Boards in Saudi Arabia more diverse and qualified than ever, says Mercer

22 December 2024 Consultancy-me.com

An annual report on the structure and composition of board of directors in Saudi Arabia shows slight changes from last year, which confirms a continuing shift towards more diverse and highly-qualified boards. The study from Mercer analyzed the top 50 publicly listed companies on the Saudi Exchange.

Diversity on boards of directors in Saudi companies is increasing, despite some lingering challenges. While female representation has shown some growth, it remains relatively low. Despite that, there have been both public and private efforts to enhance diversity by attracting and appointing qualified individuals from diverse backgrounds.

Diversity

The trend of increasing diversity on Saudi boards has been widely observed in recent years, both in Saudi Arabia as well as the other GCC countries. It is estimated that around 8% of current board members in Saudi Arabia are women. That is quite low compared to the European Union, for example, where over 30% of board members are women.

Boards in Saudi Arabia more diverse and qualified than ever, says Mercer

Source: Mercer, Boardroom Insights

When it comes to female representation in KSA boardrooms, the numbers have not increased dramatically since Mercer’s report from last year. In 2023, 20% of companies reported having at least 1 female board member, while that has increased in 2024 to 22%.

This percentage of female representation is certain to continue increasing in the years to come. That will be in large part thanks to Saudi government initiatives, like Saudi Vision 2030, which mandates more female participation in the business world. Increasing focus on ESG is another key part of Vision 2030.

There has also been a slight increase in the number of expats on boards of directors of Saudi companies. A total of 38% of companies reported having at least one expat on their board. Expats, mostly from South Asia, make up around 41% of the total population of Saudi Arabia.

Boards in Saudi Arabia more diverse and qualified than ever, says Mercer

Source: Mercer, Boardroom Insights

Experience and qualification

The report from Mercer also showed that board members are now more qualified than ever. The median years of professional experience of board members has increased from 25 years to 27 years and the maximum years of experience from 37 years to 38 years.

The study did, however, find that the minimum years of experience has decreased from 22 years to 14 years, which clearly shows that younger professionals are increasingly finding their way up to boardrooms.

The findings on qualifications seem to back that same conclusion: The percentage of companies with board members with PhDs decreased from 18% in 2023 to 9% in 2024. Younger board members are less likely to have that high level of academic qualification. The number of board members with bachelors and masters degrees increased in 2024.

Boards in Saudi Arabia more diverse and qualified than ever, says Mercer

Source: Mercer, Boardroom Insights

Additionally, the report showed how remuneration has increased significantly since last year. The median increase from 2023 to 2024 was 20%, with the average year-on-year increase at 37%. Board member remuneration was highest in financial services, technology, and industrial materials.

In related news, a previous study on board dynamics in the region highlighted that the role executives play in GCC companies is expanding. In fact, 47% of the respondents from KSA and the UAE companies said that board members were more involved in operations – that was the highest figure of all countries surveyed worldwide.

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