Corporate Governance Trends in Spain

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Pushback against board renewal

Counter to trends over the past few years that demand boards do more to address their stagnant compositions, there is increasing focus in Spain to do just the opposite – provide more stability in the boards’ seats. Spain, like other jurisdictions, experienced a surge in situations where boards faced (sometimes unexpected) demands for refreshment and “renovation.” In what feels almost like a backlash, there is a louder call for director stability. Experts predict that boards will revisit the regulatory norms concerning tenure and term limits this year.

Since the COVID-19 pandemic, Spanish boards have operated in a new business context that requires wider risk assessment, increasing the need for more ERM expert profiles and focus within boardrooms. In 2025, we expect this need to fuel a growing tension between board stability and renewal. Though experts anticipate that, while some directors will remain in seats where their long-term relationships continue to prove beneficial to the business, this will be balanced against a fast-changing environment that demands board competency refreshments.

Upping board time commitment and dedication

As a result of regulations, shareholder demands, and heightened market expectations, boards are also finding the demands on their service time increasing. Experts note that these increased director workloads may more heavily impact independent board members than their peers. The risk of director over-boarding is likely to become more apparent. Many governance leaders we spoke with noted their mounting belief that the number of boards a director can serve on must be further capped.

Independent board members and committee chairs are also increasingly taking on more active roles in their oversight duties, sometimes due to regulatory requirements. With more board involvement, complex dynamics and relationships are increasingly brewing between the board and management. Experts predict that boards will need to be thoughtful in how they balance their governance role and respect executive boundaries, especially within a context that asks them to participate more.

After a long period of ESG agenda uncertainty, boards are witnessing a reduction in its dominance (at the full board level). However, specialized committees may still be established to investigate and conduct ESG initiatives.

Impact of gender parity regulations come to bear

The recent passing of the Parity Law in Spain, which requires that IBEX companies have 40% gender diversity on boards by 2025, will impact the boards’ structure and makeup. With a limited number of women nominations for proprietary directors (which includes board members who are shareholders, represent shareholders, or have a personal or professional relationship with shareholders) and executive board member roles, women board members appointments will almost exclusively be concentrated with independent director positions. Experts are anticipating that, as this trend continues, Spain will likely face a more nuanced gender diversity imbalance that will need to be corrected.

Addressing technology & AI gaps

Nominating committees are increasingly concerned with improving their boards’ technology competencies. There is a rising sense of urgency around addressing directors’ lack of understanding and expertise in AI and its impacts on the business, with RRA research finding that only 20% of all leaders agree that their organization has the right expertise on the board to advise on generative AI implementation. As boards are being challenged to futureproof themselves with AI systems thinking capabilities, experts note that while directors are likely to begin with individual training, they will rely more on “current technology directors” for AI strategy, as these directors hold executive technology positions and are thereby more equipped to bring AI insights into the boardroom. In any case, we expect an increase in technology/AI-savvy board members recruitment in the coming refreshment cycles, especially for companies that face an apparent deficit across their C-suite.