Keep up to date with technology leadership moves by category.

Tuesday, 04 June 2013 16:43

How big are Tech Boards and how many vacancies do they have? Featured

Written by
Rate this item
(0 votes)

The average board represented in the survey hosts six members. This mirrors the NACD’s survey of entrepreneurial boards. The finding suggests that boards of small technology firms are substantially smaller than boards at most public corporations. For example, a 2006 study conducted by Spencer Stuart, a global executive search firm headquartered in Chicago, showed that the average S&P 500 firm has 10.7 members on its board. That same study shows a mere 15% of S&P 500 firms have eight or fewer board members.

To put these statistics into perspective, consider the practices of S&P 500 firms. Spencer Stuart found that 57% of S&P 500 companies pay a board meeting fee and 58% of S&P 500 companies pay a committee meeting fee (both down from 72% and 68%, respectively, in 2001). According to Spencer Stuart, the average meeting attendance fee paid by S&P 500 corporations was US$1,955 in 2005. Although it is possible that the lower prevalence of meeting fees in our sample firms is due to a greater adoption of “good governance guidelines,” we feel that the decreased emphasis on meeting fees likely reflects the fact that many small technology firms are cash constrained and have directors with significant equity stakes.

Drilling down into the survey results for small technology firms participating in our study shows a clear relationship between the size of a company and the size of its board. For example, the median number of directors at the smallest firms within our survey (i.e., firms with less than US$5 million in annual revenue) is five. The median number of directors at the largest firms within our sample (i.e., firms with greater than US$25 million in annual revenue) is seven. The size of boards varies considerably at companies of similar size, especially among firms with less than $25 million in annual revenue. (See Figure 9.)

Figure 9: Board Size by Company Size

Board Size by Company Size

Given that the public companies in our sample are significantly larger than the private companies, the public companies had much larger boards. However, when we compared public and private companies with the same revenue, we found that the median size of boards was virtually identical. Using this sub-sample of revenue-matched firms, we find that the median difference in board size is zero. In other words, holding revenue constant, half of private firms have boards that are at least as large as those of public companies, and half of private firms have boards that are at least as small as those of public companies. However, in cases where public boards are larger than private boards, public boards tend to be much larger than the private boards. And when private boards are larger than public boards, the discrepancy is generally smaller (by approximately one member).

Noteworthy is the significant difference in the number of empty board seats across public and private companies. Roughly 1 in 3 private companies have at least 1 empty board seat. By contrast, only one in six public companies have a vacant board seat. (See Figure 10.) This finding holds for both the revenue-matched and non-matched samples. Differences in company size or factors that are typically associated with size, such as the visibility of the corporation, do not make a significant impact on the number of empty board seats.

Figure 10: Proportion of Boards with Empty Seats

Proportion of Boards with Empty Seats

Click here to read the full report on Entrepreneurial Boards.

Read 8419 times Last modified on Saturday, 08 August 2020 20:13
Dora Vell

Dora Vell is the Managing Partner of Vell Executive Search, a boutique executive search firm in Boston focused on recruiting technology executives and board members. Vell has successfully completed numerous board member and C-level executive searches, including CEOs, COOs, CIOs, and Vice Presidents - at both public and private companies.

Prior to founding the firm in 2005, Vell was a Partner at Heidrick & Struggles' Technology practice for seven years.  Before her career in executive search, she worked at IBM for 11 years, managing software engineering organizations of 100 people and software sales organizations with revenues of $150 million. She has also served as an executive assistant to the CEO of IBM Canada for one year.

Vell holds seven worldwide software patents. She has published several Business of Leadership reports on governance and leadership and has been quoted in numerous articles including The Wall Street Journal, Forbes, Business Week, Fortune, Agenda Week, MSNBC, Mass High Tech, the OPUS for the World Economic Forum, Boston Business Journal, The Globe & Mail, CIO Magazine, and IEEE. She also has been a featured speaker on leadership at numerous conferences and at Columbia University's MBA program.

Vell is a member of the National Association of Corporate Directors (NACD), the Boston CEO Roundtable. She has served on the boards of Framingham State, Entrepreneur's Organization, Goodwill, Mary Centre for developmentally handicapped adults,, and RBC Capital Partners.

She has received an MBA from the University of Toronto, a Master in Computer Science from the University of Waterloo, and a Bachelor in Computer Science from Carleton. She has also completed the MIT Entrepreneurial Master’s program.

Leave a comment

Subscribe to Vell Leadership Insights

Track leadership moves and stay up to date with current trends