Report: Savannah 2019 Board Review

An analysis of the FTSE 100 & FTSE 250 Executive and Non-Executive Board appointments in 2019

Following our 2018 report, we published quarterly updates for the first three quarters of 2019. This report will look at the Q4 appointments, give a summary of the whole of 2019 and examine some of the trends we are now seeing.

Access the report here.

There are three standout findings discussed in some more detail in this report. First, we show with absolute clarity the success of the gender diversity movement. Women represented 71% of the 48 nonexecutive appointments to the FTSE 250 boards in Q4 but it is the trend that really tells the story and we will look at that in some detail later in this report. Men seeking FTSE 250 board positions now share the challenge faced by women in years past, at least until the rebalancing is complete.

Second, the 2019 board appointments clearly reflect the worsening political, social and economic uncertainty driven by Brexit. There were 118 executive director appointments to the FTSE 350 companies in 2018 but only 68 in all of 2019. That absolute fall in numbers is one thing but, again, it is the trend that is most telling. We look at this in some more detail later.

Third, we were surprised by the number of firsttime appointments. Of the non-executive director appointments to the FTSE 100 boards in Q4, 59% had not previously sat on a FTSE 350 listed company board, or the international equivalent. For the FTSE 250, the proportion is lower but still a very significant 42%. Later, we propose some reasons for this.

Before moving on to the detail, however, readers of our previous report, Good Governance Should Not be a Numbers Game, may also have seen the more recent findings from Refinitiv, the financial markets data firm, on the top performing UK stocks over the last decade. The first and second ranked companies, i.e. the best performing in terms of total shareholder returns, were both ranked well down in the Institute of Director’s good governance survey that we criticised in our report. There we showed clearly that there was no correlation between the Institute of Director’s definition of ‘good’ corporate governance and total shareholder returns of the FTSE 100 companies. The Institute’s survey focused on quantitative measures (box-ticking) and ignored any assessment of the most critically important measures being the competence, relevance and effectiveness of the board members themselves. The Institute has now stopped publishing that report, but we still see plenty of evidence of a box-ticking mentality when it comes to assessing UK corporate governance. Proxy advisors take note.

As with all of our reports, we are using BoardEx as our primary source. We edit the raw data to exclude, for example, internal promotions such as NED to SID or to Chair and non-independent shareholder employee appointments. I hope you find our report interesting and relevant.

Damian J Walsh FCA
Head of Board & CEO Practice

 

 

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