Corporate Success Linked to Smaller, More Diverse Boards

PR pros looking to get a seat at the table might want to count the number of chairs first. Smaller boards, more female directors and a higher proportion of independent directors are the key boardroom components for company success, with U.S. boards closely matching the global success trends, according to a global study of 250 top companies between October 2009 and December 2009 by international law firm Eversheds. Other findings include:

• The optimum size for a successful U.S. board is considered to be directors, in line with the global optimum size of 11.

• Companies that have more female directors performed better during the financial crisis. This is the case in the U.S., which has the highest proportion of female directors (17.6% in 2007 and 17.0% in 2009).

• However, when interviewed, only 55% of directors feel that diversity for its own sake was beneficial for board and company performance, and only half that number are directly in favor of taking positive action to appoint more women onto boards.

• There is a strong correlation between share price performance and the number of independent directors on company boards. Directors narrowly preferred independence to experience. However, 67% believed both were equally important.

Source: Eversheds

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