Two new studies find diversity in ethnicity, gender increasing in public companies—but is representation truly possible?

Victoria A.F. Camron, Digital content specialist

October 26, 2021

4 Min Read
Board rooms are becoming less white, less male dominated
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Diversity on public companies' boards of directors is increasing…slowly.

Two recently released studies found more Black executives and women became directors in the past year.

Search firm Spencer Stuart, in its annual U.S. Board Index, says 72% of all new directors are women or people of color that have been underrepresented in executive positions or on boards of directors. Of those 456 new independent directors, 47% are from underrepresented racial and ethnic groups, and 43% are women, including 18% who are bi-racial or multi-racial.

Julie Daum, leader of Spencer Stuart's North American Board Practice, says only 7% of new independent directors were Hispanic or Asian. "The real focus was on Black directors. That's a reflection of what's going on in society," she tells Forbes. The Spencer Stuart study looked at proxy reports that were filed between late May 2020 and mid-May 2021.

The Spencer Stuart study reports that one-third of the new independent directors are Black, up from 11% a year ago. Directors who are Hispanic or Latino accounted for 7% of the new appointees, up from 3% a year ago. The percentage of Asians in the class of new directors fell to 7% from 8%, while the percentage of women dropped to 43% from 47% a year ago.

However, the population of women in S&P 500 board rooms has reached 30%, compared with 28% in 2020, and 16% in 2011. More importantly, 96% of boards have two or more female directors.

Related:Changing the face of natural products’ board rooms

Directors who are Black or from other historically underrepresented racial or ethnic background account for 21% of all S&P 500 board directors, Spencer Stuart found. Overall, including the new appointees, S&P 500 boards now consist of about 75% white people and 70% men, The Wall Street Journal reports.

Beyond the S&P 500

The Conference Board and ESGuage, an analytics firm, took a broader view at corporate boards, looking at the S&P 500, the Russell 3000 and the S&P Midcap 400. This study—Corporate Board Practices in the Russell 3000, S&P 500 and S&P MidCap 400: 2021 Editionincluded proxy statements filed from Jan. 1, 2020, through June 30, 2021, as well, so the results don't exactly match those of the Stuart Spencer study.

For the S&P 500, The Conference Board's study, reports that 78.1% of new directors are white; 13.6% are Black; 5.6% are LatinX or Hispanic, and 2.3% are Asian, Hawaiian or Pacific Islander. Of the new directors in this index, 62% are men and 38% are women. Among the Russell 3000 indexed companies, 78.3% of new directors are white; 11.5% are Black; 6.5% are Latinx or Hispanic; and 3.1% are Asian, Hawaiian or Pacific Islander. Also, 62.2% of new directors are men, while 37.8% are women.

Related:In the board room: Putting women directors in natural companies

The companies in the S&P Midcap 400 index have the greatest percentage of whites. 84.1%, in their new director class. Only 6.8% of these new directors are Black; 4.5% are LatinX or Hispanic; and 3.4% are Asian, Hawaiian or Pacific Islander. Men make up 61.4% of new directors, while women account for 38.6%.

Overall, including new directors, whites make up 76.4% of S&P 500 directors; 79% of Russell 3000 directors and 81.4% of S&P Midcap 400 directors. In the S&P 500, Blacks account for 13.3% of directors; Latinx or Hispanic, 5.3%; and Asian, Hawaiian or Pacific Islander, 4.1%. By gender, 70.9% are men and 29.1% are women. Among Russell 3000 companies, Blacks make up 10.9% of directors; Latinx or Hispanic, 4.4%; and Asian, Hawaiian or Pacific Islander, 4.9%. By gender, 75.6% are men and 24.4% are women.

For the S&P Midcap 400 companies, 9.0% of total directors are Black; 3.4% are Latinx or Hispanic; and 5.3% are Asian, Hawaiian or Pacific Islander. By gender, 73,3% are men and 26.7% are women.

The Conference Board and ESGuage report also breaks down ethnicity and gender differences by industry and company size.

Change is slowly coming

Many boards are requiring their executives to recruit more women and people of color to management positions—and even tying compensation to those goals, The Wall Street Journal reported in June. In the spring, one-third of S&P 500 companies acknowledged including a diversity measure in their executives' compensation packages.

Unfortunately, about half of the public companies The Conference Board study looked at did not bring any new directors on board. According to Forbes, just 6% of boards have term limits for directors, and most term limits are set at 15 years or longer. Almost 75% of boards have mandatory retirement ages, but more than half of those are set at age 75. Ten years ago, only 20% of public companies' retirement mandates were that high.

Investors are increasingly pushing for more diversity from the companies they have stock in. BlackRock Inc. informed its portfolio companies in 2018 that they wanted to see at least two women on their boards, according to the Society for Human Resources Management article, "Corporate board diversity: Moving beyond lip service," published in January.

In July 2020, Goldman Sachs began requiring American and European companies have diverse boards before the firm would underwrite their initial public offerings. And in December, Nasdaq proposed new rules that require most companies that trade on the exchange to have at least one female director and one director who is a person of color or LGBTQ.

About the Author(s)

Victoria A.F. Camron

Digital content specialist, New Hope Network

Victoria A.F. Camron was a freelance writer and editor contracted with New Hope Network from 2015 until April 2022, when she was hired as New Hope Network's digital content specialist—otherwise known as the web editor.

As she continues the work she has done for years—covering the natural products industry for and Natural Foods Merchandiser; writing up earnings calls and other corporate news; and curating roundups of trends and information for the website—she is thrilled to be an official part of the New Hope team. (She doesn't mind having paid holidays and vacations again, though!) Victoria also compiled and edited newsletters, and served as interim content director for Delicious Living in 2016.

Before working as a freelancer, she spent 17 years in community newspapers in Longmont, Colorado, and St. Charles and Wheaton, Illinois. Victoria is a Colorado native and a graduate of Metropolitan State College of Denver.

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