New director appointments among S&P 500 boards have dropped 45 percent over the past three years, reports executive recruiting firm Spencer Stuart. The firm attributes the drought to increased demands on the time of would-be directors.
Another explanation for the drought could be that many companies began ap-pointing younger dir-ectors some years ago, which contributes to a low replacement rate, says Roger Kenny, a managing partner at Boardroom Consultants/Kenny Kindler Tholke in New York.
Kenny agrees, however, that it’s becoming more difficult for sitting CEOs to be appointed to boards. “The number of meetings is decreasing,” he says, “but what a director does in between is increasing. It is less oversight and more action and strategy.”
Many corporations restrict the number of boards CEOs may sit on to no more than two, or three for non-CEO directors.
“The directors of The Home Depot, TRW and Conseco are really asked to €˜stick to their knitting,'” says Ted Jadick, a managing partner at recruitment firm Heidrick & Struggles in New York.
With the decreased availability of traditional CEO directors, some boards have had to diversify their membership beyond the bounds of the Old Boy network.
“It’s not just about your friends anymore,” Kenny observes. “Boards are looking for diversity of all sorts: skills, geography, industry and certainly women and minorities.”