In my 40-year career in energy and heavy industry, I rarely had contact with the board directors who could block our investment projects or dismiss our CEO. Three years ago, I began a new career with Trewstar Corporate Board Services, a women-owned boutique that finds exceptional executives to refresh corporate boards, with a special focus on all kinds of diversity. For the benefit of women in the energy industry who are thinking about a corporate board career, I share some of the myths, half-truths and difficult facts I have learned.
THREE MYTHS
There are not enough qualified, diverse executives.
For many years, the accepted wisdom was that the only executives with relevant senior-level experience and “gravitas” were white men. There was simply no supply of qualified women. Even today, 30 percent of directors say, “The push for diversity results in boards nominating unqualified candidates.”1 Our experience at Trewstar belies this story. We meet dozens of exceptionally qualified candidates every week and each of them introduces us to several others.
Boards of large companies are more interesting and rewarding.
Candidates sometimes resist board opportunities with smaller market cap firms or private companies because they are saving capacity for a larger public company that appears more prestigious. In fact, these companies can offer a more interesting mix of opportunities for direct involvement. The boards typically move faster and expect directors to be active in creating strategy and executing change.
In 2023, the average Fortune 500 director compensation package was $321,220,2 with little variation by company size. Since more than half the compensation is likely in the form of equity, a smaller company that achieves a turnaround, an IPO or strategic sale, may be more lucrative than a large public company with a stagnant valuation.
A directorship certification improves the chances of securing a board position.
Our clients choose candidates based on career experience, thought process and cultural fit – things you do not acquire through training and packaging – and have never asked about certifications.
If you are an avid learner with time and money to spare, take a course or attend a conference. There are high quality options with National Association of Corporate Directors (NACD), Outstanding Directors Exchange (ODX), and major universities (Harvard, Stanford, Northwestern, and Santa Clara, to name a few). You will enjoy it and learn what happens in the boardroom. But don’t expect it to be your ticket to the boardroom. Most boards pay for director education for their members.
THREE HALF-TRUTHS
Companies are committed to increasing the diversity of their board directors.
Diverse boards make better decisions, manage risk more effectively, and deliver better financial performance. Yet, fifteen years ago, only 15 percent of directors were women, and only three percent women of color.3 Since then, large investors as well as exchanges and regulators have encouraged diversification, although the California courts struck down some mandates.
Some boards adopted a Rooney Rule, committing to interview at least one female candidate. Trewstar has found it more effective to say: “Interview the women first.” If the client does not find a stellar candidate on an all-female slate, we will open the search to men. We have never had to do it. Nowadays, clients who have achieved some meaningful diversity often ask us to broaden the funnel to include all genders, ethnicities and backgrounds.
The needle moves gradually. By 2023, the share of women among S&P 500 directors had risen to 32 percent. But the rate of change has slowed. In 2023, 38 percent of new directors were women, down from 43 percent in 2022,4 suggesting that most boards feel no imperative to reach 50/50 gender equality.
Non-profit and trade group boards are not considered board experience.
Executives often have board experience with non-profits like local hospitals or industry associations. For corporate board purposes, these do not count as “board experience.” This is not to say that such work has no value. Chairing the board for a university or hospital system can expose you to leadership succession or crisis management. A role in an industry association can yield policy insights and valuable government contacts. And the right reason to join a not for profit board is because you believe in the organization’s mission and activities.
Directors are older, retired people.
In the popular imagination, a board director is white-haired and endowed with more experience than current savvy. There are certainly many directors with this profile. But the nearly 300 candidates we have placed range in age from 36 to 77, with an average of 59. The average age of all S&P 500 company directors is 63, and 54 for first-time board members.5 More than half were in full time roles at the time of joining their first board. Most companies encourage active senior executives to join outside boards, understanding that the added perspective and experience will enhance their “day job” performance and develop them for future promotion.
COLD HARD FACTS
Supply is greater than demand.
There are approximately 25,000 director positions at 4,000 U.S. publicly traded companies6 plus another 5,000 seats at the 750 most heavily funded private companies.7 With turnover at about seven percent,8 some 2,000 director positions are filled each year. But there are far more outstandingly qualified would-be directors. For a typical role, we can show the client five to 10 highly qualified and interested candidates. The ultimate match comes down to specific experiences, industry knowledge, chemistry and often fortunate timing.
The board refreshment process is often unsystematic and informal.
Unlike executive succession, promotion and recruiting, the board refreshment process can often be unsystematic. Boards with term limits and/or age limits sometimes waive them for existing directors. It is rare for a board to ask a director to retire, even though studies have found that 89 percent of senior executives9 and 45 percent of directors10 think that one or more directors of their company should be replaced; however, NASDAQ’s corporate governance survey11 found that 54 percent of boards had no formal succession plan, and 36 percent responded: “We have an informal succession plan that we discuss when a board seat opens.”
When board seats do become available, new directors are often introduced and selected through informal networks and DIY processes. It is believed that only one-third of board positions are filled through a comprehensive process using outside professionals.
Some profiles are much more in demand than others.
Every year, we meet hundreds of extraordinary candidates. Each has a unique and impressive career history. It is exceptionally rewarding when we match an unusual candidate profile with a client’s detailed specification (“P&L leader in industry Y in market Z with personal profile X”). We call this “finding the purple unicorn.” But two profiles are always in highest demand: public company CEO and public company CFO.
[1] https://www.corporatecomplianceinsights.com/pwc-2023-corporate-directors-survey/
[2] US Spencer Stuart Board Index 2023
[3] https://www.catalyst.org/wp-content/uploads/2019/02/2010_us_census_women_board_directors.pdf
[5] https://fortune.com/2023/04/19/mpw-summit-accenture-boardroom-diversity/
[6] Author’s analysis based on Boardex database.
[8] https://www.spencerstuart.com/research-and-insight/us-board-index
[10] https://www.corporatecomplianceinsights.com/pwc-2023-corporate-directors-survey/
Since meeting the industry in 1977 at the George E. Failing Rig Company (later Azcon) of Enid, Oklahoma, Antonia Bullard has survived six price cycles and advised companies on five continents. Today, she is Managing Director at Trewstar and Climate and Energy Strategy Advisor at S&P Global. Trewstar is a woman-owned company that specializes in connecting corporate boards of directors with exceptional talent. It has placed nearly 300 directors on the boards of companies of all sizes, stages and industry sectors; six percent have been white males.
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