TheCorporateCounsel.net

For at least a generation, the idea that large public companies should be run by boards dominated by people with no experience in the business they’re running has been a cornerstone of our concept of good corporate governance. Even if you buy into that idea, I’ve always thought that there are good reasons for management representation on a public company’s board to consist of more than just the CEO. According to this recent Jenner & Block survey of non-independent directors on S&P 500 boards, at least some of those public companies seem feel the same way.

The survey identified 161 S&P 500 companies with more than one non-independent director as of March 25, 2024. That’s about 1/3rd of the S&P 500, but the question is – as Butch Cassidy put it – “Who are those guys?” Here’s what the survey had to say about that:

– Almost 20% of the S&P 500 has two non-independent directors while approximately 12% of the S&P 500 has three or more non-independent directors.

– Companies with multiple non-independent directors were split evenly between companies with solely multiple management directors and companies with one management director and one or more non-management non-independent directors. Approximately half of the 161 companies identified consisted solely of management directors while the other half consisted of one management director and other, non-independent directors.

– The most common combination of management directors was the CEO and executive chairman combination (48 companies), while the CEO-“second in command” combination was the second most common (27 companies).

– Non-independent directors who weren’t members of management consisted of a founder or co-founder (20 companies), a former CEO (26 companies), family members (15 companies had at least one family member on the board, and six companies had multiple family members on the board), and stockholder designees or former designees (eight companies). Rounding out the list were six companies with directors who weren’t independent due to related party transactions.

– John Jenkins