Diverse, always evolving, and technologically aware. These are the three nonnegotiable traits of top-performing, future-ready directors, according to François Locoh-Donou, CEO of F5, which topped this year’s Modern Board 25 ranking.
The Seattle-based cybersecurity firm may be unfamiliar to many consumers, but its software runs in the background of everyday banking, shopping, and online booking apps, says Locoh-Donou, a director of the $8 billion company. The CEO shares credit with F5’s other directors for the company’s recent reinvention as a digital rather than hardware player. His fellow board members, he says, are a diverse and highly trusted group who have advised him through major investment decisions and game-changing acquisitions.
Fortune launched the Modern Board 25 ranking last year to begin capturing how boards are changing to become more like the team at F5 and less like the boards of yore: insidery, disengaged, and cloaked in mystery.
The list uses information gathered by Diligent and ESG data from Refinitiv to measure boards’ financial performance, independence, diversity, and more. No single sector dominates the 2023 list, and the largest firms do not steal the show. Fortune 500 giants like Amazon (No. 17), Walgreens (No. 10), and Microsoft (No. 21) sit next to smaller, lesser-known companies such as F5 and American Water Works (No. 14).
Here are some highlights from our results:
- Highest overall score: F5
- Best ESG score: Microsoft
- Top sector performance score: Schlumberger
- Most gender diversity: Citigroup (though it’s a racial diversity laggard)
- Highest board independence: Citigroup
- Most multigenerational board: Danaher
- Company with the youngest board member: Gen Digital (age 43)
Companies may be facing a polycrisis, but Modern Board 25 directors offer remarkably similar answers when asked about the most pressing challenges. They didn't mention problems like inflation or geopolitical conflicts but instead zeroed in on staying competitive long-term.
That was true of Bristol Myers Squibb (No. 9), where independent lead director Ted Samuels told Fortune, “The biggest risk we face is ensuring that we build a sustainable engine of innovation.” The full board and its science and technology committee spend large amounts of time reviewing R&D initiatives and investments, he explained, because “discovering new molecules or protocols is what delivers value for all stakeholders over the long run.”
While board chemistry is hard to measure, it was a differentiator that directors highlighted in conversations. When Gen Digital directors Sherrese Smith, a managing partner at Paul Hasting, and Emily Heath, a former chief trust and security officer for Docusign, attended a joint Zoom to speak with me, Smith said she partly agreed to the interview because Heath is one of her favorite people. (It showed.) Both women praised their board colleagues for the free-flowing exchange of ideas and healthy disagreements. Likewise, in her description of what makes the Ralph Lauren board so effective, director Valerie Jarrett, CEO of the Obama Foundation, referred to the trickle-down effect of authenticity, sincerity, and curiosity from the fashion retailer’s iconic founder and from the CEO Patrice Louvet.
Marie Myers, CFO at HP and an independent director at F5, echoed Locoh-Donou's characterization of that company’s board, saying directors have cultivated camaraderie inside and outside of formal meetings. That has allowed the board to jump into action when required, "organically" forming subcommittees, for example, to work relentlessly in the face of complex challenges or existential threats. “I think that's when a board's strength really gets tested,” she told me.
Check out the complete Modern Board 25 ranking here.
Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan
