Norman Broadbent, BDO and the Quoted Companies Alliance have again joined forces to produce the second annual Board Review, which looks at the current board make up of all UK listed and AIM companies as well as identifying and analysing underlying trends.
Board composition is recognised as key in ensuring good corporate governance and, in turn, strong company financial performance. With gender continuing to attract more column inches than any other aspect of board diversity, companies across all indices have made encouraging progress. The proportion of women represented on plc boards rose by 13% in the last year across the FTSE 100, FTSE 250 and AIM. Indeed, the FTSE 100 now has no all-male boards and has hit the 25% target called for by Lord Davies in 2010. Smaller companies still have some way to match this achievement: the findings demonstrate that AIM companies have just 6.4% women on their boards, half as many as small cap companies and only a quarter of their FTSE 100 cousins.
This report also explores the changing structure of boards, the implications for the length of tenure for NEDs and the changing role of the chair of the main board and of various board committees. Overall, the findings show that women continue to be poorly represented in the positions of chair of the board (representing only 3.5% of the total) and of various board committees, such as audit and remuneration, and significant differences in the length of tenure and the number of chair positions persist.
Other key findings include:
- There are 20% fewer executive directors on FTSE 100 boards than five years ago, with a corresponding decrease of over 15% in both the FTSE 250 and small cap boards. Over the same period, the number of non-executive directors has increased by 7.5% for FTSE 100 boards, and by over 10% on FTSE 250, small cap & AIM listed boards.
- Average length of board tenures ranged from 4.40 years at FTSE 250 to 5.92 years at small cap companies.
- FTSE Small Cap and AIM companies collectively have nearly 19% of non-executive directors who have served for longer than nine years, whereas the FTSE 350 has 10%.