By Theo Francis

They oversee airlines, oil companies, home-improvement chains and makers of products ranging from deodorant to fighter jets. About half are CEOs, or once were. Roughly as many identify as women or racial or ethnic minorities.

They are the 250 most influential and effective directors at big, publicly traded U.S. companies, as ranked in the inaugural Wall Street Journal Top Board Directors listing.

At the very top: Edward Philip, the independent chairman of United Airlines. Philip made his name in executive roles at Lycos, a pioneering internet search company, and went on to head operations for Partners In Health, the global nonprofit bringing medical care to some of the world's poorest places.

Joining Philip as the five highest-ranked directors are Home Depot's Stephanie Linnartz, who once ran sportswear brand Under Armour; Debra Reed-Klages, a former utility-company CEO on the boards of Caterpillar, Chevron and Lockheed Martin; Joseph Jimenez, a former Novartis CEO who is lead director at Procter & Gamble and on the boards of General Motors and Century Therapeutics; and Gregory Boyce, a former coal-company CEO on the board of mining company Newmont.

"We're in an increasingly complex world where corporate leadership is being called on to grapple with all kinds of challenges and opportunities," says Rick Wartzman, co-president of Bendable Labs, the research and consulting firm that created the ranking for The Wall Street Journal Leadership Institute. "Directors are being called on to take an ever more important role."

To find the most effective and influential directors, Bendable analyzed data on more than 4,000 nonemployee directors of S&P 500 companies, as well as data on those companies and others at which the directors served. The analysis took into account a range of third-party scores, including company performance, activist vulnerability and corporate governance, as well as data on directors' backgrounds and their roles within their boards. (See more methodology details here.)

"So much of what happens in board deliberations and in board meetings, we really don't know," Wartzman says. "We tried to take what is public and available and where there are credible third-party assessments of different risks to a company where boards seemed to have an important role to play."

The ranking seeks to shed light on a longstanding but elusive question in corporate governance: What makes a good director?

The rise of independents

For decades, directors even at the largest publicly traded companies were often appointed from the ranks of big shareholders, upper management and their associates in business and society. These days, no more than one or two members of the C-suite sit around the boardroom table, and most or all of the other directors count as independent under the rules of the markets the company's shares trade on. (Those rules don't cover every kind of potential conflict.)

Yet boards remain notoriously difficult to evaluate. Directors oversee the company for shareholders, but management is responsible for execution. Beyond formal securities disclosures and corporate reports, it can be hard to draw a bead on what boards do. Most seek consensus and minimize disagreement, especially in public.

Ultimately, corporate boards are like firehouses, says B. Espen Eckbo, a Dartmouth College finance professor who ran its corporate-governance center for two decades. Until there's a fire, it is hard to know how well they function.

"The company runs itself in good times -- but when it gets to some times with fires, then the board has to really step up and save the company from making big mistakes," says Eckbo, who wasn't involved in the Journal's ranking. "The best way to go about it is to create a board that thinks like shareholders."

Academic research hasn't found strong evidence for director characteristics that contribute directly to company performance, although most experts believe that sizable stock ownership likely spurs directors to think more like the shareholders they represent, and that having an outside CEO on the board seems to help, but more than one isn't necessarily better.

CEO experience makes directors more sensitive to the challenges faced by executives -- and to the line between the board's role and the chief executive's, says Lloyd Carney, No. 73 on the list and a longtime tech executive who currently chairs the board of Grid Dynamics and sits on the boards of Visa and Vertex Pharmaceuticals.

"Hire the CEO, support the CEO, fire the CEO if you have to, and always guide the long-term strategy," Carney says. "The last thing you want is the board flying in every three months trying to tell you how to run the business."

Parsing the data

In the Journal's ranking, the 250 top directors vary in the length and breadth of their board service. About half the directors sit on just one board, as do seven of the top 10 directors, while most of the rest sit on two; only a few dozen directors sit on three or four (45 and 11, respectively). Among the directors sitting on four are former Alcatel-Lucent CEO Patricia Russo, who is on the boards of Merck, General Motors, Hewlett Packard Enterprise and KKR.

Half a dozen directors on the list have held a seat for at least a quarter-century -- including longtime tech executive and investor Harvey Jones, an Nvidia director since 1993, and Russo, who has been on the board of Merck and predecessor Schering-Plough since 1995. Another 17 took at least one of their seats within the past year or so, including Marissa Mayer, the former Yahoo chief executive who joined AT&T's board last year. (The ranking only considers directors set to serve terms through year-end 2025.)

Directors in the ranking had no role in creating it, though some are expected to be unpaid participants in a new conference series by the WSJ Leadership Institute.

In all, 48 companies have at least three directors among the top 250. Home Depot and Allstate have nine apiece, while Procter & Gamble has eight and Wells Fargo has seven -- in each case, majorities of each board.

"Part of what makes a great board is constructive collaboration with each other and with management," says Linnartz, who sits on Home Depot's audit and compensation committees.

At Home Depot, each director meets quarterly with a member of senior management, whether to tour stores or dig into some operational challenge, getting to know the business deeply.

When the coronavirus pandemic hit two years after she joined Home Depot's board, the board's familiarity with the company and its systematic strategic planning were evident, says Linnartz. The foundation was in place for a rapid expansion of the company's business to meet demand.

Individual vs. corporate factors

Company characteristics and results play a small part in the ranking, contributing around 10% of each director's score on average. A one-year total shareholder return that surpassed other companies in the same industry, or the S&P 500 as a whole, boosted scores, while measures of poor audit quality, activist vulnerability and high-profile controversies reduced them.

More influential: a measure of corporate prominence, based on the company's ranking in Fortune Magazine's list of the biggest and most influential companies, which accounted for around a fifth of the average combined score.

Individual characteristics were the biggest driver in the ranking, contributing about two-thirds of directors' final scores on average.

In some cases, a strong individual score made up for a poor company showing: Donald Knauss, a director of Target, McKesson and Kellanova, ranked No. 13 overall despite low corporate scores brought on by audit-quality penalties at all three companies, and penalties for activist vulnerability and litigation at McKesson and Target. Helping him: past CEO experience, serving on the boards of three such prominent companies, and leadership roles on each of the boards, including serving as lead director at Kellanova and board chairman at McKesson.

Many of the highest-scoring directors got there in part by serving on or chairing at least one of three key board committees: the audit committee, tasked with a range of financial oversight; the compensation committee, which sets CEO pay; and the nomination committee, which vets candidates for board seats.

The five top-ranked directors, for example, hold a combined 15 seats on those three committees, at nine S&P 500 companies, and chaired five of them. (Some serve on other committees as well.) Four also served as lead independent director or independent chairman for one or more companies: Jimenez at P&G and Century Therapeutics, Philip at United Airlines, Reed-Klages at Caterpillar and Boyce at Newmont.

"Typically, those leadership positions are based on the experience the other directors value in that director," says Knauss, who previously ran Clorox.

More is less

The ranking also docked 15 directors for serving on all three of the key committees, on the grounds that it could blunt a director's effectiveness.

That rule bumped Robyn Denholm, Tesla's high-profile board chair, from the top spot, landing her at No. 8 instead. Denholm chairs Tesla's audit committee and sits on its compensation and nominating committees, roles that contributed to criticism by Delaware's Court of Chancery when it found the company cut corners when awarding CEO Elon Musk a pay package that ran to billions of dollars in stock options.

A spokesman for Denholm declined to comment.

Four directors making the list did so despite receiving less than 80% shareholder support in proxy voting, including Ellen Kullman, lead director at Dell Technologies, with 62.7%, and Carney, who chairs the Grid Dynamics nominating committee, with 72.2%.

Most big-company directors win 90% support or better, and analysts often consider anything under 80% as cause for concern. Investors often oppose committee chairs based on fixed voting policies or to make a statement. Some withholding support from Carney flagged that women make up less than 30% of Grid Dynamics' board.

Carney notes just two of Grid Dynamics' eight nonemployee directors are white men. He concluded the board didn't need to change as it grappled with Russia's invasion of Ukraine, then home to nearly half of the company's employees.

"We have who we need to make the company successful," Carney says. "My focus is, how do I keep my employees safe, how do I keep the company executing to its true north?"

One thing that is difficult to capture in any rankings: personality traits like flexibility, the courage to question decisions and a clear vision of the distinction between the board's role and management.

"On paper he or she could have the most stellar background or track record but not really say much, not have much to add -- is that value to the company and shareholders?" says Constantine Alexandrakis, CEO of Russell Reynolds Associates, which places directors and helps boards evaluate their own effectiveness. "Or are they taking up a seat that could be filled by someone who has a more thoughtful approach?"

Ken Denman, No. 14 in the Journal ranking and chair of Costco Wholesale's audit committee and Motorola Solutions' governance and nominating committee, says he looks for intellectual curiosity in potential board members, as well as an understanding of the board's role in asking questions without micromanaging.

"At the top level, I think board work is all about being part of an effective team," says Denman, who has served as CEO of several tech companies, including one acquired by Apple in 2016.

"While the company may have a particular mission, a particular focus, a particular area of expertise -- inevitably the world changes," Denman says. "Each person has to know, here's what I can bring to the table."

Theo Francis is a Wall Street Journal staff reporter based in Washington, D.C. Email him at theo.francis@wsj.com.

(END) Dow Jones Newswires

By Theo Francis

They oversee airlines, oil companies, home-improvement chains and makers of products ranging from deodorant to fighter jets. About half are CEOs, or once were. Roughly as many identify as women or racial or ethnic minorities.

They are the 250 most influential and effective directors at big, publicly traded U.S. companies, as ranked in the inaugural Wall Street Journal Top Board Directors listing.

At the very top: Edward Philip, the independent chairman of United Airlines. Philip made his name in executive roles at Lycos, a pioneering internet search company, and went on to head operations for Partners In Health, the global nonprofit bringing medical care to some of the world's poorest places.

Joining Philip as the five highest-ranked directors are Home Depot's Stephanie Linnartz, who once ran sportswear brand Under Armour; Debra Reed-Klages, a former utility-company CEO on the boards of Caterpillar, Chevron and Lockheed Martin; Joseph Jimenez, a former Novartis CEO who is lead director at Procter & Gamble and on the boards of General Motors and Century Therapeutics; and Gregory Boyce, a former coal-company CEO on the board of mining company Newmont.

"We're in an increasingly complex world where corporate leadership is being called on to grapple with all kinds of challenges and opportunities," says Rick Wartzman, co-president of Bendable Labs, the research and consulting firm that created the ranking for The Wall Street Journal Leadership Institute. "Directors are being called on to take an ever more important role."

To find the most effective and influential directors, Bendable analyzed data on more than 4,000 nonemployee directors of S&P 500 companies, as well as data on those companies and others at which the directors served. The analysis took into account a range of third-party scores, including company performance, activist vulnerability and corporate governance, as well as data on directors' backgrounds and their roles within their boards. (See more methodology details here.)

"So much of what happens in board deliberations and in board meetings, we really don't know," Wartzman says. "We tried to take what is public and available and where there are credible third-party assessments of different risks to a company where boards seemed to have an important role to play."

The ranking seeks to shed light on a longstanding but elusive question in corporate governance: What makes a good director?

The rise of independents

For decades, directors even at the largest publicly traded companies were often appointed from the ranks of big shareholders, upper management and their associates in business and society. These days, no more than one or two members of the C-suite sit around the boardroom table, and most or all of the other directors count as independent under the rules of the markets the company's shares trade on. (Those rules don't cover every kind of potential conflict.)

Yet boards remain notoriously difficult to evaluate. Directors oversee the company for shareholders, but management is responsible for execution. Beyond formal securities disclosures and corporate reports, it can be hard to draw a bead on what boards do. Most seek consensus and minimize disagreement, especially in public.

Ultimately, corporate boards are like firehouses, says B. Espen Eckbo, a Dartmouth College finance professor who ran its corporate-governance center for two decades. Until there's a fire, it is hard to know how well they function.

"The company runs itself in good times -- but when it gets to some times with fires, then the board has to really step up and save the company from making big mistakes," says Eckbo, who wasn't involved in the Journal's ranking. "The best way to go about it is to create a board that thinks like shareholders."

Academic research hasn't found strong evidence for director characteristics that contribute directly to company performance, although most experts believe that sizable stock ownership likely spurs directors to think more like the shareholders they represent, and that having an outside CEO on the board seems to help, but more than one isn't necessarily better.

CEO experience makes directors more sensitive to the challenges faced by executives -- and to the line between the board's role and the chief executive's, says Lloyd Carney, No. 73 on the list and a longtime tech executive who currently chairs the board of Grid Dynamics and sits on the boards of Visa and Vertex Pharmaceuticals.

"Hire the CEO, support the CEO, fire the CEO if you have to, and always guide the long-term strategy," Carney says. "The last thing you want is the board flying in every three months trying to tell you how to run the business."

Parsing the data

In the Journal's ranking, the 250 top directors vary in the length and breadth of their board service. About half the directors sit on just one board, as do seven of the top 10 directors, while most of the rest sit on two; only a few dozen directors sit on three or four (45 and 11, respectively). Among the directors sitting on four are former Alcatel-Lucent CEO Patricia Russo, who is on the boards of Merck, General Motors, Hewlett Packard Enterprise and KKR.

Half a dozen directors on the list have held a seat for at least a quarter-century -- including longtime tech executive and investor Harvey Jones, an Nvidia director since 1993, and Russo, who has been on the board of Merck and predecessor Schering-Plough since 1995. Another 17 took at least one of their seats within the past year or so, including Marissa Mayer, the former Yahoo chief executive who joined AT&T's board last year. (The ranking only considers directors set to serve terms through year-end 2025.)

Directors in the ranking had no role in creating it, though some are expected to be unpaid participants in a new conference series by the WSJ Leadership Institute.

In all, 48 companies have at least three directors among the top 250. Home Depot and Allstate have nine apiece, while Procter & Gamble has eight and Wells Fargo has seven -- in each case, majorities of each board.

"Part of what makes a great board is constructive collaboration with each other and with management," says Linnartz, who sits on Home Depot's audit and compensation committees.

At Home Depot, each director meets quarterly with a member of senior management, whether to tour stores or dig into some operational challenge, getting to know the business deeply.

When the coronavirus pandemic hit two years after she joined Home Depot's board, the board's familiarity with the company and its systematic strategic planning were evident, says Linnartz. The foundation was in place for a rapid expansion of the company's business to meet demand.

Individual vs. corporate factors

Company characteristics and results play a small part in the ranking, contributing around 10% of each director's score on average. A one-year total shareholder return that surpassed other companies in the same industry, or the S&P 500 as a whole, boosted scores, while measures of poor audit quality, activist vulnerability and high-profile controversies reduced them.

More influential: a measure of corporate prominence, based on the company's ranking in Fortune Magazine's list of the biggest and most influential companies, which accounted for around a fifth of the average combined score.

Individual characteristics were the biggest driver in the ranking, contributing about two-thirds of directors' final scores on average.

In some cases, a strong individual score made up for a poor company showing: Donald Knauss, a director of Target, McKesson and Kellanova, ranked No. 13 overall despite low corporate scores brought on by audit-quality penalties at all three companies, and penalties for activist vulnerability and litigation at McKesson and Target. Helping him: past CEO experience, serving on the boards of three such prominent companies, and leadership roles on each of the boards, including serving as lead director at Kellanova and board chairman at McKesson.

Many of the highest-scoring directors got there in part by serving on or chairing at least one of three key board committees: the audit committee, tasked with a range of financial oversight; the compensation committee, which sets CEO pay; and the nomination committee, which vets candidates for board seats.

The five top-ranked directors, for example, hold a combined 15 seats on those three committees, at nine S&P 500 companies, and chaired five of them. (Some serve on other committees as well.) Four also served as lead independent director or independent chairman for one or more companies: Jimenez at P&G and Century Therapeutics, Philip at United Airlines, Reed-Klages at Caterpillar and Boyce at Newmont.

"Typically, those leadership positions are based on the experience the other directors value in that director," says Knauss, who previously ran Clorox.

More is less

The ranking also docked 15 directors for serving on all three of the key committees, on the grounds that it could blunt a director's effectiveness.

That rule bumped Robyn Denholm, Tesla's high-profile board chair, from the top spot, landing her at No. 8 instead. Denholm chairs Tesla's audit committee and sits on its compensation and nominating committees, roles that contributed to criticism by Delaware's Court of Chancery when it found the company cut corners when awarding CEO Elon Musk a pay package that ran to billions of dollars in stock options.

A spokesman for Denholm declined to comment.

Four directors making the list did so despite receiving less than 80% shareholder support in proxy voting, including Ellen Kullman, lead director at Dell Technologies, with 62.7%, and Carney, who chairs the Grid Dynamics nominating committee, with 72.2%.

Most big-company directors win 90% support or better, and analysts often consider anything under 80% as cause for concern. Investors often oppose committee chairs based on fixed voting policies or to make a statement. Some withholding support from Carney flagged that women make up less than 30% of Grid Dynamics' board.

Carney notes just two of Grid Dynamics' eight nonemployee directors are white men. He concluded the board didn't need to change as it grappled with Russia's invasion of Ukraine, then home to nearly half of the company's employees.

"We have who we need to make the company successful," Carney says. "My focus is, how do I keep my employees safe, how do I keep the company executing to its true north?"

One thing that is difficult to capture in any rankings: personality traits like flexibility, the courage to question decisions and a clear vision of the distinction between the board's role and management.

"On paper he or she could have the most stellar background or track record but not really say much, not have much to add -- is that value to the company and shareholders?" says Constantine Alexandrakis, CEO of Russell Reynolds Associates, which places directors and helps boards evaluate their own effectiveness. "Or are they taking up a seat that could be filled by someone who has a more thoughtful approach?"

Ken Denman, No. 14 in the Journal ranking and chair of Costco Wholesale's audit committee and Motorola Solutions' governance and nominating committee, says he looks for intellectual curiosity in potential board members, as well as an understanding of the board's role in asking questions without micromanaging.

"At the top level, I think board work is all about being part of an effective team," says Denman, who has served as CEO of several tech companies, including one acquired by Apple in 2016.

"While the company may have a particular mission, a particular focus, a particular area of expertise -- inevitably the world changes," Denman says. "Each person has to know, here's what I can bring to the table."

Theo Francis is a Wall Street Journal staff reporter based in Washington, D.C. Email him at theo.francis@wsj.com.

(END) Dow Jones Newswires

May 18, 2025 20:31 ET (00:31 GMT)

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