Minority directors reach milestone 20% of Russell 3000 board seats (updated)

Unum

21/02/2023 20:44

(Adds figures on Black CEOs)
    By Ross Kerber
       Feb 21 (Reuters) - Racial and ethnic minorities now hold
a fifth of board seats at  Russell 3000  .RUA  companies, up
from 12% in 2019, but remain underrepresented, data from ISS
Corporate Solutions on Tuesday showed.
    The increase comes as U.S. companies face growing pressure
from investors to add more Black, Latino and Asian voices to
their boards as part of a broader national reckoning on race
relations.
    Still, most minority groups hold a smaller share of board
seats than their share of the total U.S. population. That is
especially true for directors of Hispanic or Latino origin, who
hold 3.6% of board seats but account for 18.9% of the U.S.
population, according to U.S. census figures.
    "While this is a huge sea change in terms of the
percentages, it still falls short of the ethnic breakdown of the
U.S. population," said Marija Kramer, head of ISS Corporate
Solutions, an arm of proxy adviser Institutional Shareholder
Services, which will release the study later on Tuesday. "It's a
watershed moment but probably not something to pat ourselves on
the back too much about," she said.    
    Top asset managers and pension funds have pushed for better
diversity in the leadership of portfolio companies since well
before the death of a Black man, George Floyd, at the hands of
Minneapolis police in 2020 set off national demonstrations on
equality and social justice.
    Often the investors have found receptive audiences, but slow
turnover on corporate boards has limited the pace of change,
recruiters say.
    Many U.S. companies now publish a breakdown of the
backgrounds of their directors, sometimes on a person-by-person
basis, helping ISS to estimate boardroom diversity in the
Russell 3000, whose boards are often less diverse than bigger
peers in the S&P 500.
    The biggest gain over the four-year period was for Black or
African-American directors, who nearly doubled their share of
board seats to 8.3% from 4.4% in 2019. They were most
represented in the utility sector, with 12% of board seats, and
least represented among information technology, energy and
healthcare companies, each at 6%. 
        Just 1% of the companies in the index had Black or
African-American CEOs, highlighting how companies have not
brought as much diversity to the CEO role as in the boardroom.
Still, CEO diversity has risen as well, with a 56% increase in
the number of Black or African-American CEOs since 2019.    
  
        Gale V. King, a director at Autozone Inc  AZO.N , J.B.
Hunt Transportation  JBHT.O  and Unum Group  UNM.N  and board
chair of The Executive Leadership Council, which promotes the
development of Black executives, said the data shows some
progress but that more work is needed for boards to reach
representation parity.
    Having a more diverse board, she said, "drives better
decision making in innovation, guidance for management, and risk
management. It also helps reduce group think."
    Marta Newhart, a Mexican-American and former brand chief of
Westinghouse Electric who is active in the Latino Corporate
Directors Association, said the figures show companies should
work harder to attract more diverse directors who can help them
serve broad customer bases.
    Compared to Hispanics' total share of the U.S. population,
their 3.6% share of board seats "isn't anywhere near where it's
supposed to be," she said.
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
There are more minorities in U.S. company boards but they are
still underrepresented    https://tmsnrt.rs/3lJewQm
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 (Reporting by Ross Kerber; Editing by Simon Jessop and Susan
Fenton)
 ((ross.kerber@thomsonreuters.com; (617) 412 0093;))