The highlights of 2023
02 highlights
2023
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25%
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35%
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Board Monitor United Arab Emirates
Our third annual report on incoming directors at listed companies in the UAE shows a growing willingness to appoint younger board members and those without prior CEO experience.
2023
01 Overview
After the unprecedented disruptions of recent years, in 2022, the United Arab Emirates continued its mission to drive sustainability and prosperity internally and lead innovation globally. The onus is on boards to deliver on the ambition of making Emirati companies world leaders in their fields; the data collated in this report indicates that boards are continuing to reshape themselves to deliver on this mandate.
The shifting profile of newly appointed directors, when compared to previous years, suggests a growing focus on diversity, particularly when it comes to gender and executive backgrounds. Gender diversity is at the top of many Emirati boards’ agendas as they are looking to comply with a rule established in 2021 by the Emirates Securities and Commodities Authority (ESCA) that sets a quota of one woman per listed company board. In 2022, while there were fewer board appointments made overall, the share of seats going to women increased.
Sustainability, climate change in particular, has risen on board agendas as well. The UAE has stepped up in the GCC region, introducing the Sustainable Finance Framework, which is meant to incentivize green financing and increase the volume of climate-related initiatives in the country. This led to an intensification of corporations setting up ESG initiatives in the country. And the government is leading by example in hosting the UN’s 28th Climate Change Conference (COP 28) in November 2023. Boards around the world are feeling the pressure from their customers, investors, and governments to integrate sustainability in their business, and they will increasingly have to deal with complex regulatory requirements when they expand internationally. A recent survey Heidrick & Struggles
01 Overview
Driving sustainability and prosperity in the UAE
02 highlights
04 Methodology
This report is part of Heidrick & Struggles’ long-standing study of trends in board composition in markets around the world. Produced by our global CEO & Board Practice, these reports track and analyze trends in non-executive director appointments to the boards of the largest publicly listed companies in Australia (ASX 200), Belgium (BEL 20), Brazil (BOVESPA), Canada (TSX 60), Colombia (COLCAP), Denmark (OMX Copenhagen 25), Finland (OMX Helsinki 25), France (CAC 40), Germany (DAX and MDAX), Hong Kong (Hang Seng), Ireland (ISEQ), Italy (FTSE MIB), Japan (TOPIX Core 30), Kenya (NSE Top 40), Mexico (BMV IPC), the Netherlands (AEX), New Zealand
(NZX 10), Norway (OBX), Poland (WIG 20), Portugal (PSI 20), Saudi Arabia (Tadawul), Singapore (STI 30), South Africa (JSE Top 40),
South Korea (KOSPI 50), Spain (IBEX 35), Sweden (OMX 30), Switzerland (SMI Expanded), the United Arab Emirates (ADX and DFM),
the United Kingdom (FTSE 350), and the United States (Fortune 500). Information about executives is gathered from publicly available sources, BoardEx, and a Heidrick & Struggles proprietary database.
ABOUT THE REPORT
03 References
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Acknowledgments
Thanks to the following Heidrick & Struggles colleagues for their contributions to this report: Richard Guest and Maliha Jilani.
The share of board seats allocated to women rose from 17% in 2021 to 23% in 2022.
For detailed market data and comparisons, please visit our interactive Board Monitor 2023 dashboard.
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29%
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Experience as a CEO remains the most common route to a board appointment; however, the number of appointees with a CEO background dropped from 56% in 2021 to 35% in 2022.
20%
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7%
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56%
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References
¹ M. Muneer and Ralph Ward, “Boards must know that ESG isn’t just a buzzword. Here’s why,” Gulf Business, June 28, 2023.
Alice Breeden, Jeremy Hanson, Ron Soonieus, Sonia Tatar, and David Young, The Role of the Board in the Sustainability Era, Heidrick & Struggles.
61%
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conducted in collaboration with the Boston Consulting Group (BCG) and the INSEAD Corporate Governance Centre shows that, while 79% of the board members we surveyed globally say they have a very or entirely clear understanding of the strategic opportunities and risks sustainability presents, only 29% completely agreed that they have sufficient knowledge for effective oversight of sustainability in their business.
As many UAE companies are planning on international expansion, we have also seen greater acceleration—though from a low starting speed—toward bringing in more international independent directors. Opening up more board positions to international executives has the additional benefit of mitigating “overboarding,” an issue that continues to be of concern for many companies in the country and one that may be compounded by the significant decrease in the share of first-time public board directors. In addition, the UAE has a historical preference to appoint directors who are active in their executive roles and therefore have limited time to focus on board matters outside their companies. This could be addressed by adding more retired executives to their boards, thus expanding the pool from which they search for executives.
In this third annual report, part of a series monitoring boards in 30 markets around the world, we detail how the UAE is refining board-level leadership in service of the country’s bold, long-term ambitions.
There was a notable decrease in the number of first-time board directors appointed: 29% in 2022, compared to 61% in 2021.
71%
2019
33%
2020
17%
2021
23%
2022
In 2022, 31 director appointments were made to boards on the ADX/DFM indices, down from 54 the previous year.
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48%
49.7%
52.5%
37%
2022
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Boards continued getting younger in 2022; the average age of new members was 48, compared to 49.7 in 2021 and 52.5 in 2020.
