Voo Stock – Black Directors Gained Ground in the Boardroom as Women, Latinos, Whites Slipped
Black appointees made progress in gaining corporate boardroom seats last year, though it possibly came at the expense of other groups as representation among women and Latinos among new directors fell.
The percentage of new Black directors in the Fortune 500 almost tripled to about 28%, as the share for Latino directors slipped and women gained fewer seats, according to a report by executive recruiter Heidrick & Struggles. White directors had the lowest percentage of new seats added in the dozen years the analysis has been conducted.
The protests that followed the murder of George Floyd by police last year have put pressure on companies to add more Black directors as part of a broader focus on racial disparities in the workforce and executive ranks. About three quarters of the Black appointments came after Floyd’s death, the report said. Women and Latino activists have also advocated for greater representation, as they’ve expressed concern that heightened focus on one group could be to the detriment of others.
BlackRock Inc. and Vanguard Group Inc. have been voting against directors at companies that lack women on their boards, and Goldman Sachs Group Inc. Chief Executive Officer David Solomon said last year the firm will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse. California laws also have diversity and gender requirements for directors at companies based in the state.
Corporations have also been adding more women and minorities to their boards in the last year in reaction to a proposal by Nasdaq Inc. that would require listed companies to have at least one female and one underrepresented director, or explain why they don’t. The U.S. Securities and Exchange Commission will decide by August whether to approve it.
Women — which made up 41% of Fortune 500 board directors last year, down from a record high of 44% in 2019 — won’t reach parity until 2023, a year later than previously estimated, Heidrick said. Latino directors slipped one percentage point to 4% of new directors in 2020, while Asian directors improved one percentage point to 9%, according to the data.
Companies also seem to be more accepting of candidates with less traditional backgrounds. The percentage of current or former CEOs and corporate financial officers named to board seats dropped to 51%, the lowest in the study’s history, from 62% in 2019. The share of directors with no previous boardroom experience rose to 38% from 28%.