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Atlanta Board of Directors Study Shows Some Interesting Trends

Board Meeting-1.jpgSpencer Stuart has been tracking national trends and boardroom best practices with their Spencer Stuart Board Index (SSBI).

They have been publishing an Atlanta Board Index since 2013. In the 2016 Atlanta Board Index they analyze the boards of 46 Atlanta-based companies with $1B or more in revenues.

The index examines:

  • specific trends and practices at these companies
  • how corporate governance compares to the S&P 500 (where applicable research methodologies are consistent)
  • how governance practices, processes and trends shift over time.

Some of the more interesting facts shared in the Atlanta 2016 SSBI study are:

  • CEOs of Atlanta companies with greater than $5B in revenues were less likely to serve on outside boards in 2016 — 32% compared with 52% in 2015. The national average for CEO’s of similar size companies is 42%. What this seem to indicate is that the demands that Atlanta CEO’s are facing are keeping them from making outside commitments. This is not surprising given the increasing complexity of the position.
  • The average tenure on Atlanta boards is 8.8 years and reflects a slight decline versus prior year. It should be noted that directors on Atlanta company boards have an average tenure that is six months greater than their national counterparts.
  •  Atlanta-area boards are much less likely than their S&P 500 counterparts to have a mandatory retirement age, 48% versus 73%. The average age of outside directors for Atlanta boards ticked upward in 2016, rising to 63.9 years from 63.5 years in 2015; this is nearly a year older than the average age of 63 for S&P 500 outside directors.
  • Female board participation in Atlanta is increasing. Women now comprise 17% of members on Atlanta boards — the highest percentage since the first Atlanta Board Index in 2013. It should be noted though that the S&P 500 national average shows that 21% directors are female.
  • Atlanta boards tend to be smaller than their national counterpart (9.9 directors on average versus the S&P national average of 10.8.
  • No Atlanta based board has established a dedicated risk committee despite that fact that cybersecurity has become top concerns for enterprises worldwide.
  • Forty-three percent of Atlanta companies separate the chair and CEO roles, a slight increase from 41% in 2015. Among S&P 500 companies, 48% have a separate chair and CEO. This shows a gradual shift towards the acceptance of corporate governance best practices that advocate role separation.
  • Atlanta boards are showing to be more active.

They met an average of 7.9 times (let’s call it 8) in 2016, up from an average of seven meetings last year. Driving the higher average was an increase in the number of boards meeting eight or more times, which rose from 32% in 2015 to 41% in 2016. The number of total board meetings ranged from four to 21, with six being the most frequent meeting occurrence. S&P 500 boards met an average of 8.4 times, with 49% meeting eight or more times, and seven meetings being the most common.

  • Non-employee directors on Atlanta company boards received $222,229 in total compensation on average (3% more than in 2015). The total annual per-director compensation reflects the cash, value of equity and all other fees paid for board service, including premiums paid for leadership and committee service. Stock awards represent the largest share of director compensation, 54% of total compensation on average, while cash fees account for 43% of director compensation.

Thanks to Spencer Stuart for their excellent work on this study and their openness in sharing the results with the HR community.