EDITORIAL: NAVIGATING STORMY SEAS

For more than 30 years, Spencer Stuart has tracked global trends in board composition and performance, governance practices and director compensation across leading public companies. Their latest report provides key insights into the state of corporate boards in 2024. 

The report highlights that board sizes remain relatively static, averaging between 9 and 11 members, with a few exceptions. This stability has increased the focus on recruiting new non-executive directors who bring the skills and experience organisations need. 

It is also noticeable that there has been an increase in the use of outside experts to provide specialised advice on key issues. 

There has been an increase in the level of independence among board directors with Finnish and Swiss boards leading the way with 92 per cent independent board members. The US is slightly higher at 85 per cent, while France stands at 58 per cent. Chile lags behind with just 25 per cent.

Board refreshment remains a key topic of discussion. To stay effective and aligned with the company’s evolving needs, boards must anticipate future skills gaps, conduct rigorous evaluations, and make tough decisions - including asking directors to step down when necessary.

Director tenure varies significantly by country. In Mexico, the average tenure has risen to 12 years, up from 11 in 2018 - well above the global average of 5.4 years. At the other end of the spectrum, Finland now has the shortest average tenure at just four years.

In 2024, more first-time directors joined the boards of publicly traded companies, particularly in Ireland, Italy, Norway, Spain, Turkey, and the US. Switzerland was a notable exception, where the proportion of first-time directors fell sharply from 63 per cent to 31 per cent. Boards cited fresh frontline perspectives as the main reason for appointing less experienced directors.

You can access the full report here.