S&P 500 Equity Return by Governance Ranking
There is strong bottom-line evidence for strong corporate governance. By applying the composite measure of corporate governance characteristics to the S&P 500, a report found that the companies in the top 20% outperformed those in the bottom 20% by 17 points.
Source: The High Cost of Governance Deficits: A Case For Modern Governance, Diligent Institute
‘It Takes Three to Tango’
There is little difference in financial performance between companies with one or two digitally savvy directors and those with none, according to a report from MIT Sloan Management Review’s “It Pays to Have a Digitally Savvy Board.”
But companies with three or more digitally savvy directors had:
• 17% higher profit margins than those with two or fewer,
• 38% higher revenue growth,
• 34% higher return on assets, and
• 34% higher market cap growth
Avoiding the Overboarded Director
Market norms and expectations regarding the maximum number of boards a director may serve on are evolving.
Increased investor scrutiny on board performance appears to have led to directors serving on fewer boards.
Source: ISS Analytics, Director Overboarding: Global Trends, Definitions, and Impact
Boards Getting Older, More Female
And the percentage of women joining boards reaches a new record high, with 45% of new board seats filled by women in 2019 (compared to only 12% in 2008); and 19% of all Russell 3000 seats held by women.
Source: ISS Analytics, U.S. Board Diversity Trends in 2019