Board Practices and Composition: 2024 Edition

Despite record levels of demographic diversity in board composition, directional trends are slowing amid an increasingly complex economic and social environment. This report provides a detailed analysis of evolving board composition and practices in 2024, focusing on public companies in the Russell 3000 and S&P 500 indexes.

Key Insights

• As boards look to diversify their composition demographically, the percentage of directors who are former C-Suite executives or former executives below the C-Suite is rising.
• While US corporate boards are more demographically diverse than ever, the proportion of new directors from non-White backgrounds is decreasing.
• • A rise in overboarding policies, which limit the number of boards on which directors can serve, may reflect an emphasis on ensuring that directors can effectively fulfill their responsibilities, as well as certain investor and proxy advisor prescriptions.
• Board excellence practices are evolving, with some larger companies sponsoring education and evaluation practices.
• Only a small proportion of companies has established a designated sustainability or environmental, social & governance (ESG) committee, as many have allocated ESG responsibilities to existing committees and some boards are uncertain of the long-term trajectory of ESG-related initiatives.

Boards Are Increasingly Diversifying Their Ranks by Appointing C-Suite Executives and Executives from Below the C-Suite

➢ The functional background of board members is gradually evolving to include more directors with C-Suite and near C-Suite experience, contributing to increased diversity in thought and approach in the boardroom. Such executives can bring deep expertise in key areas, as well as valuable insights from firsthand experience working across the organization rather than solely at the top.

The percentage of directors who are active or former C-Suite executives other than the CEO has gradually increased for the Russell 3000, from 14% in 2020 to 18% in 2024. Directors from a level below the C-Suite have also become more common, increasing from 17% to 21% over the same period. At the same time, the percentage of directors who are active or former CEOs slightly declined.

The representation of former CEOs in the Russell 3000 significantly increases with company size. This trend peaks at 28% for companies with over $50 billion in revenue, compared to just 17% for those with revenue under $100 million.

The percentage of active CEOs on boards shows less fluctuation across company sizes, sitting between 13% and 17%. The percentage of active C-Suite executives—excluding the CEO, as well as the chief operating officer—decreases as company size increases, dropping from 7% in the smallest companies (under $ 1 billion in revenue) to just 2% in the largest companies (over $50 billion in revenue).

The representation of former C-Suite executives shows relative stability across company sizes, hovering around 13%. The representation of active executives below the C-Suite declines notably with company size, falling from 12% in the smallest companies to only 2% in those with over $50 billion in revenue. In contrast, former executives below the C-Suite maintain a more consistent presence across company size, ranging from 8% (in the smallest companies) to 13% (companies with $5 billion– 9.9 billion in revenue).

Dominance of strategic experience: The percentage of directors with a strategic background remains high, although it declined steadily from 61% in 2020 to 55% in 2024 in the S&P 500, and from 60% to 53% in the Russell 3000 over the same period. The drop in strategic experience may stem from how companies determine which skills and experiences to disclose. Typically, directors self-identify their capabilities from a list provided by the company, which often limits the number of areas disclosed to just three or four. Consequently, this can lead to directors highlighting their expertise in trending topics rather than focusing on equally or more significant core competencies.

• Rise in international experience: There has been a notable increase in directors with international experience, rising from 41% in 2020 to 52% in 2024 in the S&P 500, and from 23% to 29% in the Russell 3000.
• Emphasis on corporate governance: The representation of directors with corporate governance experience has increased significantly, from 30% in 2020 to 41% in 2024 in the S&P 500, and from 22% to 31% in the Russell 3000.
• Surge in technology and cybersecurity experience: There has been a substantial rise in directors with technology backgrounds, jumping from 20% to 38% between 2023 and 2024in the S&P 500 and from 15% to 26% in the Russell 3000. Directors with cybersecurity expertise have also increased significantly, rising from 13% in 2020 to 26% in 2024 for the S&P 500, and from 7% to 16% for the Russell 3000 during the same period, with notable growth in both indexes over the past year.
• Growing focus on human resources: The percentage of directors with human resources or human capital experience has also increased, from 23% in 2020 to 38% in 2024 in the S&P 500 and from 14% to 26% in the Russell 3000 over the same period.
• Emerging importance of ESG: The representation of directors with ESG expertise has increased from 2% in 2020 to 13% in 2024 in the S&P 500, and from 1% to 9% in the Russell 3000.

These trends collectively highlight a shift toward a more diverse skill set among directors, with a particular emphasis on global perspectives and business acumen, technological expertise, governance, and human capital management (HCM). This shift reflects the increasing complexity of the current business environment, where boards must navigate evolving global markets, digital transformation, regulatory scrutiny, and workforce dynamics.

Corporate Boards Are More Demographically Diverse Than Ever

➢ Gender and racial diversity on US corporate boards reached record levels in 2024, reflecting sustained efforts to diversify boards. However, the proportion of new directors who are women or from non-White backgrounds has declined since a high in 2022, suggesting a possible slowdown.

The share of women directors has risen to record levels, from 27% in 2020 to 34% in 2024 in the S&P 500 and from 21% to 29% in the Russell 3000 over the same period. At the same time, the percentage of women board chairs has increased from 4% in 2020 to 11% in 2024 in the S&P 500, and from 5% to 8% in the Russell 3000. Notably, the proportion of women lead directors has seen a more remarkable increase, jumping from 11% in 2020 to 22% in 2024 in the S&P 500, and from 9% to 17% in the Russell 3000. This trend may reflect how the growing presence of women on boards has expanded the pool of candidates with the expertise, tenure, and relationships necessary for leadership roles.

While the proportion of women directors on boards has steadily increased, the 2024 data for new appointments reveals a more nuanced dynamic. Since 2020, the percentage of new women directors has remained relatively stable, fluctuating between 38% and 41% in both the Russell 3000 and S&P 500. However, the share of new non-White women directors among all new appointments has declined since a peak in 2022. This trend may reflect a slowing rate of growth as board representation approaches greater alignment with the broader workforce. It may also indicate a need for some boards to reassess and refine their diversity recruitment strategies.

Racial diversity on US corporate boards is also gradually increasing. While the proportion of non-White directors in the S&P 500 increased from 20% in 2020 to 26% in 2024, their representation in the Russell 3000 has shown more modest growth, from 21% to 23% during the same period. Non-White board chairs have seen slight improvements in both indexes, with S&P 500 representation rising from 8% in 2020 to 12% in 2024 and Russell 3000 increasing from 8% to 12%. The percentage of non-White lead directors in the S&P 500 peaked at 15% in 2022 but fell to 13% in 2024, although it is still up from 9% in 2020. The Russell 3000 has maintained a stable 11% for non-White lead directors since 2022.

In 2024, 69% of new directors in both indexes identify as White, a rise from a historic low in 2022 of 52% for the Russell 3000 and 50% for the S&P 500. This trend has been accompanied by a decline among all non-White racial and ethnic groups, except for individuals from the Middle East and North Africa. Notably, the proportion of new African American or Black directors dropped from 26% in 2022 to 12% in 2024 for the Russell 3000, and from 26–10% for the S&P 500, although this is still up for both indexes from 2020. Additionally, the percentage of self-identified LGBTQ+ directors fell sharply from 21% in 2023 to 3% in 2024 for the Russell 3000, and from 15% to 3% for the S&P 500, although this may reflect a decrease in selfidentification. The proportion of non-US nationals among new directors also decreased significantly in both indexes.

These trends may partly reflect a natural slowdown as board representation approaches alignment with working-age demographics following the post-2020 push to increase diversity. The data may also signal some waning of momentum in corporate diversity initiatives amid heightened political and social scrutiny. Boards may consider steps to enhance recruitment, including targeted outreach to persistently underrepresented groups.

Overboarding Policies Signal a Strong Focus on Maintaining Director Effectiveness and Accountability

➢ The proportion of companies with formal board overboarding policies has significantly increased in both the S&P 500 and Russell 3000, most commonly limiting directors from serving on more than three other boards. The increase in overboarding policies likely reflects heightened investor engagement and pressure from dominant proxy advisory firms.

The adoption of overboarding policies has significantly increased in the S&P 500, from 68% in 2020 to 81% in 2024. The Russell 3000 has seen a more modest increase, rising from 44% to 53% during the same period. These trends likely reflect how, as public company board service has become more complex, institutional investors and proxy advisory firms have sharpened focus on directors who serve on a perceived excessive number of boards.

Currently, 65% of S&P 500 companies with an overboarding policy allow their directors to serve on up to three other boards, which is higher than the 52% of Russell 3000 companies. At the same time, only 29% of S&P 500 companies allow their directors to serve on four boards, compared to 37% of Russell 3000 companies. The likelihood of directors serving on other forprofit company boards also increases in step with company size. The financials sector has the highest percentage of directors with no other for-profit board memberships, at 71%.

Some Larger Companies Are Embracing Comprehensive Training and Assessment Methods

➢ While most companies conduct board director orientation and education programs internally, a notable minority utilize external resources and providers—particularly larger S&P 500 firms. However, full outsourcing of these responsibilities remains rare. Additionally, companies in both indexes are gradually broadening the scope of performance assessments to include the full board, committees, and individual directors, with a growing reliance on independent assessment facilitators.

Both S&P 500 and Russell 3000 companies predominantly use in-house programs for director orientation and education, with 63% of companies in each index organizing their own programs in 2024. Meanwhile, the use of a combination of in-house and external resources is on the rise in both indexes, and S&P 500 companies are more inclined to adopt this approach, with 36% doing so in 2024 compared to 23% of Russell 3000 companies. Fewer than 1% of firms in both indexes fully outsource these responsibilities.

Incorporating individual director evaluations into annual board self-assessments is a prevalent practice among larger companies, with 55% of S&P 500 firms disclosing a combination of full board, committee, and individual evaluations in 2024. In contrast, a majority (59%) of Russell 3000 companies still focus solely on full board and committee evaluations. Nevertheless, the Russell 3000 is experiencing a shift, as the adoption of combined board, committee, and individual evaluations has risen significantly from 24% in 2020 to 38% in 2024.

Among sectors in the Russell 3000, the utilities sector stands out as the only sector where a majority of companies conduct evaluations that include full boards, committees, and individual directors—which likely reflects industry norms and extensive scrutiny from federal and state regulators. By contrast, the energy sector has the lowest percentage of companies that employ this approach, at 28%.

Both S&P 500 and Russell 3000 companies have seen a steady increase in the use of independent assessment facilitators for board evaluations; however, the S&P 500 leads significantly, with 38% of companies employing these facilitators in 2024, up from 21% in 2020, compared to 17% in the Russell 3000, up from 10% over the same period.

A Minority of Companies Have a Dedicated ESG or Sustainability Committee

➢ The absence of dedicated ESG or sustainability board committees may reflect the fact that companies are integrating ESG responsibilities into existing committees, most commonly nominating and governance or audit. The low prevalence of dedicated committees in this area may also reflect continued uncertainty in the context of persistent ESG scrutiny and backlash.

After the traditional audit, compensation, and nominating/governance committees required by most stock exchange listing standards, the most common standing committee of the board continues to be the executive committee. In the S&P 500, 32% of companies have such a committee in 2024, compared to 16% of Russell 3000 companies.

Other common board committees are the finance committee (26% of S&P 500 and 9% of Russell 3000 companies), science and technology committee (15% of S&P 500 and 9% of Russell 3000 companies), and risk committee (13% of S&P 500 and 12% of Russell 3000 companies). Only 3% of S&P 500 and 4% of Russell 3000 companies have a sustainability or ESG committee. As previously documented by The Conference Board, the nominating/governance committee leads in shouldering ESG responsibilities, although specific governance-related issues are most commonly assigned to the audit committee and HCM issues to the compensation committee.

The energy sector stands out with a notable 20% of companies having an ESG or sustainability committee, followed by materials at 9%. In contrast, the share of health care companies with such a committee is negligible, at only 0.4%.

The project is a collaboration among The Conference Board, the KPMG Board Leadership Center, Russell Reynolds Associates, the John L. Weinberg Center for Corporate Governance at the University of Delaware, and ESG data analytics firm ESGAUGE. Visit conferenceboard.esgauge.org/boardpractices to access the real-time data.