This research, conducted in collaboration with MSCI Institute and leveraging data from MSCI Solutions, examines how director equity ownership shapes long-term outcomes across more than 2,100 global public companies. The findings are clear and consistent across markets: when directors — particularly independent directors — hold meaningful, sustained equity stakes, companies deliver stronger long-term performance.
Acknowledgements
FCLTGlobal’s work benefited from the insights and advice drawn from FCLTGlobal’s members and other organizations. We are grateful for the insights of all our project collaborators:
Across our analysis, companies with increasing and durable board ownership significantly outperformed over a five-year period. A sustained rise in director equity ownership over that timeframe is associated with:
The data also highlights what happens when ownership declines. Companies where independent directors reduced their holdings saw materially weaker outcomes, including:
Beyond returns, the research shows that board ownership is linked to how companies make decisions. Higher director ownership is associated with greater investment in innovation, with roughly 3 percent higher R&D intensity relative to revenue. At the same time, companies where directors hold more equity than executives exhibit significantly lower volatility — reduced by more than 50 percent over five years.
Taken together, the evidence points to a broader conclusion: when directors have meaningful, sustained exposure to long-term outcomes, boards appear better positioned to support disciplined capital allocation, maintain strategic focus, and invest through cycles.
Yet despite these findings, board equity ownership remains uncommon: Nearly one-fifth of companies in the MSCI ACWI have no director ownership, and 94 percent of companies did not have a formal equity ownership policy for directors at the time of this study.
Furthermore, directors’ equity is often structured in ways that limit its effectiveness. The report explores why this gap persists and outlines practical steps for designing ownership structures that reinforce long-term alignment — emphasizing scale, duration, balance with executive ownership, and investor support.
Governance | Toolkit
13 April 2026 - This toolkit will help boards and compensation committees assess whether board ownership provides durable, meaningful exposure aligned with long-term value creation.
Governance | Toolkit
13 April 2026 - This toolkit is designed to support structured board-level discussion on how ownership connects to the company’s purpose, time horizon, and governance responsibilities.
Governance | Toolkit
13 April 2026 - This toolkit is intended to help long-term investors evaluate board ownership as a governance mechanism.
This research builds on FCLTGlobal’s broader work on long-term governance and incentives, offering both evidence and practical frameworks for boards and investors seeking to strengthen alignment with long-term value creation:
Governance | Article
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19 May 2025 - Companies — both public and private — strive to build boards that are instrumental in creating long-term value. But boards often feel they must follow somebody else's playbook. As companies grow, especially when they transition from private to public markets, they encounter a set of norms that governance experts expect them to follow. While some of these norms are listing requirements or laws that companies must follow, many are simply conventions rather than mandates.
Governance | Article
15 April 2024 - There is no one-size-fits-all solution to designing corporate boards for long-term value creation. Recognizing and understanding that choices are available is the first step toward making longer-term choices and establishing next-generation board governance.