Amongst the most senior board members – chairs and executive directors – the average number of positions held is two. Across all board members, sitting on more than one major financial services board is less common: only 3% of directors tracked hold two or more board roles at the largest European financial services firms.
When asked to identify the primary driver behind directors assuming multiple board positions, just over a quarter (26%) of investors cited board members’ desires to gain broader experience and over a fifth (22%) cited remuneration. Separately 19% of investors believe it relates to a shortage of female candidates with sufficient experience; however, current EY Boardroom Monitor data does not support this, finding that the proportion of both men and women sitting on three or more boards correlates with the gender split of the total director population tracked.
From a sector perspective, directors holding multiple board positions are most common within the asset management sector, where 49% of board members hold more than two board positions. It is least common in the banking sector, where 39% of board members hold more than two board positions.
From a regulatory perspective, while there are local market limitations to some director roles, there is no blanket regulation applied across European financial services markets to restrict or mandate the number of board roles that can be held by an individual.
Omar Ali, EY EMEIA Financial Services Managing Partner, comments: “Concerns about ‘overboarding’ and the knock-on effects it could have on governance are increasingly topical. A careful balance must be struck by companies and chairs to build a board with the requisite skills and breadth of experience to face new and increasingly complex risks while ensuring that all members have the capacity to dedicate the time and resources demanded by the board role. This is particularly the case for board directors serving on multiple boards of businesses that are facing into challenges at the same time, and when the talent pool of qualified candidates is small.