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On US Corporate Boards, Business Strategy Experience Declines--Putting Directors at Greater Risk of Activism

NEW YORK, Oct. 3, 2023 /PRNewswire/ -- A new report reveals a red flag for corporate boards: At US public companies, the share of board directors who are reported as having business strategy experience has dropped significantly over the last five years. It declined from 70 percent in 2018 to 59 percent in 2023 in the S&P 500, and from 68 percent to 55 percent in the Russell 3000.

The decline in such experience among new directors was even more pronounced. In the S&P 500, business strategy experience declined from 66 percent in 2018 to 47 percent in 2023, which matched the decline in the Russell 3000 from 65 percent to 47 percent.

At the same time, companies are reporting higher levels of experience among directors in several ESG areas as compared to five years ago. 

"The decline in business strategy experience may reflect a combination of underreporting of such experience and a shift in director recruitment. Regardless of what's driving the trend, it's concerning. Having such experience is important in fulfilling the board's core responsibilities and in enabling directors to collaborate effectively and help keep shareholder activism at bay," said Merel Spierings, Senior Researcher at The Conference Board.

The Conference Board report was produced in collaboration with data analytics firm ESGAUGE, along with Debevoise & Plimpton; KPMG; Russell Reynolds Associates; and the John L. Weinberg Center for Corporate Governance. Informing the insights are 1) public disclosure data, as recent as August 2023; and 2) key insights from governance leaders at a Chatham House Rule convening, where they discussed current trends in corporate boardrooms.

Additional findings and insights include:

All Directors

As business strategy experience has declined, the share of directors with reported functional experience in ESG areas has increased:

New Directors

The share of new directors with reported functional experience in ESG areas has also increased:

"Investors and other observers are skeptical of directors claiming expertise on too many subjects. To avoid being accused of greenwashing the board, companies should ensure that their directors' self-disclosed qualifications can be substantiated," said Richard Fields, Head of the Board Effectiveness Practice at Russell Reynolds Associates. "Companies should validate that directors have significant?and preferably recent?experience disclosed in composition matrices."

As boards look to diversify professional experience, there's been a slight decrease in current and former CEOs serving on boards:

Average board size has barely increased in recent years:

"Companies should take a fresh look at their board size to ensure it allows for the needed range of experience, skills, and perspectives," said Umesh Chandra, Executive Director of ESGAUGE. "As board responsibilities continue to grow over the long term, boards should ensure that the board strikes the right balance between diversity of experience and thought, and efficient decision-making, and consider modestly increasing their size, as appropriate, to meet this balance."

About The Conference Board

The Conference Board is the member-driven think tank that delivers Trusted Insights for What's Aheadtm. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.ConferenceBoard.org

About Debevoise & Plimpton

Debevoise & Plimpton LLP is a premier law firm with market-leading practices, a global perspective and strong New York roots. We deliver effective solutions to our clients' most important legal challenges, applying clear commercial judgment and a distinctively collaborative approach. Our Corporate Governance Practice includes lawyers from our Capital Markets, Mergers & Acquisitions, Executive Compensation, Commercial Litigation and White Collar and Regulatory Defense teams?all with decades of experience counseling and representing boards and senior managers.


ESGAUGE is a data mining and analytics firm uniquely designed for the corporate practitioner and the professional service firm seeking customized information on US public companies. It focuses on disclosure of environmental, social, and governance (ESG) practices such as executive and director compensation, board practices, CEO and NEO profiles, proxy voting and shareholder activism, and CSR/sustainability disclosure. Our clients include business corporations, asset management firms, compensation consultants, law firms, accounting and audit firms, and investment companies. We also partner on research projects with think tanks, academic institutions, and the media. www.esgauge.com

About the KPMG Board Leadership Center

The KPMG Board Leadership Center (BLC) champions outstanding corporate governance to drive long-term value and enhance stakeholder confidence. Through an array of insights, perspectives, and programs, the BLC?which includes the KPMG Audit Committee Institute and close collaboration with other leading director organizations?promotes continuous education and improvement of public and private company governance. BLC engages with directors and business leaders on the critical issues driving board agendas?from strategy, risk, talent, and ESG, to data governance, audit quality, proxy trends, and more. Learn more at kpmg.com/us/blc

About Russell Reynolds Associates

Russell Reynolds Associates is a global leadership advisory firm. Our 600+ consultants in 47 offices work with public, private, and nonprofit organizations across all industries and regions. We help our clients build teams of transformational leaders who can meet today's challenges and anticipate the digital, economic, sustainability, and political trends that are reshaping the global business environment. From helping boards with their structure, culture, and effectiveness to identifying, assessing and defining the best leadership for organizations, our teams bring their decades of expertise to help clients address their most complex leadership issues. We exist to improve the way the world is led.

About Weinberg Center for Corporate Governance

The John L. Weinberg Center for Corporate Governance was established in 2000 at the University of Delaware and is part of the Lerner College of Business and Economics. It is one of the longest-standing corporate governance centers in academia, and the first and only corporate governance center in the State of Delaware, the legal home for a majority of the nation's public corporations. The Center's mission is to provide a forum for business leaders, members of corporate boards, stockholders, the judiciary, the legal community, academics, students, and others interested in corporate governance issues to interact, learn and teach, with the goal of positively impacting and improving the field of corporate governance and the capital markets.  The Center is recognized as a thought leader in the corporate governance field.


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