The Canada Spencer Stuart Board Index Snapshot provides an in-depth analysis of non-executive director (“NXD”) appointments and board composition for the boards of Canada’s largest publicly traded “blue chips.” The analyses, together with commentary from our board experts, provide an authoritative view of board composition and succession trends for a representative sampling of 100 S&P/TSX Composite listed companies with annual revenues exceeding C$ 1 billion (the CSSBI 100). The 2023 Snapshot spotlights the incoming class of NXDs, measuring progress on board-level diversification, derived from enhanced director self-identification and disclosure by the boards of CSSBI 100 companies. Spencer Stuart’s annual review of board compensation for CSSBI 100 companies is also provided, including benchmarks for each of: NXDs, board chairs, lead directors, committee chairs and committee members, in addition to amounts paid for board and committee meetings and travel, where applicable.
Fewer new non-executive directors in 2023
In 2023, 93 new non-executive directors (NXDs) were appointed by CSSBI 100 boards, 17 fewer than in 2022. Board turnover in 2023 (9%) was slightly lower compared to levels observed in the prior four years. Sixty percent of CSSBI 100 boards appointed at least one new NXD, mostly to replace retiring board members on a one-to-one basis. Two or more NXDs were appointed at 25% of CSSBI 100 boards. Generally, NXD appointments were part of planned renewal initiatives, undertaken by governance and nomination committees.
NXDs from historically underrepresented groups constituted the majority of new board members
Nearly 60% of all incoming NXDs to CSSBI 100 boards were representative of various historically underrepresented groups. Women, including those also self-identifying as Indigenous, a visible minority, a person with a disability or LGBTQ2s+, comprised most of this cohort. While there were fewer appointments of those self-identifying as Indigenous, a visible minority, a person with a disability and/or LGBTQ2S+ compared to 2022, the totals for 2023 were still three times higher than in 2019.
Strong demand for CEO-level experience, financial experts and transformational leadership credentials
CSSBI 100 boards added more CEO experience than in the prior four years. CEOs are always in high demand for board roles, given their depth and breadth of experience and chair succession potential; however, supply constraints, especially active public company CEOs, help to explain the variable totals over the past five years. “Financial experts” represented a large proportion (35%) of new NXDs. Boards need financial depth to help meet challenging market demands and stringent audit and reporting requirements. Natural turnover and audit committee succession also help to explain the consistently high demand.
“First-timers” are a critical pipeline for board renewal and diversification
First-time public company directors constituted 37% of all incoming NXDs to CSSBI 100 boards in 2023. This influx, higher in recent years, should be viewed in the context of board renewal, including the recruitment of NXDs from non-traditional corporate networks, non-residents of Canada and active, next-generation leaders. Most (62%) of this cohort were representative of historically underrepresented groups, compared to about half in 2020 and 2019; also close to half of the first-timers (44%) were non-residents of Canada, in a continuing trend.
More women are serving in board leadership, given active chair rotation practices
Compared to 2019, there were close to 50% more women serving in formal board leadership positions (board chair, vice chair, lead director and committee chair). Comparing 2023 to 2022, women chairing key board committees increased, except for governance and nominations committees. Women had the largest gain in audit chair appointments compared to other core board committees.
NXD compensation mix in 2023
“Flat fee” structured annual NXD retainers (inclusive of per meeting fees) were used by the vast majority (92%) of CSSBI 100 companies. Fewer than 10% of companies in 2023 continued to provide incremental compensation for meeting attendance.