corporate responsibilities diminish.
* Director compensation is up: average board retainer plus meeting fees per director: 1987: $36,667; 2011 $95,262. The 1987 figure equates to $69,428 in 2010 inflation- adjusted dollars, or a real increase in director compensation of 38%.
*Smaller is better: public company boards with 12 or fewer members: 1987: 22%; 2011 83%. In my view, this is one of the most positive trends among public boards, as smaller groups generally work together more cohesively than larger groups and larger boards are most often dominated by smaller groups within them– sometimes formally, most times de facto.
* More independent directors: the independence rules have become more clearly defined, with Sarbanes Oxley’s passage in ’02 driving the trend. 1987:68%; 2011: 84%. Having more independent directors, however, does not necessarily correlate to having a more effective board– let’s not forget models of director independence, such as Tyco and Enron, that were emblematic of poor board governance.
* Still dominated by white males: in 2011, 9% of boards have no female directrs, 16.2% of corporate directors are women, and 15.3% of directors at the top 200 companies are African-american, Hispanic, or Asian.