Leadership in Review: CEO and Board of Directors | TALNT Insights
Boards Improving on Gender Diversity as Appointments Surge - CEOs Remain Mostly MaleBoard of Directors appointments surged in 2020 and Q1 of 2021 with an impressive rate of female appointees. The Fintech, Consumer, Software and Wealth and Asset Management sectors all performed well on gender diversity in the boardroom, as board appointments accounted for the greatest amount of moves tracked by TALNT. The reasons for these trends are manifold. First, pandemic disruption meant that many executives sought external expertise to manage strenuous shareholder relations, and to craft a new vision going forward. Indeed, corporate governance requires those with experience in managing crises - despite the vast differences between the 2008 financial crash and that of 2020.Yet it should be noted that the pandemic had varied effects on each sector. The Technology, Fintech and Software sectors were boosted by digital transformation; Wealth and Asset managers had to reconsider portfolio strategy. For example, payments firm Square appointed Ford Foundation president, Darren Walker, to its board to pursue philanthropic goals after a surge in profits - displaying the myriad reasons for board appointments across industries.Board moves continued to surge in the second half of 2020 and Q1 of 2021 as the economy recovered. Another rationale, particularly for technology companies, was the IPO and SPAC gold rush driven by low-interest rates.Board appointments are often seen as a precursor to going public, since influential non-execs can connect late-stage startups with institutional investors - or a blank-cheque company for a merger. The appointment of Next CEO, Simon Woolfson, by Deliveroo as they approach their IPO typifies this trend.Other technology firms have used board appointments to strengthen their legal and compliance teams as they anticipate regulation. In addition, many expansive companies brought in venture capitalists and executives from other sectors as they look towards M&As. One such example is the cryptocurrencies marketplace Coinbase bringing in Melissa Strait and Marc Andreessen.
Read Company in Focus | Coinbase hereBoard DiversityThe commendable diversity stats for Board appointments, relative to CEO, CFO and CTO, could be attributed to an incoming NASDAQ rule that boards must have at least one woman and one member of an underrepresented minority.However, this was announced in early December. Our data shows that female representation was rising prior to the announcement. We can also reveal that female representation approached parity with men in the Wealth and Asset Management and Consumer sectors too - highlighting that structural changes are well underway beyond the technology index. In March 2021, the FCA threatened regulatory scrutiny if diversity quotas weren't met, which could pre-empt an influx of UK female board-moves in the future. Tim Sheffield, Executive Chairman, Sheffield Haworth, comments:
"The increase in Board appointments highlights the pace of change and disruption in many global industries. It is encouraging to see the TALNT data validating the movement in diversity trends."CEO TrendsCEO moves ran slightly below board trends, with a large spurt of activity into Q4 of 2020. Pandemic-related tumult undoubtedly caused upheaval at the apex of large organisations such as HSBC, JP Morgan, Deutsche, Mastercard and UBS.Not all activity was pandemic related though. Thomas Gottstein was nominated as CEO of Credit Suisse when Tidjane Thiam stepped down after a corporate espionage scandal in February 2020. As with board appointments, we witnessed a small drop in activity in February 2021. The precipitous drop in March of that year is merely due to being halfway through that month at the time of writing. Still, the slight dip has likely been caused by the prospect of US corporate tax rises from 21% to 28%, and rising 10-year Treasury yields holding off new appointments. TALNT data showed the three most active sectors for CEO appointments were Fintech, Consumer and Wealth and Asset Management. Fintech saw a large spike in January 2021 as the sector continues to grow.CEO DiversityJust 15.4% of CEO moves recorded by TALNT were female, and our data shows that the gap in appointments by gender is far greater in CEOs than Board positions. The total number of female CEO moves did rise in the past nine months, with promising signs of closing the gap in early 2021. The Fintech sector performed the best in this regard.Another promising sign was Citi's high profile appointment of Jane Fraser in September 2020, and we expect to see the number of female CEOs rise throughout the rest of 2021. Tim Sheffield adds,
"The positive outlook for increased numbers of female CEO appointments is encouraging. Citi are leading the way in setting a new leadership dynamic in the financial services sector."Overall, the past year has seen significant growth in the appointment of directors and CEOs. Companies have looked for new leadership and advisors to deal with pandemic-effects and technological disruption. We expect to see a continued increase of board appointments as vaccines spark economic recovery across the world, providing the Fed stay resolute on interest rates amid short-term inflationary risk.Retirements and resignations render CEO moves capricious by their very nature. Nonetheless, the outlook is bright, and female appointments are set to rise in 2021 and beyond.
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