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Launched recently, the 2013 Eversheds Board Report, “The Effective Board” is a major new study into global boardroom composition and culture, investigating how board structures are changing across the world. The report is unique in that it seeks to provide insight into what makes an effective board.

Our new report updates and expands on the findings of our original 2011 report and involves a close analysis of the share price performance of over 500 top companies in Europe, the US, Asia-Pacific, the Middle East and Brazil between 2011 and 2012 to investigate the characteristics of global boardrooms. It also reflects in-depth interviews with 85 senior board members from around the world.

Some on the key findings of the report include:

Ratio between executive to non-executive directors

Companies with a higher ratio of executive directors to non-executive directors tend to perform better.

Board size

A significant trend identified in our 2011 report continued as companies with smaller boards had a better share price performance. The majority of the directors interviewed believed that an effective board should have less than 12 members.


Companies with a diversity of industry experience and slightly younger directors tended to perform better, with 61% of directors believing that diversity in the widest sense has the most effect on board performance.

Trend and average age

Notwithstanding this, the trend has been to recruit non-executive directors with same industry experience. The average age of directors has also increased to 60 from 58.


In all regions, better company performance was more closely linked to levels of short term variable pay rather than to fixed salaries or long term variable pay. Amongst European companies, the CEOs who received the highest total remuneration packages and those who earned the highest levels of short term variable pay led better performing companies.

Shareholder engagement

Shareholders appear generally to be engaged in voting (although shareholders of European companies are least engaged compared to other regions). The types of resolutions which received the highest shareholder approval generally related to dividends whilst lowest approval varied from remuneration reports in the UK to shareholder proposals in the US.

Risk management

The majority of directors interviewed felt that their board’s approach to risk management had changed over the past couple of years towards a more proactive and positive focus on risk and risk management.

One of the benefits of our quantitative and qualitative analyses is that the data and the views reported show an interesting dichotomy, namely that often the general trend of what is happening lies in one direction, yet the trend in relation to better performing companies lies in the other. For example, the trend seems to be to have fewer executives on a board, but companies with better share price performance have a higher ratio of executives to non-executives than the regional norm!

The findings of the report ought to make a valuable contribution to the ongoing debate on what makes for good corporate governance in the boardroom. It is encouraging that our research also reveals that diversity is still a key priority, with directors now moving the debate beyond gender to also encompass diversity of age, sector and skill sets as well as international experience. However, the trend towardsmaller boards means that achieving this diversity will become an increasing challenge.



This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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