New research by the Conference Board says that despite the demand for a diverse array of skills, companies continue to value prior board experience in their director selection.
It found that in 2018, only a quarter of public companies elected a director who had never served on a public company board before. Three-quarters of companies reported electing no first-time director, a percentage almost identical to the one from 2016.
The finding comes from the Conference Board’s “Corporate Board Practices: 2019 Edition.”
In both the Russell 3000 and the S&P 500 indexes, roughly 1 out of 5 companies elected one first-time director to their board, while only 4.3 percent elected two. The real estate (6.8 percent) and consumer staples (6.6 percent) sectors had the most firms with two elected first-time directors, while utilities industries reported the highest percentage of companies with no first-time directors elected.
Companies with annual revenue of $20 billion or higher were twice as likely to elect two first-time directors as those with an annual turnover of under $1 billion (7.3 percent versus 3.2 percent).
The study was developed in partnership with ESG data analytics company ESGAUGE and in collaboration with Debevoise & Plimpton, Russell Reynolds Associates, and the John L. Weinberg Center for Corporate Governance at the University of Delaware.