The Alliance for Board Diversity today announced the findings of its recent study, Women and Minorities on Fortune 100 Boards, which showed little progress over two years in bringing diversity to the boardrooms of America’s leading corporations. According to the report, white men still held a disproportionate share of board director seats, although the study revealed small gains in the share of board seats held by minority women. It also noted that white men realized a net gain of 21 seats as compared with a net gain of three for all women and minority men.
The Alliance for Board Diversity (ABD) is a collaboration of three leadership organizations—Catalyst, The Executive Leadership Council®, and the Hispanic Association on Corporate Responsibility (HACR)—that have joined forces to support the business case for inclusion of women and minorities on corporate boards. Each member organization conducts research to assess the progress of board diversity. And with access to highly qualified potential board candidates, member organizations independently offer active board initiatives that include preparing individuals for board service.
Key findings from the study include:
- The percentage representation of all women and minority men on Fortune 100 corporate boards did not change substantially from September 30, 2004, to April 30, 2006. Men occupied the vast majority—82.94%—of the 1,219 board seats. In contrast, women held 17.06% of all directorships.
- All women and minority men held 28.47% of board member seats—just under one-third of the total—essentially flat compared with 2004. In 2006, 41% of the Fortune 100 boards had more than 30% of their seats held by women and minorities, up from 38% in 2004.
- From 2004 to 2006, there were minor improvements in terms of percentage of distribution for Hispanics, Asian-Americans and minorities in general on corporate boards, but no change for African-Americans and a virtual stagnation for women overall on corporate boards.
- All women and minority men realized a net gain from 2004 of only three seats. Minority women gained 13 seats, but white women and minority men lost seven and three seats, respectively.
- The recycling rate for men overall improved, edging down from 1.21 to 1.18 seats per person; for African-American and Hispanic men specifically, the improvement was even greater. This was the result of more men holding fewer seats per person.
- In contrast, women’s overall recycling rate rose slightly, from 1.18 to 1.20 seats per person primarily because the number of board seats held by Hispanic women outpaced the number of individual Hispanic women who became board members. There was, however, a significant improvement in the recycling rate for Asian-American women and a slight improvement for African-American women.
“With many qualified women and minority candidates available, we hope that more companies will realize what research shows: that diverse teams, well managed, deliver better results—including better financial performance,” Catalyst President Ilene H. Lang said. “Diverse board directors bring independent, creative thought and fresh perspectives to the boardroom. Clearly, many shareholders recognize that strategic and competitive value, especially in a complex global marketplace.”
“While the findings are not all positive, we are taking the long-term approach, which includes keeping the issue before corporations. We are in full agreement that corporate board diversity is not just the right thing to do, it is the profitable thing to do!” said Executive Leadership Council President and CEO Carl Brooks.
“The change in demographics of our country is influencing the types of products and services being developed for the nation’s diverse marketplace,” stated HACR President and CEO Carlos F. Orta. “Just as products and services change to reflect these demographic changes, representation from these diverse consumer groups also must be reflected in corporate America’s boards of directors in order to ensure economic sustainability.”
The Alliance for Board Diversity recommends the following when seeking to fill a board seat with qualified diverse candidates:
- Gain clarity on the competencies that will strengthen the board and commit to finding and interviewing diverse candidates who have those competencies. Diverse candidates are likely to bring expertise and perspectives that can enhance a board’s effectiveness in guiding a company to successful financial performance.
- Review board slates and insist that diverse qualified candidates are included. If diverse candidates are not included in a directorship search, work with groups like the members of ABD to find qualified diverse candidates to add to that slate.
This report was compiled with assistance from The Prout Group Inc., a retained executive search firm.
For more information on this study and The Alliance for Board Diversity, please visit ABD member Web sites or contact: Catalyst: www.catalyst.org; Susan Nierenberg, [email protected], (646) 388-7744; The Executive Leadership Council® (ELC): www.elcinfo.com; Damon Williams, [email protected], (703) 706-5216; and the Hispanic Association for Corporate Responsibility (HACR): www.hacr.org; Michael A. Carpio, [email protected], (202) 682-4012 Ext. 28.
The Prout Group Inc., with the assistance of its research team, gathered information on the Fortune 100 corporate board members. The companies were identified using the April 2006 issue of Fortune magazine. Names of board members were gathered using the EDGARS (Securities and Exchange Commission filings) database, corporate Web sites and company news releases. A point-in-time snapshot approach was used, and April 30, 2006, was the chosen date. Data on race, ethnicity and gender were gathered from Microquest, as well as other diversity resources. The information was compared with previous research conducted by Catalyst, the Hispanic Association on Corporate Responsibility (HACR) and The Executive Leadership Council (ELC). The team also consulted the 2007 Corporate Board Report Card of the Committee of 100 (C-100; www.committee100.org) to verify the Asian-American Fortune 100 board population. Spreadsheets identifying the names, race, ethnicity and gender of each board member were sent to corporate secretaries for verification. Phone calls were made and letters were mailed to companies in an attempt to further verify the information. For those companies that did not verify, extensive research was conducted to link the individual board member name with instances of individual verification of ABD’s race, ethnicity and gender classifications. The data were again cross-referenced with Microquest, Catalyst, ELC, HACR and C-100 to verify the team’s findings.
The Alliance for Board Diversity made every effort to achieve a high degree of accuracy. Because the race, ethnicity and gender composition of board members is not always publicly available, the alliance has made numerous attempts to verify the information. If errors or omissions are discovered, ABD will make necessary adjustments.
THE ALLIANCE FOR BOARD DIVERSITY MEMBERS
Founded in 1962, Catalyst is the leading nonprofit corporate membership, research and advisory organization working globally with businesses and the professions to build inclusive environments and expand opportunities for women and business. Headquartered in New York, with offices in California, Canada, and Europe, with the support and confidence of more than 350 leading corporations, firms, business schools, and associations, Catalyst produces ground-breaking research to drive change within businesses and is the premier resource for information and data about women in the workplace. In addition, Catalyst honors exemplary business initiatives that promote women’s leadership with the annual Catalyst Award. Information at: www.catalyst.org.
The Executive Leadership Council® (ELC) is an independent, nonpartisan, nonprofit 501(c)6 corporation founded in 1986 by 19 African-American pioneering executives to fulfill a bold mission: change the face of corporate America by creating a support network and public leadership forum that prepares the next generation of African-American executives, honors business achievements by African-Americans, encourages excellence in business, and influences public policy on behalf of African-Americans. Information at: www.elcinfo.com.
The Hispanic Association on Corporate Responsibility, a nonprofit 501(c)3 founded in 1986, is a coalition of 13 national community organizations in the United States and Puerto Rico. Its mission is to advance the inclusion of Hispanics in corporate America at a level commensurate with the Hispanic population’s economic contributions. HACR focuses on four areas of corporate responsibility and market reciprocity. They are: employment, procurement, philanthropy and governance. Information at: www.hacr.org.
THE ALLIANCE FOR BOARD DIVERSITY KEY PARTNERS
The National Association of Corporate Directors (NACD) is a national, nonprofit, membership organization dedicated exclusively to serving the corporate governance needs of corporate boards and individual directors. NACD promotes high professional board standards, creates forums for peer interaction, enhances director effectiveness, communicates and monitors the policy interests of directors, conducts benchmarking research, and educates boards and directors about traditional and cutting-edge issues. Information at: www.nacdonline.org.
The Prout Group Inc. is a retained executive search firm that places senior executives and board members across the nation. The firm, headquartered in Cleveland, has offices in New York and Chicago. With the belief that diversity is a strategic business imperative, The Prout Group presents an inclusive slate of candidates on all search assignments. Since the firm’s founding in June 2002, nearly 70% of its placements have been women or people of color. The Prout Group is a certified Minority Business Enterprise (MBE). Information at: www.proutgroup.com.