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Companies in the S&P 500 index have added a record number of first-timers to their boards this year as they look beyond the traditional candidate pool of chief executive officers, according to a Nov. 2 analysis by executive search firm Spencer Stuart.
The research shows that incoming directors tend to be younger, more diverse, and more tech savvy than their peers.
Boards have typically sought out current or retired CEOs, who often have already sat on their own company’s board or another company’s board. “Many boards still think that’s the ideal director,” Julie Hembrock Daum, who leads Spencer Stuart’s North American Board Practice, told Bloomberg Law.
But the study found that the number of CEOs sitting on one or more S&P 500 boards besides their own has hit its lowest point in the past decade, while the number of incoming independent board members without any previous experience as a public company director has reached a record high of 45 percent.
Daum said part of it has to do with directors’ growing workload. “It’s also harder to be a CEO than it used to be,” she said.
Another factor is the recent push for different kinds of directors. Compared to more seasoned directors, those who are on their first board are more likely to be younger and actively employed, rather than retired. They also tend to have a background in technology, according to Spencer Stuart.
Incoming directors are more diverse, too. For the first time, slightly more than half of the nearly 400 new directors on S&P 500 boards are women, minorities, or both. “As soon as you take away the criteria of looking for an active CEO, you do open the boardroom up to more people,” Daum said.
The complete results of Spencer Stuart’s annual analysis will be released in mid-November.
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