Heidrick & Struggles' annual "Board Monitor" revealed – among other things - record-breaking increases in first-time and women directors across the 449 newly appointed Fortune 500 independent directors in 2021.
Key takeaways include:
- 45% of new seats were filled by female directors, an increase of 1% over the record-high set in 2019 and up 4% over last year.
- 43% of new directors had no prior public company board experience, compared to last year’s then-record-breaking 38%, reflecting a much greater percentage of C-level experience outside the traditional CEO/CFO/CFO experience more commonly associated with tenured directors.
- Consistent with evolving risk profiles and stakeholder focus, last year saw a marked increase in digital, cyber, and sustainability experience, as shown here:
Notably, new directors with sustainability experience differ from the new director profile generally, as follows:
- More CEO & CFO experience - Current or former CEO experience possessed by the new director class as a whole is 40%, compared to 52% for new directors with sustainability experience. Current or former CFO experience possessed by the new director class as a whole is 14%, compared to 19% for new directors with sustainability experience.
- More international experience - New directors with sustainability experience have more international experience (67%) than the new director group as a whole (59%)
- More retirees - 38% of the new director class as a whole consists of retired executives (62% active), compared to 44% of new directors with sustainability experience who are retired (notwithstanding the fact that there is no meaningful difference in the average age among the two groups).
- Less ethnically diverse - New directors with sustainability experience are less ethnically diverse than the new director class as a whole (61% white vs. 59% white for the new director class as a whole).
While 2021 did not illustrate much change in ethnic and racial diversity compared to the prior year (2021 findings shown below), dramatic shifts over the course of the past 13 years among Black/African American and Asian/Asian American directors are evident.
The percentages of new directors who identify as white declined from 86% in 2009 to 59% in 2021. The percentages of new directors who identified as Black/African American, Asian/Asian American, and Hispanic/Latinx, increased from 5%, 4%, and 5% in 2009 (respectively) to 26%, 9%, and 6% (respectively) in 2021.
See Heidrick & Struggles' release; “First-time Fortune 500 directors at all-time high, says report” (Pensions & Investments); “Appointment of women to Fortune 500 boards hits record high” (CFO Dive); and additional resources on our Board Composition, Board Diversity, and Board Refreshment pages.
This post first appeared in the weekly Society Alert!