Characteristics of 2019’s Newly-Appointed Directors
A recent publication by ISS Analytics (ISS) examines the characteristics of directors who were newly-appointed at Russell 3000 companies in 2019 and concludes that, “The U.S. is experiencing a significant shift in the composition of corporate boards, as the market expects companies to address a new set of challenges and their boards to better reflect developments in society.”
Based on its review of directorships in the Russell 3000, ISS notes five major trends in new director appointments for 2019:
- Board renewal rates continue to increase, as board refreshment, director qualifications and board diversity remain high-priority issues for companies and investors.
- The percentage of women joining boards reached a new record high, with 45 percent of new Russell 3000 board seats filled by women in 2019 (compared to only 12 percent in 2008) and 19 percent of all Russell 3000 seats held by women.
- Ethnic diversity also reached record highs, but has grown at a much slower pace, with approximately 10 percent of Russell 3000 directors currently belonging to an ethnic minority group, while 15 percent of new directors are ethnically diverse.
- New director appointments focus on non-financial skill sets, with an increased proportion of directors having international experience, environmental, social and governance (ESG) expertise and background in human resources.
- The average director age continues to increase, as the appointment of younger directors is less frequent than in previous years, with only 7.2 percent of new directorships filled by directors younger than 45 years, compared to 11.5 percent of new directors in 2008.