Building Societies Association
Feature
Diverse governance at building societies
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Contact: Andrew Gall Date: 10 Jun 2008 |
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Building society boards of directors are more diverse in terms of gender than the boards of publicly quoted companies on the FTSE 100 or the FTSE 250. This diversity can provide a wide basis of experience which can benefit decision making at building societies.
This analysis is based on information in building society annual reports and accounts for the financial years ending before 5 February 2008, as well as the Female FTSE 2007 Report*.
Size of boards
There were 523 directors at the 59 building societies in the UK, of which 153 were executive directors and 370 were non-executive directors.
As the charts below show, on average each society has a board of about nine directors, made up of two to three executive directors and around six non-executive directors. In comparison, the average FTSE 100 board has over 11 directors, with three to four being executive directors.
As would be expected, larger building societies tend to have more directors on the board, with the largest board in the sector comprising 13 directors.
Gender of directors
Of the 523 building society directors, 69, or 13.2%, were female, and most of these were non-executive directors (59, or 15.9% of non-executives) rather than executive directors (10, or 6.5% of executives).
Building societies as a whole compare well to publicly quoted companies. In the FTSE 100, 11.0% of all directors are female, and on FTSE 250 boards the proportion is just 7.2%.
13 societies had no female representation on their board. This represents 22% of societies, similar to the 24% of FTSE 100 companies with no female directors, but much lower than the 55% of FTSE 250 who have only males on their boards.
Age of directors
The average age of executive directors at building societies is 49.8 years old, and for non-executive directors it is 58.0. Both of these are lower than the average age of a director across all FTSE 100 companies, which were 50.9 years for executives and 58.8 for non-executive directors.
The average age of building society chairmen is 60.9 years old.
The youngest member of a building society board is 31 and the oldest is 86.
Length of service
Building society executive directors had served 7.0 years on average, and non-executive directors had served 7.5 years. These tenures are longer than at FTSE 100 companies, where executive directors had served 5.6 years on average and non executives had been in their positions for an average of 4.4 years.
The shorter tenures on FTSE 100 boards may reflect the shorter time horizons that stem from having publicly quoted shares and large institutional investors, compared to boards at building societies that may be better able to make decisions with regard to the longer term.
The longest serving building society executive director had been on the board for 25 years and the longest serving non-executive has served 37 years.
Board turnover
There was considerable change to building society boards in 2007, with changes to personnel on the board at more than four fifths of socieites.
Over 12% of the 523 directors at the end of 2007 reporting period were appointed within the financial year.
* The FTSE 100 and FTSE 250 information quoted above has been taken from The Female FTSE 2007 Report, published by the Cranfield University School of Management, which can be downloaded here:
