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Blog : BOARD TALK

UK Boardrooms: Far More International Than S&P 500

Posted on October 5, 2014 at 3:15 PM

Amid all the talk of things we need to fix when it comes to corporate governance and UK plc boardrooms, there are some things for which we can be grateful. This is one of them: the international nature of non-executive directors in the FTSE 350 - particularly when compared to the S&P 500.


Egon Zehnder, the global executive search firm, has been tracking the global capabilities of boards in a systematic way since 2008, creating a measurement tool called The Global Board Index. The latest one for 2014 has some revelations that might surprise you. 


"The good news is that our research shows that the share of directors with meaningful international work experience among S&P 500 directors is now at 14.1%, up from 8% in 2008" says George Davis, co-leader of the global board practice at Egon Zehnder. There is no point, really, in asking about the bad news...


Nearly 34% of all S&P 500 companies report some amount of international revenue, so why don't their boards reflect this new strategic direction, asks Egon Zehnder. While 44% of companies have at least one foreign national director, only 17% have two or more.


The largest S&P 500 board has 19 directors, and the smallest has five - so the average number of directors per board is 10.7, apparently. But when Egon Zehnder ranks boards by share of international revenue, it does not change the composition numbers. Even among the 'most global' group of companies, only one in ten directors is a foreign national. 

 

And this, for me, is where it becomes intriguing. Egon Zehnder says IT reports the highest percentage of global revenue, at 55% - but among the levels of their 'board global capability' ranks at just 11%. Other sectors simiiarly show moderate degrees of global penetration - but it really is not reflected in their boardrooms.


IT as a sector  is particularly interesting because a great deal of talent in that industry has come from outside the 'white', developed world. What do you think it all amounts to...when it comes to better representation in boardrooms ?


Now for the UK. "Foreign directors constitute 32% of all directors, and 84% of companies in the top 150 now have at least one non-UK national on their board, up from 81 % last year. Even in a reduced universe which excludes companies that cannot realistically be described as UK companies, 82% have at least one foreign director, up from 78% in the last survey" says global executive search firm Spencer Stuart.


"Almost a quarter of chairmen and a third of chief executives are non-UK nationals" it adds in its 2013 UK Board Index.


So, sittting on this side of the pond, it seems there is quite a lot for which to be grateful on representation in boardrooms. But of course, it depends whether one rates onself on corporate governance by comparison, or sets one's own goals.

 

And one thing worth mentioning: to what extent does the composition of the S&P 500 boardrooms (when it comes to an international perspective) play a part in the general attitude to shareholder voices, and activist investors?


I don't know the answer to that...if you have a view or want a voice here in a guest post email me: dinamedland1@gmail.com. Thank you for reading. And thank you to @ICSAsoftware for sponsoring this blog into a second year (with no editorial control).





Categories: Appointments, Representation, Investors