1

OVERVIEW

As evidenced by the 2019 MIT research indicating that companies with several tech directors outperformed their market and peer group (in terms of both revenue growth and profitability), robust representation is becoming a matter of good governance.

In this report, we look at tech and digital director moves over the past two years, as well as underlying trends and our projections for the rest of 2020 and beyond.

METHODOLOGY

We analyzed the 300 largest publicly-traded companies around the world based on the S&P Global 1200 list. The criteria for technology directors included*:

1. Past or current experience as an executive at a technology company

2. Past or current experience as a technology executive

3. Past or current experience overseeing digital transformation efforts

4. We considered only non-executive directors

*Only experience since 2007 was considered

The Trend ContinuesWe continue to see an influx of tech and digital director additions to boards worldwide, and in several markets the pace is picking up: More than a third of tech and digital directors currently on the S&P Global 300 boards joined within the last two years. While Europe’s numbers are flat, in the Americas there has been a significant increase in the number of boards with two or more tech/digital directors. In the Asia Pacific region (APAC), we have seen meaningful growth in the total number of companies with any tech/digital expertise, as well as those with two or more. The shift in composition driven by the addition of tech and digital talent is a critical enabler of a future-ready board.

PERCENTAGE OF COMPANIES IN THE S&P 300 BY REGION THAT HAVE TECH/DIGITAL DIRECTORS

Americas

76%

49%

73%

38%46%

24%

38%

13%

AsiaPac

Has at least 1 TD

2018

2020

Has 2+ TD

66%

26%

65%

29%

Europe

CROSSING THE DIGITAL DIVIDE: AN IMMEDIATE AND URGENT IMPERATIVE

Building a Future Proof and Agile BoardAs companies across all sectors have accelerated technology transformation agendas, many have also prioritized the diversification of talent at the board level; focusing on appointing leaders with tech, digital and data backgrounds. In the turbulent environment created by the impact of Covid-19, we expect this trend to further accelerate. For the past 7 years, Russell Reynolds Associates has published a bi-annual report tracking the addition of such talent to boards. Based on our 2020 analysis of the 300 largest publicly-traded companies around the world, or the S&P Global 300, we find the percentage of boards that include two or more tech and digital directors has grown to 36 percent, up from 28 percent in 2018.

rr-0147-004019 - Future proofing the board.indd 1rr-0147-004019 - Future proofing the board.indd 1 10-Apr-20 6:25:42 PM10-Apr-20 6:25:42 PM

2

Trends by Industry: Among Those Placements in the Past Two Years

PERCENTAGE OF COMPANIES IN THE S&P 300 BY INDUSTRY THAT HAVE TECH/DIGITAL DIRECTORS

% of directors with background in academia (with

particular focus on AI) has more than

doubled in the past two years.

Food & beverage manufacturers

accounted for 1/4 of the new consumer

appointments in the past two years.

Nearly 2/3 of the tech directors added since 2018 have functional

technology experience.

4 out of 10 of tech directors added in the

past two years have so�ware

backgrounds.

Accelerated adding tech or digital talent to the board: 1/4 of

companies that added tech directors since 2018 added two

or more.

Vishal Sikka, CEO of Vianai

Helen Arnold, President of SAP

Data Network, and previously SAP CIO

Ken Washington, CTO of Ford Motor

Maria Martinez, EVP and Chief Customer Experience Officer of

CiscoEd Mueller, Former

Chairman and CEO of Qwest

Communications

Aparna Chennapragada, VP

& GM for Camera and AR Products at

Google

Raj Lochan Gupta, Chairman of Aptiv

(Components Manufacturer and

Tech Solutions)Terrence Robin

Curtin, CEO of TE Connectivity

Amy Brady, CIO of KeyCorp (Financial Services Products)

92%

83%89%

69%

76%

33%

72%

29%

Has at least 1 TD

2018

2020

Has 2+ TD67%

11%

70%

22%

49%

22%

53%

30%

54%

17%

53%

23%

Technology

Sector Trends

Consumer Healthcare Financial Services Industrial

Recent additions – select examples

rr-0147-004019 - Future proofing the board.indd 2rr-0147-004019 - Future proofing the board.indd 2 10-Apr-20 6:25:43 PM10-Apr-20 6:25:43 PM

3

Tech & Digital Director Archetypes in 2020The profile and expertise of the ideal tech or digital director depends on a company’s strategic objectives and governance needs. Though about half bring tech company CEO experience, we have also seen an increase in those with functional tech backgrounds (IT/engineering, data, digital, AI) in the past two years, signaling a shift towards a more targeted approach.

The Elements of a Future Proofed Board: Governance in 2020 and BeyondIn the shaping of a “future proof” board, the addition of tech and digital talent is critical -- but it is only a beginning. Boards must also ensure that they leverage the strength of such diversity by integrating the perspectives of these new directors, particularly when they challenge assumptions about how the business is making space for new business models and growth opportunities, and when they elevate risk topics such as business model disruption, cyber attacks and tech obsolescence.

In the uncharted territory in which all companies now find themselves, it is clear that boards must move away from check-the-box, rear-looking governance and reporting towards a more agile and engaged approach. Those able to pivot will spot opportunities and threats earlier and be better equipped to oversee critical strategic bets, people decisions and risk mitigation.

CEO

CIO/CTO/CDO/Data

COO

CFO

58%

24%

20%

12%

+15%

+11%

+7%

+5%

FUNCTIONAL EXPERIENCE: AMONG THOSE DIRECTORS ADDED SINCE 2018 % Change (since 2018)

Questions the board should be asking:

Does our board composition reflect the desired “future state” of our organization?

Do our directors bring the diversity of experience to address strategic growth and transformation as well as risk management?

Which tech, digital, data skillsets would be most additive?

How can our board function in a more “agile” manner to address increased volatility and change?

rr-0147-004019 - Future proofing the board.indd 3rr-0147-004019 - Future proofing the board.indd 3 10-Apr-20 6:25:44 PM10-Apr-20 6:25:44 PM

CONTRIBUTING MEMBERS OF THE RUSSELL REYNOLDS TECHNOLOGY AND CEO & BOARD PRACTICES

ROBERT ALEXANDER, New York City

WOLFGANG BAURIEDEL, Boston

DAVID FINKE, Palo Alto

RHYS GROSSMAN, London

CECYL HOBBS, San Francisco

ART HOPKINS, Atlanta

TRISTAN JERVIS, London

MARGOT MCSHANE, San Francisco

TUCK RICKARDS, San Francisco

ERIC SIGURDSON, Chicago

NADA USINA, New York City

About Russell Reynolds Associates

Russell Reynolds Associates is a global leadership advisory and search firm. Our 470+ consultants in 46 offices work with public, private and nonprofit organizations across all industries and regions. We help our clients build teams of transformational leaders who can meet today’s challenges and anticipate the digital, economic and political trends that are reshaping the global business environment. From helping boards with their structure, culture and effectiveness to identifying, assessing and defining the best leadership for organizations, our teams bring their decades of expertise to help clients address their most complex leadership issues. We exist to improve the way the world is led.

www.russellreynolds.com

© Copyright 2020, Russell Reynolds Associates. All rights reserved. This material may not be copied, reproduced or redistributed, in whole or in part, without the prior express written consent of Russell Reynolds Associates.

https://sloanreview.mit.edu/article/it-pays-to-have-a-digitally-savvy-board/

rr-0147-004019 - Future proofing the board.indd 4rr-0147-004019 - Future proofing the board.indd 4 10-Apr-20 6:25:44 PM10-Apr-20 6:25:44 PM