BOARD STRUCTURE

DATA SPOTLIGHT

David F. Larcker and Brian Tayan

Corporate Governance Research Initiative
Stanford Graduate School of Business
NUMBER OF DIRECTORS

There are approximately 40,000 directors of publicly traded companies in the U.S.

2009 2010 2011 2012

Number of firms 4,650 4,972 4,624 4,249

Number of directors 42,642 45,242 42,557 39,547

Data from Equilar; calculations by the authors
NEW DIRECTOR BACKGROUNDS

Directors have a diverse set of executive, financial, and other experience.

Spencer Stuart Board Index (2017)

WISH LIST FOR DIRECTOR BACKGROUNDS
Boards are looking to add directors with broad skills and leadership expertise.
Diversity candidates are very important.

Spencer Stuart Board Index (2017)

DIRECTORS WITH CEO EXPERIENCE

Directors who are active CEOs are being replaced by retired CEOs and directors with
other corporate executive experience.

Spencer Stuart Board Index

FEMALE DIRECTORS

The average percentage of female directors on boards is low, but growing.

Spencer Stuart Board Index

FEMALE DIRECTORS
Still, the U.S. lags many developed nations in female board representation
Country % Female Country % Female
Norway 42% Ireland 20%
France 41% Austria 19%
Sweden 38% Greece 18%
Italy 36% India 14%
Finland 34% Singapore 13%
Belgium 30% Thailand 12%
Australia 29% Hong Kong 11%
United Kingdom 27% Poland 11%
Canada 26% Turkey 11%
Spain 24% China 10%
Denmark 24% Taiwan 10%
Israel 23% Brazil 8%
Netherlands 22% Chile 8%
United States 22% Mexico 8%
South Africa 21% Russia 7%
Switzerland 21% Japan 5%
Germany 21% Indonesia 3%
Malaysia 20% South Korea 2%
MSCI (2017)
DIRECTOR COMPENSATION

Director compensation varies with company size.

Mix of pay (cash vs. equity) does not.

Equilar, S&P 1500 Board Profile Committee Fees (2013)

DIRECTOR COMMITTEE FEES

Audit committee members receive larger annual retainers than

other committee members.

Equilar, S&P 1500 Board Profile Committee Fees (2013)

STAGGERED (CLASSIFIED) BOARDS

The number of companies with a staggered board structure has declined.

SharkRepellant
BOARD INDEPENDENCE

Boards have become (modestly) more independent over time.

Spencer Stuart Board Index

BOARD CHAIRMAN

Companies have gradually moved to separate the chairman and CEO roles.

Spencer Stuart Board Index

SEPARATING CHAIRMAN AND CEO

Companies primarily separate chairman and CEO roles during a succession event,
often on a temporary basis.

Larcker and Tayan (2016)

COMBINING CHAIRMAN AND CEO

However, companies also often combine the two roles as part of a succession.

Larcker and Tayan (2016)

“BUSY” DIRECTORS

Fewer than 10% of directors are considered “busy”—defined as serving on three or

more public company boards at the same time.

Number of Directorships Directors %

Seven or more 10 0.0%

Six 23 0.1%

Five 119 0.3% Potentially “busy”

directors
Four 464 1.2%

Three 1,794 4.5%

Two 6,035 15.3%

One 31,102 78.6%

Total unique directors 39,547 100.0%

Data from Equilar; calculations by the authors

DISTRIBUTION OF COMMITTEE WORKLOAD
Are directors who sit on multiple high-work committees also too “busy”?...

2002 2007 2012

Audit committee size 3.6 3.8 3.7

Compensation committee size 3.5 3.8 3.7

Nominating/Governance committee size 3.8 3.8 3.7

Overlap audit and compensation committees 1.7 1.7 1.4

All compensation on audit committee 18% 13% 9%

All audit on compensation committee 14% 13% 9%

Same directors on audit and compensation 10% 8% 6%

Audit chair on compensation committee 36% 39% 32%

Compensation chair on audit committee 32% 42% 35%

Same directors on audit, comp, and nom/gov 4% 6% 4%

Larcker, Tayan, and Zhu (2014)

AUDIT AND COMPENSATION COMMITTEE OVERLAP

… or do overlaps help to share knowledge across committees?

Larcker, Tayan, and Zhu (2014)

BIBLIOGRAPHY

Note: Data varies across sources depending on the attributes of the companies included in the sample, such as size and industry.

Equilar directorship data. Fiscal year ending June 2012 to May 2013.

Equilar. S&P 1500 Board Profile Committee Fees: Parts 1 and 2. 2013.

David F. Larcker and Brian Tayan. Chairman and CEO: The Controversy over Board Leadership. June 24, 2016. Stanford Closer Look
Series.

David F. Larcker, Brian Tayan, and Christina Zhu. A Meeting of the Minds: How Do Companies Distribute Knowledge and Workload
across Board Committees? December 8, 2014. Stanford Closer Look Series.

MSCI. Women on Boards: Progress Report 2017. December 2017.

NACD. Public Company Governance Survey. 2014.

SharkRepellent, FactSet Research Systems, Inc. S&P 1500 Staggered (Classified) Board Trend Analysis 1999-Present. 2018.

Spencer Stuart. Spencer Stuart U.S. Board Index. 2007-2017.