Board Members & Mandates - US
After an extensive search, we have determined that the total number of board members and board mandates in the United States is not available. However, we were able to gather some useful information such as the number of board members, board sizes, compositions, and mandates in S&P and 500 boards. Our findings and an explanation of our research strategy are detailed below.
NUMBER OF BOARD MEMBERS
- The number of board members in S&P 500 companies is 5,450 and in Russell 3000 are 27,300 (Calculations in research strategy).
- The number of board members in S&P SmallCap 600 companies is 5,100 and in S&P 1500 are 14,400 (Calculations in research strategy).
- The average board size of S&P 500 companies is 10.9, S&P MidCap 400 is 9.7 (Ref: Source 1)
- The average board size in S&P SmallCap 600 is 8.5, S&P 1500 is 9.6 and Russell 3000 is 9.1 (Ref: Source 1)
- There is only one Director required for a Delaware Company and the same person can have other titles like President, Vice-President, etc.
- According to DGCL, section 141(b), a board of directors should consist of one or more members and beyond the requirement of at least one director, corporate law does not set a minimum or a maximum. (Ref: Source 5)
- The ISS stated that a company should have no fewer than six nor more than 15 directors, with a board size of between nine and 12 directors considered ideal.
- There were about 85% of independent directors in S&P 500 Boards in 2018.
- About 40% of new independent directors were women in 2018 as compared to 36% in 2017 in S&P 500 Boards.
- In 2017, the percentage of women in director roles in the United States was 21.7%. Approximately 39.2% of boards had three or more women on boards.
MANDATES IN S&P 500 BOARDS
- About 71% of boards in 2018 had a mandatory retirement age. Of those, 44% of boards had a mandatory retirement age of 75 and about 96% of boards had a mandatory retirement age of 72.
NUMBER OF COMPANIES IN UNITED STATES
- According to the North American Industry Classification System (NAICS), there are about 16,502,694 companies in the United States.
- About 14,339 companies have 500 to 999 employees while 16,637 have 1,000 or more employees.
MANDATORY BOARD MEMBERS
- According to the NYSE and NASDAQ, companies are required to have audit committees of independent directors.
- According to the requirement of Sarbanes-Oxley Act, all boards of companies with listed securities must have audit committees composed entirely of directors who receive no compensation from the company other than directors’ fees, and who are not affiliated with the company.
We began our search by looking for research reports, surveys, and government documents to find any information on the total number of board members and board mandates in the United States. With this strategy, we were able to find the average board size in different companies (ex: S&P 500, Russell 3000). We also found examples of board leadership structures, compensation, and other similar information. We had thought that this strategy might work because some companies conduct research on various topics, and thus may have published information on this topic in their reports. However, there was no information on the total number of board members or mandates in these reports.
My second strategy was to look for information on government database websites like NAICS and Census.gov, among others. This strategy did not work as there was no information on the number of board members and board mandates. Instead, we found information on the number of companies in the United States by the size of employees, sales, etc. We had thought that this strategy may work as government sources maintain a database on businesses, employees and may have information on this in their databases. We also looked for the information on the total number of companies (small, medium, large) which has a Board of Directors. With this information, we could potentially find the average size of boards in the United States and then calculate the data. However, even this strategy was not possible as there was no such data available on these websites.
Our third strategy was to look for news articles and press release published on this topic. We found some information on sites like Reuters, Directors and Boards. We hoped this strategy may return information on the total number of board members and mandates in the US since sites like these publish news and articles citing information from studies or surveys that are not available to the public. We did, however, find information about the California state law mandating women directors. However, further information on the number of board members and mandates was not available.
Our final strategy was to calculate the information on the number of board members in the United States. We looked for the number of companies with board members in the United States and planned to multiply it with the average board size in the United States. We looked for various reports and articles. However, this strategy did not work as there was no information on the number of companies with board members in the United States. Instead, we found additional statistics on the percentage of women directors in the United States. Our aim behind this strategy was to triangulate the information to provide the number of board members in the United States.
WHY THE INFORMATION COULD NOT BE TRIANGULTED
- There are no reports or studies conducted to find the total number of board members and board mandates and which categorizes these figures by company size (small, medium & large) and by company status (private versus public).
- One of the reasons for non-availability of such information could be that the cost to conduct such in-depth survey is likely to be pretty high as there are 16,502,694 companies in the United States and hence, no agencies/organizations have conducted such in-depth research.
Below are the calculations we used to determine the number of directors in each company. The formulas we used are as follows:
- Number of Board Directors = (Number of Companies x Average size of Directors)
- The average Board Size in S&P 500 companies is 10.9, S&P MidCap 400 is 9.7, S&P SmallCap 600 is 8.5, S&P 1500 is 9.6 and Russell 3000 is 9.1 (Ref: Source 1)
Number of Directors
- Number of Directors in S&P 500 companies= (500 x 10.9)= 5,450
- Numbers of Directors in S&P Midcap 400 = (400 x 9.7)= 3,880
- Numbers of Directors in S&P SmallCap 600= (600 x 8.5)= 5,100
- Numbers of Directors in S&P 1500= (1500 x 9.6)= 14,400
- Numbers of Directors in Russell3000 = (3000 x 9.1)= 27,300