Governance professionals share their insights on board refreshment oversight and seeking director candidates
One of the core duties of any board is to renew itself with an evolving set of members who together can help the company thrive into the future. Problems can arise if a board is allowed to get stale and develops a narrow range of group-thinking that misses risks and opportunities.
Equally, there is a growing recognition of the benefits of having diversity on boards, in terms of both the personal identities of directors and their experience and skills. That recognition is accompanied by pressure from investors, regulators and others for boards to increase the diversity of their memberships. Allied to this, it is important for boards to bear in mind the evolving nature of their own and their company’s needs.
In this special report, we present the results of a global survey conducted among governance professionals such as general counsel, corporate secretaries and their teams. Their responses offer helpful insight into how boards are tackling refreshment and whether governance teams are satisfied by what’s being done.
Respondents reveal what is happening on their board in terms of assigning oversight of refreshment and discussing the topic, how candidates are identified and what characteristics are taken into account, whether they are building a pipeline of potential directors and how board composition information is shared publicly.
Key findings
More than four in 10 respondents (44 percent) say their main board discusses refreshment on an ad hoc basis. Almost three in 10 (29 percent) say those discussions happen once a year. Just 6 percent say they take place at every meeting.
Eighty percent of respondents in Europe say their board uses an executive search firm to identify potential director candidates, compared with 66 percent of those in North America.
Overall, slightly more than half (54 percent) of respondents say their board has a pipeline of potential director candidates.
When asked which factors their board includes in its considerations while recruiting new directors, respondents’ most common answer is gender (mentioned by 87 percent) followed by relevant experience from an industry other than the company’s (80 percent).
Around two thirds of respondents at small caps (63 percent) and large caps (64 percent) say their firm’s proxy statement uses a board matrix, while 76 percent of those at mega-caps and 81 percent of those at mid-caps say likewise.
Just over half (54 percent) of respondents don’t see a need for their board to improve its approach to refreshment, with 46 percent saying they would like it to do better.
Survey demographicsThis report is based on the findings from an online survey conducted between December 2022 and March 2023. A total of 211 respondents took part.
Total number of respondents: 211
