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).

BOARD SIZE

• 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.

BOARD COMPOSITION

• 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.

RESEARCH STRATEGY

Strategy #1

Strategy #2

Strategy #3

Strategy #4:

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.

CALCULATIONS

• 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

Average board size:

• From 2006-2016, board size has declined on average in all countries except France, where the average number of board members has increased nearly one percentage point up to 12.4, a value which is slightly higher than the corresponding value for supervisory boards in Germany where it is 12 members on average.
• At the end of 2016, the smallest boards were English (9.5 directors on average), followed by Italian (10.3 directors) and Spanish boards (10.5 members).

Women's involvement:

• 4.5% of the companies in the Index have a woman serving as CEO/Chair of the Executive Board.
• Average of 33.6% of women on non-executive boards.
• 5% of female Chairs of Board of Directors.

The strength of employee representation:

• The number and/or percentages of representatives on the board vary considerably from country to country.
• The strength also varies within the specific countries according to type of business structure and financing.
• In some countries, the number of representatives on boards varies according to number of employees (escalator system).
• In Croatia and Greece, in eligible companies, the workers are represented by one member on the board. In Spain, eligible trade unions can appoint members.
• In a number of countries worker representation is set at one-third of the board. This is the case for Austria, Czech Republic, Ireland, Luxembourg (privately owned companies) and the Netherlands.
• In Poland, the limit is two-fifths or 25%, depending on the ownership.
• In some countries, the level of representation can be varied with a minimum and maximum set by law. This is the case for Denmark (decided by the shareholders, minimum two seats, maximum one-third), Hungary (can be negotiated, default is one-third of seats), Slovak Republic and Slovenia (defined in articles of association, minimum one-third up to one-half of seats, not the chair)
• In France, the threshold is set at 200 employees in state-owned companies; two members and up to one-third of board members for the smaller companies, and one-third of board members for the larger state-owned companies.
• In France, for privately owned companies, the threshold is set at 1000 employees (5000 worldwide).
• In France, on boards with 12 seats or fewer, the employees have a right to one seat, and on boards with 13 seats or more, they have the right to two seats.
• In France, representation rights on all boards can be negotiated, the maximum being one-quarter of the board or four seats.
• In Germany, the law provides for several steps in board representation.
• The first step is companies with 500-2000 employees, where the employees have the right to one-third of board members.
• The second step is companies with more than 2000 employees, where the worker representation is one-half of the board; the chairman, the casting vote, is elected by the shareholders.
• A distinct system is the original system in the iron, coal and steel industry for companies with more than 1000 employees. The employees elect one-half of the board members and the casting vote is a neutral person agreed to by both the employee side and the shareholder side. The employees have a member on the managing board, who can block the appointment of the labor director.
• In Luxembourg, in state-owned companies, the employees can elect one board member per 100 employees, the minimum being three seats and the maximum one-third of the board.
• In Norway, the employees can elect a minimum of one member and up to one-third of the board, plus an additional member depending on the size of the company.
• In Sweden, in companies with less than 1000 employees, the workers can elect two members and up to one-half of the board (depending on the general assembly).
• In Sweden, in companies with more than 1000 employees and which are operating in several industries, the workers can elect three members and up to one-half of the board (depending on the general assembly).
• In Slovenia, in companies with more than 500 employees, the employees are additionally entitled to elect one member of the management board, or one executive member of the board of directors.
• In Poland, in companies with more than 500 employees, the workers can additionally elect one member of the management board.

Other Key findings:

• There are only 10 countries without legislation or other agreed arrangements providing for board level representation. These are Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Lithuania, Malta, Romania and the United Kingdom.
• There are a further six countries, where board level representation is limited to some state-owned or municipally-owned companies. These are the Czech Republic, Greece, Ireland, Poland (where companies in the process of being privatized are also covered), Portugal and Spain.
• In 19 of the 31 members states of the European Economic Area countries, there exists some legislation on employee board-level representation.
• The situation in 2017 slightly changed from that of 2015, since board-level employee representation rules were reintroduced in the Czech Republic for the private sector in January 2017.
• In every country a specific system has evolved and representation is always embedded in the wider context of the national industrial relations system.

Research Strategy:

What information is not available?

Why is it not available?

Methodology:

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