Investors constantly seek confidence that boards of directors at portfolio companies are fulfilling their fiduciary responsibilities well. Investors are often left weaving together bits and pieces of outside-in data to get a feel for what might be happening in the boardroom – and to assess how likely the board is to be focused on serving their fiduciary responsibilities. ISS Analytics recognizes this problem, and to address it we continue to build datasets available in ISS DataDesk and methodologies such as ISS QualityScore. In this paper, ISS describes one such model of evaluating outside-in board effectiveness and its measures.

With the global corporate governance debate turning to board refreshment and director qualifications, many investors have already begun to search to identify the boardroom attributes that turn a collection of highly credentialed individuals into an effective board that can deliver company performance, reduce governance risk, and represent shareholders’ interests. ISS Analytics, Powered by DataDesk can be used to access an important but non-traditional source of information on companies, to generate a more complete picture of all risks and all opportunities, or for unique idea generation.

In this continuing series of analyses drawing on the capabilities of ISS Analytics, Powered by DataDesk, we examine companies in the U.S. S&P 1,500 index to gauge whether and how industry classification affects certain governance structures and practices. This paper provides inter-sectoral comparisons of average director ages and board tenures, outside seats and attendance levels, and director and officer holdings for firms in the S&P 1500 index. While ISS found that certain common assumptions hold true, the analysis also uncovered some unexpected findings.