S&P 500 companies' boards elected 294 new directors over a recent 12-month period, the smallest number in 10 years, according to executive recruiter Spencer Stuart's preliminary 2011 annual corporate governance study released Friday.
Also, 41% of boards of the companies split the chairman and CEO roles, up from 26% in 2001, according to a statement about the preliminary findings.
“Reasons for this downtrend (in new directors) may include the downsizing of boards, the raising of director retirement ages and less voluntary director resignations during the economic downturn,” Julie Hembrock Daum, practice co-leader for the North American board and CEO practice of Spencer Stuart, said in the statement. “The lack of board turnover creates a very real challenge for board renewal and getting new skills on the board.”
The 2011 board index study draws on the latest proxy statements of 494 companies in the S&P 500, filed between May 15, 2010, and May 15, 2011, as well as responses — typically from corporate secretaries, general counsels or chief governance officers — from 102 companies to a governance survey in the second quarter.
Also according to the early findings, the average board size was 10.7 directors, down from 11.1 in 2001; the average age of independent directors was 62.4, from 60.2; and 37% of S&P 500 companies' boards have an average age of 64 or older, more than double the share in 2001.
While nearly three-quarters of all S&P 500 boards set a mandatory retirement age for directors, up from 58% in 2001, many boards retain the discretion to make exceptions to the rule. Of that three-quarters group, 83% of the boards set the age limit at 72 or older, vs. just 36% in 2001.
Spencer Stuart plans to post the complete board index study on its website, www.spencerstuart.com, by Nov. 7.