2018 United States
`Spencer Stuart
`Board Index
`
`2018 u.s. spencer stuart board index
`
`RPX Exhibit 1067
`RPX v. AIT
`IPR2015-01751
`1
`
`

`

`about spencer stuart board services
`spencer stuart perspective for 2018
`
`At Spencer Stuart, we know how much leadership matters. We are trusted by organizations around
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`
`Contents
`
`
`2018 u.s. spencer stuart board index
`
`1
`
` Spencer Stuart Perspective for 2018
`
`7 S&P 500 Boards: Trends over One, Five and 10 Years
`
`10 Board Composition
`10 New Independent Directors
`14 Board Size and Independence
`15 Term Length and Tenure
`16 Resignation Policies and Restrictions on Other Directorships
`17 Board Affiliations
`17 Term Limits
`18 Mandatory Retirement
`18 Average Age
`19 Board Diversity
`21 CEO Outside Board Service
`21 Separation of Board Chair and CEO Roles
`22 Independent Chair Backgrounds
`23 Lead and Presiding Directors
`
`24 Board Organization and Process
`24 Board Meetings
`25 Committee Structure and Independence
`26 Committee Meeting Frequency
`26 Committee Chair Backgrounds
`27 Board Evaluations
`
`28 Director Compensation
`28 Overall Director Compensation
`29 Board Retainers and Meeting Fees
`30 Stock Compensation
`31 Board Leadership Compensation
`31 Committee Compensation
`32 Averages by Industry, Region, Sales
`
`34 Nominating/Governance Committee Member Survey
`
`37 Comparative Board Data
`
`

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`header (section title) — (remove when section header present)
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`Spencer Stuart Perspective for 2018
`
`New faces are increasingly joining U.S. boardrooms. But the chronic low rate of director
`turnover is bringing about only gradual shifts in the overall complexion of U.S. boards.
`And the modest pace of change is likely to persist, yielding a continued incremental
`evolution of corporate boardrooms.
`
`Faced with a variety of forces — including an increasingly complex business
`environment with an unprecedented pace of change and disruption; a growing
`number and variety of business risks; and intensifying investor focus on the
`composition, diversity and quality of the boardroom — S&P 500 boards are
`gradually reshaping.
`
`Recognizing the strategic imperative for new perspectives and experience in the
`boardroom, boards are increasingly adding directors with backgrounds in tech,
`digital, consumer marketing and other areas of emerging importance. They are
`casting a wider and deeper net to identify director talent who are available and
`interested in taking on board roles.
`
`Experience as a CEO or on a public company board is no longer a must-have
`credential. One-third of the incoming class are serving on their first public
`company board, and only 35.5% of the new S&P 500 directors are active or retired
`CEOs and other CEO-level leaders, down significantly from a decade ago.
`
`Financial talent remains a priority. Boards continue to be more focused
`on recruiting financial experts with experience as CFOs/finance executives
`or investment professionals, and less interested in accounting and banking
`backgrounds. Tech savvy, “digital” directors are also in high demand,
`and boards are increasingly tapping younger, “next-gen” candidates
`with these skills.
`
`For the second consecutive year, women and minorities composed half of the
`incoming class of S&P 500 directors. But progress on the diversity front was
`mixed. Female directors made real strides, while male minorities saw their
`advancement in the boardroom slow. Ongoing low turnover in U.S. boardrooms
`continues to slow down the advancement of women and minorities on boards.
`
`Though the boardroom evolution is modest at an aggregate level, the
`2018 U.S. Spencer Stuart Board Index finds progress on many fronts. Here
`are highlights from our analysis.
`
`2018 u.s. spencer stuart board index
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`

`spencer stuart perspective for 2018
`
`428
`
`New independent directors
`
`40%
`
`New female directors
`
`boards are bringing in fresh skills,
`qualifications and perspectives
`Responding to rapidly changing business challenges, emerging
`risks and increasing attention to board composition and director
`relevance and quality by institutional and activist investors and other
`stakeholders, S&P 500 boards are adding directors with new skills,
`qualifications and perspectives.
`
`S&P 500 boards appointed 428 new directors during the 2018 proxy
`year, the most since 2004 and an increase of 8% from 2017. A majority
`(57%) added at least one new director; 22% appointed two or more
`directors. However, overall turnover remains modest; S&P 500 boards
`added 0.88 directors on average.
`
`New types of talent are joining S&P 500 boards. Nearly two-thirds
`(65%) of the incoming class come from outside the most senior
`board and company leadership roles. Only 35.5% of the new directors
`are CEO-level — active or retired CEOs, chairs, vice chairs, presidents
`or COOs — down from 47% a decade ago. Reflecting this shift, only
`45% of CEOs of S&P 500 companies are serving on one or more outside
`boards, a drop from 51% in 2008 but an increase from 37% last year.
`
`Public company boardroom experience is no longer a requirement.
`First-time directors represent 33% of the incoming class of S&P 500
`directors. Consistent with last year, these first-time directors are
`younger than their experienced peers and more likely to be actively
`employed (64% versus 53%). They are less likely to be at the CEO level,
`and more likely to have other executive experiences such as line or
`functional leadership. They are also more likely to be minorities.
`
`Financial skills are in high demand. More than a quarter (25.5%) of the
`incoming directors are financial experts, up from 18% in 2008. Eleven
`percent (11%) — nearly half of the financial professionals — are experi-
`enced CFOs/financial executives. In addition, directors with investing/
`investment management skills are increasingly joining S&P 500 boards.
`Ten percent (10%) of new directors bring an investor lens to the board-
`room, up from 4% a decade ago.
`
`Younger, tech savvy executives are also valued directors. Seventeen
`percent (17%) of the incoming class are age 50 and younger, up
`slightly from 16% last year. More than one-third of these next-gen
`directors have backgrounds in the tech/telecommunications sector.
`The challenge here is finding experts who have a broad business
`perspective as well as technical expertise. Nearly two-thirds of the
`next-gen directors are serving on their first public company board.
`More than half (53%) are women.
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`Boards appear to be again prioritizing active over retired executives.
`Reversing a decade-long decline, 56% of the incoming class are
`actively employed. Ten years ago 68% of directors were employed.
`
`As they evolve their board composition, a growing number of companies
`are voluntarily enhancing their disclosures to highlight the diversity of
`their boards and showcase how director skills and qualifications align
`with company strategies and risks. But only 30% of the surveyed S&P
`500 companies published a board matrix spotlighting the skills and
`qualifications of each director.
`
`17%
`
`Next-gen directors
`(50 years old and younger)
`
`progress in boardroom diversity is mixed
`For the second consecutive year, women and minorities represent half
`of the class of new S&P 500 directors. But progress is mixed. Women
`advanced, representing a record-breaking 40% of the incoming class
`(up from 36% last year). Minority women represent 9% of the new
`directors, up from 6% last year. Meanwhile, minority men (defined as
`African-American, Hispanic/Latino or Asian) experienced a slowdown
`(representing 10% of the incoming class, down from 14% last year).
`
`More than half of the new women directors were added to boards that
`expanded in size over the past year, an indication that boards are
`heeding investor calls for enhanced gender diversity in the boardroom.
`Only three S&P 500 companies have no women directors. Today 87%
`of S&P 500 boards have two or more women directors, up from 80%
`last year and 56% a decade ago. Ten S&P 500 companies have 50% or
`more women on their boards.
`
`The new women directors have markedly different backgrounds from
`their male peers. Women are more frequently line and functional
`leaders and financial executives and less frequently at the CEO level.
`Their industry experiences differ as well, with women more likely to
`have backgrounds in the tech/telecommunications and consumer
`sectors and less likely to have private equity/investment backgrounds.
`
`33%
`
`Not only are more women joining S&P 500 boards, but they are also
`assuming somewhat more committee leadership roles. Women now
`chair 20% of audit committees, 19% of compensation committees, and
`24% of nominating/governance committees, compared to 20%, 17%
`and 22% last year. However, women represent only 7% of independent
`board chairs, unchanged from last year, and 10% of lead/presiding
`directors, versus 9% last year.
`
`With only 8% of all S&P 500 directors joining a board in the past year,
`moving the needle on boardroom diversity is difficult. As a result, in
`
`New directors serving on
`first corporate board
`
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`spencer stuart perspective for 2018
`
`35.5%
`
`of new directors
`are CEO-level
`
`45%
`
`CEOs sitting on one or more
`outside boards
`
`spite of the record number of new female directors, representation of
`women on S&P 500 boards increased incrementally to 24% of all
`directors, up from 22% in 2017 and 18% in 2013.
`
`Meanwhile, progress has stalled when it comes to minority represent-
`ation at the top 200 S&P 500 companies. Today, 17% of the independent
`directors of the top 200 companies are male or female minorities,
`unchanged from last year and up only slightly from 14% in 2008.
`
`board assessments are standard practice,
`but individual assessments appear to be
`far less prevalent
`Annual assessments have become the norm for boards around the
`globe, and 98% of the S&P 500 companies in our index reported
`conducting a board assessment over the past year. Companies are
`increasingly turning to external parties to assist with board evalua-
`tions. This year 9% of S&P 500 companies disclosed retaining an
`independent expert to facilitate the evaluation progress, compared
`to only 2% last year.
`
`Individual assessments continue to appear to be far less prevalent.
`Only 38% of S&P 500 companies — largely unchanged from 37% last
`year and 33% five years ago — report some form of individual
`director evaluations.
`
`The persistent reluctance to incorporate individual/peer assessments
`in the evaluation process runs counter to widespread investor views.
`Today, investors consider meaningful board and peer/self-assessments
`as “best practice” for evaluating and enhancing board and director
`performance and promoting boardroom refreshment.
`
`mandatory retirement policies are an
`important turnover mechanism
`Meanwhile, S&P 500 boards continue to rely on mandatory retirement
`policies to facilitate board turnover. Today 71% of S&P 500 boards
`disclose a mandatory retirement age for directors, largely unchanged
`over the past five years. Retirement ages continue to climb. Of the
`universe of S&P 500 companies with retirement age policies, 43.5% set
`the age at 75 or older, compared with 42% last year and just 11% in
`2008. Three boards have a retirement age of 80. More than half
`mandate retirement at age at 73 or higher.
`
`Over the past year, 406 independent directors left S&P 500 boards.
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`They departed at an average age of 68.4 and with an average tenure of
`12.7 years. More than half (56%) left at 70 or older, and 36% served on
`the board for 15 or more years. Twenty-one (5%) were 80 or older with
`an average tenure of 20.6 years, and 28 were 55 or younger with an
`average tenure of five years. A total of 69 women directors (average
`tenure 13 years) retired during the past year, replaced by 33 women.
`
`Three-quarters of the independent directors who left S&P 500 boards
`in the past year served on boards with mandatory retirement ages. The
`age limits influenced a majority of these departures, with 37% either
`exceeding or reaching the age limit at retirement, and another 16%
`exiting the board within three years of the retirement age.
`
`Tenure limitations are rare. Only 25 S&P 500 boards (5%) set explicit
`term limits for non-executive directors, with terms ranging from nine
`to 20 years. A majority of the policies are set at 15 years or more.
`Meanwhile, the average tenure of S&P 500 independent directors is
`8.1 years, a slight decrease from 8.6 years in 2013.
`
`Absent changes in boardroom trends and refreshment practices,
`future turnover rates of S&P 500 boards will remain low. Only 16% of
`independent directors on boards with age caps are within three years
`of mandatory retirement. And with independent directors averaging
`63 years of age (two years older than a decade ago) and mandatory
`retirement ages rising, many have a long runway until they reach the
`age cap. Interestingly, demographics may force turnover on boards
`without mandatory retirement ages; 28% of directors on boards with
`no age caps are 70 or older.
`
`independent board chairs are on the rise
`Independent board chairs, a common governance practice outside of
`the U.S., are slowly gaining ground at S&P 500 companies. Today half
`of S&P 500 boards split the chair and CEO roles, up from 39% a decade
`ago. Slightly more than 30% of S&P 500 boards are now chaired by an
`independent director — a director who meets the applicable NYSE or
`NASDAQ rules for independence — an increase from 28% last year
`and 16% in 2008.
`
`With more boards appointing independent chairs, the number of lead
`and presiding directors has steadily declined. Today 80% of S&P 500
`boards report having an independent lead or presiding director,
`compared with 95% a decade ago.
`
`50%
`
`of boards have a separate
`chair and CEO
`
`26%
`
`of new directors have
`finance backgrounds
`
`2018 u.s. spencer stuart board index
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`

`spencer stuart perspective for 2018
`
`71%
`
`of boards report having
`mandatory retirement age
`
`43.5%
`
`Boards with retirement age
`setting it at 75 or higher
`
`Although the roles and responsibilities of an independent chair of the
`board and a lead director are frequently similar, their compensation is
`vastly different. Independent chairs receive, on average, an additional
`$165,000 in annual compensation, with the premium ranging from
`$20,000 to $625,000. In contrast lead directors are paid an average
`supplement of nearly $40,000, with a range from $10,000 to $200,000.
`
`growth in director compensation
`continues to outpace inflation
`The average total compensation for S&P 500 non-employee directors,
`excluding independent chairs, is around $295,000, a 3% year-over-year
`increase. The breakdown of director pay is unchanged, with 56% paid
`in stock awards, 38% in cash and 4% in stock options.
`
`The use of meeting attendance fees continues to decline. Today only
`10% of S&P 500 companies pay non-employee directors for attending
`board meetings, down from 45% a decade ago. Thirteen percent (13%)
`pay fees for attending committee meetings, compared to 47% in 2008.
`
`Four industry sectors posted average total compensation of more than
`$300,000. Consistent with last year, the highest-paying sectors are:
`healthcare ($363,328); information technology ($337,492); energy
`($324,801); and telecommunications services ($330,909).
`
`The composition of non-employee director pay varies by industry.
`Telecommunications services and utilities pay more in cash,
`48% and 47%, respectively, compared to 31% in the healthcare
`sector and 33% in the information technology sector. Stock awards
`account for 63% of director pay among information technology
`companies and 57% in consumer discretionary, consumer staples
`and energy companies, but just 50% of director compensation for
`companies in the telecommunications services sector.
`
`Editor’s Note
`The U.S. Spencer Stuart Board Index (SSBI) is based on our analysis of the most recent proxy reports from the S&P 500, plus an extensive
`supplemental survey. This edition of the SSBI draws on the latest proxy statements from 485 companies filed between May 23, 2017, and
`May 17, 2018, and responses to our governance survey from 177 nominating/governance committee members conducted in the second
`quarter of 2018. Revenue data were taken from Capital IQ.
`
`Data in tables and charts may not total 100% due to rounding.
`
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`S&P 500 Boards: Trends over One, Five and 10 Years
`
`2018 u.s. spencer stuart board index
`
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`

`S&P 500 Boards: Trends over One, Five and 10 Years
`
`2018a
`
`2017b
`
`2013c
`
`2008d
`
`5-year
`% change
`
`10-year
`% change
`
`Board composition
`
`Average board size
`
`Independent directors
`
`Average age of independent directors
`
`New independent directors
`
`Total number
`
`Women
`
`Minorities
`
`Average age
`
`Active CEO/chair/president/COO/vice chair
`
`Retired CEO/chair/president/COO/vice chair
`
`Financial backgrounds
`
`All other corporate executives
`
`First-time directors
`
`% of all new directors
`
`10.8
`
`85%
`
`63.0
`
`428
`
`40%
`
`19%
`
`57.2
`
`19%
`
`17%
`
`25.5%
`
`21%
`
`33%
`
`10.8
`
`85%
`
`63.1
`
`397
`
`36%
`
`20%
`
`57.3
`
`18%
`
`18%
`
`29%
`
`24%
`
`45%
`
`55.2
`
`10.7
`
`85%
`
`62.9
`
`339
`
`24%
`
`18%
`
`57.5
`
`23%
`
`23%
`
`18%
`
`21%
`
`38%
`
`n/a
`
`10.8
`
`82%
`
`61.2
`
`380
`
`18%
`
`12%
`
`57.0
`
`31%
`
`16%
`
`18%
`
`19%
`
`24%
`
`n/a
`
`1%
`
`0%
`
`2%
`
`26%
`
`67%
`
`6%
`
`-1%
`
`-17%
`
`-26%
`
`44%
`
`0%
`
`-13%
`
`n/a
`
`0%
`
`4%
`
`3%
`
`13%
`
`122%
`
`58%
`
`0%
`
`-39%
`
`6%
`
`44%
`
`11%
`
`38%
`
`n/a
`
`Average age
`
`# of first-time directors
`
`Women directors
`
`Women as a % of all directors
`
`Boards with at least one woman director
`
`CEO profile
`
`% of CEOs serving on one or more
`outside boards
`
`# of women CEOs
`
`Boards where CEO is the only non-independent
`
`Average age
`
`Average tenure with company
`
`Chair independence
`
`CEO is also chair
`
`Independent chair
`
`Boards with lead or presiding director
`
`Board meetings
`
`Average number of board meetings
`
`Median number of board meetings
`
`54.7
`
`140
`
`24%
`
`99%
`
`45%
`
`27
`
`59%
`
`57.6
`
`19.3
`
`50%
`
`30.5%
`
`80%
`
`8.0
`
`7
`
`179*
`
`130
`
`91
`
`8%
`
`54%
`
`22%
`
`99%
`
`37%
`
`31
`
`60%
`
`57.4
`
`19.8
`
`49%
`
`28%
`
`84%
`
`8.2
`
`7
`
`18%
`
`93%
`
`47%
`
`22
`
`60%
`
`56.7
`
`17.8
`
`55%
`
`25%
`
`90%
`
`8.0
`
`7
`
`16%
`
`89%
`
`51%
`
`14
`
`44%
`
`55.4
`
`14.4
`
`61%
`
`16%
`
`95%
`
`8.7
`
`8
`
`33%
`
`6%
`
`-4%
`
`23%
`
`-2%
`
`2%
`
`8%
`
`-9%
`
`24%
`
`-11%
`
`0%
`
`0%
`
`50%
`
`11%
`
`-12%
`
`93%
`
`34%
`
`4%
`
`34%
`
`-18%
`
`94%
`
`-16%
`
`-8%
`
`-13%
`
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`

` s&p 500 boards: trends over one, five and 10 years
`
`2018a
`
`2017b
`
`2013c
`
`2008d
`
`5-year
`% change
`
`10-year
`% change
`
`Retirement age
`
`Boards with mandatory retirement age
`
`Boards with mandatory retirement age of 75+
`
`Boards with mandatory retirement age of 72+
`
`Committee meetings (average number)
`
`Audit committees
`
`Compensation committees
`
`Nominating committees
`
`Audit committee chair
`
`Active CEO/chair/president/COO
`
`Financial exec/CFO/treas/public acct exec
`
`Non-employee director compensation
`
`71%
`
`44%
`
`96%
`
`8.4
`
`6.2
`
`4.6
`
`6%
`
`55%
`
`73%
`
`42%
`
`96%
`
`8.6
`
`6.0
`
`4.7
`
`7%
`
`43%
`
`72%
`
`24%
`
`88%
`
`8.7
`
`6.3
`
`4.7
`
`10%
`
`35%
`
`74%
`
`11%
`
`72%
`
`9.1
`
`6.6
`
`4.5
`
`15%
`
`24%
`
`Total average compensatione
`
`$298,981
`
`$288,909
`
`$249,168
`
`n/a
`
`Average annual retainerf
`
`$124,306
`
`$120,409
`
`$102,507
`
`$74,872
`
`$80,000
`
`$60,000
`
`-1%
`
`83%
`
`9%
`
`-3%
`
`-2%
`
`-2%
`
`-40%
`
`57%
`
`20%
`
`21%
`
`25%
`
`-4%
`
`300%
`
`33%
`
`-8%
`
`-6%
`
`2%
`
`-60%
`
`129%
`
`n/a
`
`66%
`
`67%
`
`Median annual retainerf
`
`$100,000
`
`$100,000
`
`Boards paying retainer of at least $100,000
`
`Boards paying board meeting fee
`
`56%
`
`10%
`
`52%
`
`14%
`
`38%
`
`27%
`
`18%
`
`45%
`
`Average board meeting fee
`
`$2,190
`
`$2,197
`
`$2,159
`
`$2,036
`
`Boards offering stock option program
`
`Boards paying equity in addition to retainer
`
`12%
`
`77%
`
`13%
`
`77%
`
`20%
`
`76%
`
`40%
`
`74%
`
`Committee compensation
`
`Boards paying committee chair retainer
`
`97%
`
`96%
`
`94%
`
`89%
`
`Average committee chair retainer
`
`$21,036
`
`$20,443
`
`$17,248
`
`$13,896
`
`Boards paying committee member retainer
`
`45%
`
`45%
`
`39%
`
`Average committee member retainer
`
`$12,027
`
`$11,560
`
`$10,443
`
`Boards paying committee meeting fees
`
`Average committee meeting fees
`
`13%
`
`$1,688
`
`19%
`
`$1,653
`
`30%
`
`$1,708
`
`31%
`
`$9,070
`
`47%
`
`$1,568
`
`47%
`
`-63%
`
`1%
`
`-40%
`
`1%
`
`3%
`
`22%
`
`15%
`
`15%
`
`-57%
`
`-1%
`
`211%
`
`-78%
`
`8%
`
`-70%
`
`4%
`
`9%
`
`51%
`
`45%
`
`33%
`
`-72%
`
`8%
`
`aData based on proxy year May 20, 2017, through May 17, 2018.
`bData based on proxy year May 16, 2016, through May 19, 2017.
`cData based on proxy year May 15, 2012, through May 15, 2013.
`dData based on proxy year June 1, 2007, through May 31, 2008.
`eBased on non-employee director compensation tables included in 484 (2018), 491 (2017), 488 (2013), and 469 (2008) proxies.
`fNot including equity beyond retainer.
`n/a = not available.
`*Applying this year’s methodology to 2017, there would have been 121 first-time directors.
`
`2018 u.s. spencer stuart board index
`
`9
`
`

`

`Board Composition
`
`428
`
`new independent
`directors, the most
`since 2004
`
`2018 Snapshot
`
`33%
`
`of new directors
`appointed are serving
`on their first public
`company board
`
`50%
`more than30%
`
`of new independent directors
`are women and/or minorities
`
`For the first time,
`
`of S&P 500 boards (30.5%)
`have a truly independent chair
`
`most new directors elected since 2004
` » The 485 S&P 500 boards included in our index appointed 428 new independent directors. This is 8% more
`than last year and the most since 2004.
` » 57% of boards appointed at least one new independent director, and 22% appointed two or more
`board members.
` » Of the nine boards that added four or more independent directors, most did so in response to activists
`or business transformation.
` » The average age of new directors is 57.2, consistent with the past 10 years. New directors range in age
`from 32 to 75.
`
`10
`
`spencer stuart
`
`

`

`
`
`half of new independent directors are women and/or minorities
` » 40% of new directors are women and 19% are minority executives, including 39 minority women (9%).
` » Female representation among new directors reached a new high since we began tracking this data in
`1998 and increased notably from last year, when women accounted for 36% of new directors.
` » Progress slowed for minority men, who represented 10% of the incoming class, down from 14% last year.
` » New female independent directors are more likely than their male peers to be line and functional leaders
`(20.5% versus 7%) and financial executives (13.5% versus 10%), but half as likely to be at the CEO level
`(active and retired CEOs, chairs, vice chairs, presidents and COOs) — 21% versus 45%.
` » Women also are more likely than men to have a background in technology and telecommunications
`(20% versus 16%) and in the consumer sector (12% versus 10.5%), but half as likely to have a private
`equity/investment management background (6% versus 14%).
` » New minority directors are more likely than non-minority directors to be line and functional leaders
`— 19.5% versus 11% — and slightly less likely to be an active or retired CEO-level leader, 32% versus 36%.
`
`New Director Snapshot
`
`New directors elected
`
`% female
`
`% minority
`
`% directors who are female and minority
`
`Percentage of newly elected female or minority directors
`
`New directors
`
`2018
`
`428
`
`40%
`
`19%
`
`9%
`
`50%
`
`2017
`
`397
`
`36%
`
`20%
`
`6%
`
`50%
`
`New Director Backgrounds: First-Time Versus Experienced Directors
`
`First-time directors
`
`Non-first-time directors
`
`Active #
`
`Retired #
`
`Total %
`
`Active #
`
`Retired #
`
`CEO/chair/president/COO/VC
`
`Line and functional leaders
`
`Financial executives/CFOs/treasurers
`
`Division/subsidiary presidents
`
` 9
`
` 22
`
` 12
`
` 13
`
` 11
`
` 6
`
` 2
`
`2
`
`14%
`
` 20%
`
` 10%
`
` 11%
`
`71
`
` 7
`
` 11
`
` 4
`
` 60
`
` 19
`
` 23
`
`16
`
` 3
`
`Total %
`
` 45.5%
`
`9%
`
`12%
`
`7%
`
`Investment management/investors
`
`Academics/nonprofit
`
`Consultants
`
`Lawyers
`
`Bankers/investment bankers
`
`Public accounting executives
`
`Others*
`
`Total
`
`*Includes government and military.
`
` 9
`
` 9
`
` 4
`
`3
`
` 3
`
`0
`
` 5
`
` 89
`
` 4
`
`1
`
`2
`
`4
`
` 6
`
`1
`
` 12
`
` 51
`
` 9%
`
` 7%
`
`4%
`
` 5%
`
` 6%
`
`1%
`
` 12%
`
`100%
`
` 25
`
` 9
`
` 8
`
`4
`
` 3
`
`1
`
` 9
`
`10%
`
`3.5%
`
`3%
`
`2%
`
`2%
`
`2%
`
`4%
`
`1
`
`1
`
`3
`
` 3
`
`4
`
` 3
`
` 152
`
` 136
`
`100%
`
`2018 u.s. spencer stuart board index
`
`11
`
`

`

`board composition
`
`a third of new directors are serving on their first board
` » 33% of the S&P 500 directors appointed in the 2018 proxy year are serving on their first public company
`board. This compares with 45% reported in 2017. The decline is due to a change in methodology. In
`prior years, CEOs who served on their own boards but were serving on their first independent or outside
`board role were counted as first-time directors. Applying this year’s methodology to 2017, 30% of new
`directors last year were first-time directors.
` » Nearly two-thirds (64%) of these first-time directors are actively employed, compared with 53% of new
`directors with previous board experience.
` » First-time directors are more than two years younger on average than new directors overall, 54.7 versus
`57.2 for all new directors.
` » More than half (60%) of first-time directors are women or minorities: 46% are women and 24% are
`minorities, including 13% minority men and 11% minority women.
`
`First-Time Director Snapshot
`
`New directors elected
`
`% female
`
`% minority
`
`% directors who are female and minority
`
`Percentage of newly elected female or minority directors
`
`First-time directors
`
`2017*
`
`179
`
`42%
`
`21%
`
`8%
`
`55%
`
`2018
`
`140
`
`46%
`
`24%
`
`11%
`
`60%
`
`*Includes directors who had served or were serving as an executive director on a public company board.
`
`boards are adding more directors 50 and younger
` » 17% of the incoming class of S&P 500 directors are age 50 and younger, up slightly from 16% last year.
`Nearly two-thirds of these next-gen directors are serving on their first public company board, and more
`than half (53%) are women.
` » Three-quarters have backgrounds in five industry sectors: tech/telecommunications (34%); consumer
`goods (16%); private equity/investments (14%); financial services (5.5%); and government (5.5%).
` » Looking at younger directors’ roles, one out of five (20.5%) are EVPs or SVPs. 14% are investors or
`investment managers.
`
`increase in directors with global perspective
` » 13% of new independent directors were born outside the U.S., an increase from 8% in 2017.
` » 32% of directors have global professional experience, defined as having worked at an
`international location.
`
`12
`
`spencer stuart
`
`

`

`
`
`fewer active and retired ceos and other top executives
`joining boards
` » 35.5% of new directors are active or retired CEOs, chairs, vice chairs, presidents and COOs, which
`represents a slight decline from 36% last year. Ten years ago, 47% of new directors were active or retired
`executives in these roles.
` » More than a quarter (25.5%) of new directors have financial backgrounds, including banking, finance,
`investment or accounting credentials, compared with 29% last year and 18% in 2008. The most notable
`difference over the 10-year period is the increase in directors coming from investing and investment
`management, who now account for 10% of new directors, up from 4% a decade ago.
` » 60% of new directors are actively employed, an increase from 53% last year. Over the past decade, the
`number of employed directors has declined from 68% in 2008, reaching a low of 52% in 2013 before
`increasing again, primarily due to an increase in the number of active financial executives.
`
`New Independent Director Functional Backgrounds
`
`CEO/chair/president/COO
`
`Active
`
`Retired
`
`Other corporate executives
`
`Financial backgrounds
`
`Financial executives/CFO/treasurers
`
`Bankers/investment bankers
`
`Investment managers/investors
`
`Public accounting executives*
`
`Academics/nonprofit
`
`Consultants
`
`Lawyers
`
`Others**
`
`2018
`
`35%
`
`19%
`
`17%
`
`21%
`
`26%
`
`11%
`
`3.5%
`
`10%
`
`1%
`
`5%
`
`3.5%
`
`3%
`
`7%
`
`Year
`
`2013
`
`46%
`
`23%
`
`23%
`
`21%
`
`18%
`
`6%
`
`2%
`
`8%
`
`2%
`
`4%
`
`3%
`
`2%
`
`6%
`
`2008
`
`47%
`
`31%
`
`16%
`
`19%
`
`18%
`
`9%
`
`4%
`
`4%
`
`1%
`
`6%
`
`3%
`
`3%
`
`4%
`
`2018
`
`Women
`
`21%
`
`9%
`
`12%
`
`28%
`
`24.5%
`
`13.5%
`
`4%
`
`6%
`
`1%
`
`7%
`
`5%
`
`4%
`
`10%
`
`Men
`
`45%
`
`25%
`
`20%
`
`16%
`
`27%
`
`10%
`
`3%
`
`12%
`
`2%
`
`3%
`
`2%
`
`3%
`
`5%
`
`*All former partners or executives of public accounting firms.
`**Includes former government employees, physicians, scientists and private company owners.
`N = 257 men and 171 women in 2018.
`
` » The largest industry source of new directors is the technology and telecommunications sector, which
`accounts for 19% of new independent directors. Other top industry backgrounds for new independent
`directors are consumer goods and services, financial services and healthcare, representing 11%, 10% and
`10% of new director backgrounds, respectively. We saw a modest decline from last year in the number of
`new directors with backgrounds in the private equity/investment management sector, from 12% to 10%.
`
`2018 u.s. spencer stuart board index
`
`13
`
`

`

`board composition
`
` » Of the 81 new directors coming from technology/telecommunications, 25% joined boards within the IT
`sector and another 24% joined industrial company boards. 62% are actively employed, and 30% are
`serving on their first public company board.
` » 30% of S&P 500 boards included in the index published a board matrix summarizing the qualifications
`and skills of each director.
`
`New Independent Director Top Industry Backgrounds
`
`Technology/telecom
`
`Consumer goods & services
`
`Financial services
`
`Healthcare/pharmaceuticals
`
`Private equity/investment management
`
`Industrial/manufacturing
`
`Academics/nonprofit
`
`Energy/utilities/oil & gas
`
`2018
`
`19%
`
`11%
`
`10%
`
`10%
`
`10%
`
`6.5%
`
`5%
`
`5%
`
`Year
`
`2013
`
`15%
`
`16%
`
`12%
`
`6%
`
`6%
`
`8%
`
`4%
`
`13%
`
`2008
`
`11%
`
`17%
`
`13