Analysis: Women's U.S. boardroom gains slow as diversity focus shifts

Red Rock Resorts

08/09/2022 11:00

By Ross Kerber
    Sept 8 (Reuters) - A push to get more women on U.S. boards
has slowed this year, raising concern among recruiters that some
firms may have "ticked the gender box" by hitting minimum levels
of female representation or moved on to focus on other diversity
issues.
    Improving boardroom diversity has become a focus for many
investors who say having a broader range of experiences around
the top table improves decision-making and corporate
cultures. urn:newsml:reuters.com:*:nL1N2TS2PV
    But new data and interviews show that's not the only
priority at many companies. Figures that researcher Equilar
shared with Reuters showed women made up a smaller share of new
directors who joined company boards in the first two quarters of
this year, accounting for around 40% of new directors in both
timeframes.
    The figures undo a rising trend seen in 2021 when women
accounted for 41% of new directors in the first quarter and 47%
of new directors in the second quarter. 
    The figure then rose to 48% for the last two quarters of
2021, the highest share since Equilar began tracking companies
on the Russell 3000 index in 2017. (Graphic: https://tmsnrt.rs/3edQSYk)
    

    To be sure quarterly numbers can fluctuate, with women
accounting for just 36% of new directors as recently as
mid-2020. The total share of women directors among the Russell
3000 has risen steadily.
    Equilar, and a number of recruiters, told Reuters the
slowing pace in part reflects boards turning their attention
away from gender equality to racial equality, instead of
focusing on both. 
    Boards are "focusing on diversity beyond gender," said
Equilar Director of Research Courtney Yu, especially if they
already include at least one woman as required by Nasdaq Inc
 NDAQ.O .  
    Equilar said 67 Russell 3000 companies had no women on their
boards as of June 30 and 443 companies had just one woman, down
from 633 such companies a year earlier.
    
    'LITTLE REVOLT'
    Beth Stewart, CEO of search firm Trewstar Corporate Board
Services, said some boards also may have reached level where a
third of members were women - the goal of activists like the 30%
Club https://30percentclub.org/ – and then shifted their
attention as they recruit other new directors. 
    In addition some white male directors think they have enough
diverse candidates, she said. "There's been a little revolt
going on among white men," Stewart said.
    Pressure to add women eased in May when a California judge
struck down a state law mandating boardroom gender diversity.
 urn:newsml:reuters.com:*:nL2N2X82IP 
    It's unclear how the dynamics have affected minority
boardroom representation, for which current Equilar data was not
available. 
    Among bigger companies in the S&P 500, which tend to have
more diversity, women accounted for 46% of new directors
according to security filings through April 30, up from 43% a
year earlier, said recruiting firm Spencer Stuart.
    Ethnic or racial minorities accounted for 46% of new
directors in the latest period, down from 47% a year earlier,
the report said. As in previous years, more new minority
directors were men than women. 
   Limiting change is that many boards add just one director a
year, said Keith Meyer, a practice leader with recruiting firm
Allegis Partners. Few U.S. boards have the term limits common in
Europe, and many have done away with age limits.
    "A reason U.S. boards are very stagnant is there's no easy
exit path," he said.
    
    NEW VOICES
    Meyer said an easy fix would be for boards to expand their
rosters. That is what happened at the start of the year at
Houston-based food service distributor Sysco Corp,  SYY.N  which
created three new board seats and named two women among new
directors. 
    A Sysco representative said the company "continues to
prioritize efforts to advance diversity, equity and inclusion
across all areas of the company and on the board of directors." 
    Some companies have cited obstacles to diversity including
costs or challenges of finding suitable candidates amid much
competition for women and minorities. One, casino operator Red
Rock Resorts Inc  RRR.O  in an April securities filing said all
five of its directors are white men.
    While the company values diversity, Red Rock said it also
must consider the cost of adding directors. Further the limited
pool of potential directors willing to subject themselves to the
rigors of obtaining a gaming license "and the demand for
qualified diverse candidates will continue to impact our ability
to attract certain categories of diverse directors," the filing
states.
    A Red Rock spokesperson declined to comment further. 
    Wall Street bank Wells Fargo & Co  WFC.N  expanded its board
and named three new directors this year including two women, one
of whom is African-American. 
    Celeste Clark, a member of Wells Fargo's nominating
committee, said in looking for diverse candidates it aimed to
"widen the aperture" to consider executives from nontraditional
executive roles, not just people who have been CEOs or CFOs of
other companies.
    "Recruitment of racially and gender-diverse candidates
doesn’t just happen," Clark said.
    

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GRAPHIC-Women’s share of new directorships declines    https://tmsnrt.rs/3RFQlgu
GRAPHIC-Women’s share of new directorships declines
(interactive)    https://tmsnrt.rs/3edQSYk
State Street calls for women on corporate boards worldwide   
 urn:newsml:reuters.com:*:nL1N2TS2PV
California law requiring women on company boards struck down   
 urn:newsml:reuters.com:*:nL2N2X82IP
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 (Reporting by Ross Kerber in New York; Editing by Lisa
Shumaker)
 ((ross.kerber@thomsonreuters.com; (617) 856 4341; Reuters
Messaging: Ross.Kerber.Reuters.com@Reuters.net))