The big picture in board recruiting
October 16, 2013
Today, the Korn/Ferry Institute published the 2013 Korn/Ferry Market Cap 100, our annual report on boardroom issues. This edition focuses on if and when to add directors with technology expertise. But we also took the opportunity to look at some other aspects of board membership, and how they are trending over time.
The 100 companies listed in the KFMC100 changes a bit each year, determined by the market capitalization of each companies. And each year, Each year, demographic trends tick up and down. But what we hope to gain by looking at this pool of high-value public companies is the big picture of what practices create sustainable growth for shareholders.
Looking back over the last three years, a few things stand out:
The number of seats held by women is rising, from 16.5 percent overall in 2010 to 20 percent in 2012. Looking ahead, 21 percent of new directors named to boards in so far in 2013 are female.
More and more directors have some government or public sector experience, up from 15 percent in 2010 to 18.4 percent last year.
Globalization falls short in the boardroom. Even among these huge multinational companies, only 10 percent of all directors are from nations other than the US. International work experience is most frequently found in independent directors, among whom the rate of expat work experience has ticked up from 26 to 27 percent in the last three years.
Independent directors are sticking around longer. The average tenure of independent directors has increased from 9.3 to 10.5 years. In contrast, CEO tenure has dropped from 7.5 to 6.4 years.
Directors are increasingly staying on past retirement age. Overall, the percentage of directors who were older than their board's stated retirement age increased from 2.7 percent in 2010 to 3.8 percent in 2012.
Turnover stays low. While the total number of new directors added to boards in 2012 was 113, up from 90 in 2012, that spike was caused by the IPO of Facebook and two companies that split and added multiple directors. Plenty of boards are sitting pat with their membership: 40 of the 100 KFMC companies added no new directors at all in 2012.