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Report: In Response to Investors, Boards Seek Diversity

REDWOOD CITY, CA (September 13, 2017) —According to a new report from Equilar, Board Composition and Director Recruiting Trends, which featured commentary from KPMG’s Board Leadership Center and Semler Brossy Consulting Group, boards are adding more women to their ranks and are voluntarily disclosing more information about directors’ diversity and skills. Pressure from investors continues to heat up on this topic, and companies are responding in kind.

In 2017, 20.9% of board seats were occupied by women at the largest U.S. companies by revenue, compared to 16.5% five years earlier. For the Russell 3000 as a whole, that figure stands at 16.0%, up from about 12% in 2013.

“There was a time when getting 20% of women on boards might have seemed an audacious goal, but now that goal has been reached for Equilar 500 boards overall and seems in sight for the Russell 3000—that achievement should be celebrated,” said Blair Jones, Managing Director for Semler Brossy Consulting Group. “At the same time, it is not time for boards to rest on their laurels, as gender parity is the ultimate goal, and the current pace of change has that milestone still quite a ways away.”

Large institutional investors have become more and more vocal about not only what decisions are being made in the boardroom, but also who is making them. In 2017, State Street Global Advisors and BlackRock, for example, have called on boards to address composition, and gender diversity specifically. If deemed an issue at any particular company, both investors have said they will heavily scrutinize and likely vote against boards that do not effectively and urgently address gender diversity. And both have done so.

Companies are recognizing the importance of board diversity information as material to investors, and according to an Equilar analysis included in the report, more than 45% of Equilar 500 companies disclosed their board composition as it relates to gender diversity, and nearly 40% included information about their directors with respect to racial or ethnic background.

“Given the challenges businesses face from factors including disruptive technology, global competition and geopolitical uncertainty, companies have increasingly taken a more strategic approach to board composition, looking for skill sets and backgrounds that will add new and important perspectives to the boardroom conversation,” said Susan Angele, Senior Advisor, Board Governance, KPMG’s Board Leadership Center. “This need has caused many boards to look beyond their immediate networks when they recruit new board members.”

Indeed, companies are also voluntarily providing more detailed information about their directors’ skills to help investors and other stakeholders understand how they are approaching board composition. In the Equilar 500, 18.4% of companies included a “board skills matrix” in their proxy statement, which is a table or other graphical representation of the qualifications exhibited directors on their board. Among directors at those companies, finance, business development and technology were the most commonly cited.

Other key findings from Board Composition and Director Recruiting Trends include:

  • Average director age has increased while average director tenure has decreased over the past five years

  • The prevalence of new directors—a reflection of turnover on and additions to boards—in the Equilar 500 dropped 1.9 percentage points from 12.0% in 2016 to 10.1% in 2017, while Russell 3000 companies saw an increase in new directors from 8.7% to 10.3% during the study period

  • In 2017, 40.5% of Equilar 500 companies disclosed a mandatory retirement age policy in comparison to 18.6% of Russell 3000 companies—nearly 80% of all retirement policies were set at either 72 years or 75 years

  • More than half of all board seats in the Equilar 500 were occupied by directors who serve multiple boards in 2017, a figure that has been increasing steadily since 2013

About the Report

Board Composition and Director Recruiting Trends, an Equilar publication, examines the boards of directors as disclosed in annual proxy statements (DEF 14A) of Equilar 500 and Russell 3000 companies over the last five years. The Equilar 500 tracks the 500 largest, by reported revenue, U.S.-headquartered companies trading on one of the major U.S. stock exchanges (NYSE, Nasdaq or NYSE MKT (formerly AMEX)), adjusted to approximate the industry sector mix of similar large-cap indices. The report identifies trends in the composition and disclosure of S&P 500 boards with respect to prevalence of new directors, gender, race and ethnicity, skill set, and more.

About Equilar

Equilar is the leading provider of board intelligence solutions. Its data-driven platforms, BoardEdge and Insight, provide tools for board recruiting, business development, executive compensation and shareholder engagement. Companies of all sizes, including 70% of the Fortune 500 and institutional investors representing over trillion in assets, rely on Equilar for their most important boardroom decisions. Equilar also hosts industry-leading board education symposiums, conducts comprehensive custom research services and publishes award-winning thought leadership. Founded in 2000, Equilar is cited regularly by Associated Press, Bloomberg, CNBC, The New York Times, The Wall Street Journal and other leading media outlets. Visit to learn more.

About KPMG Board Leadership Center

The KPMG Board Leadership Center champions outstanding governance to help drive long-term corporate value and enhance investor confidence. Through an array of programs and perspectives—including KPMG's Audit Committee Institute, the WomenCorporateDirectors Foundation, and more—the Center engages with directors and business leaders to help articulate their challenges and promote continuous improvement of public- and private-company governance. Drawing on insights from KPMG professionals and governance experts worldwide, the Center delivers practical thought leadership—on risk and strategy, talent and technology, globalization and compliance, financial reporting and audit quality, and more—all through a board lens.

About Semler Brossy Consulting Group

Semler Brossy is an established, independent executive compensation consulting firm founded in 2001. Over the years, our clients have trusted us with their toughest business issues, helping them work through changes in strategic direction, turnaround situations, CEO succession, transactions such as mergers, acquisitions and IPOs, and conflicts between management and the Board. We have built and maintained longstanding corporate and board consulting relationships because we always view issues from a multi-faceted business perspective. Our principals have deep and extensive experience working with a broad cross-section of U.S. companies, from Fortune 100 to smaller, privately held firms, some over several decades. Many clients are global, with all the attendant compensation issues. Industries we currently serve include financial services, healthcare, consumer products, technology, manufacturing, retail and professional services.

For more information, contact:

Amit Batish
Content Manager
Equilar, Inc.

Media Inquiries

(650) 241-6655

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