There has been much discussion and focus in recent years on the lack of diversity inside corporate boardrooms. Public companies in particular have been seeing a wave of pressures to increase the diversity of directors sitting around the boardroom table. Champions of diversity have echoed that the ongoing lack of boardroom diversity is not only problematic in an increasingly diverse society, but that boards risk missing the opportunities for concrete improved business results and enhanced overall board effectiveness if they lack diversity. This article considers the current landscape and rising pressures for corporate boardroom diversity. The article also highlights some of the challenges faced by companies trying to diversify and offers some tools that companies may find effective as they endeavor and respond to the pressures and challenges.

Current Landscape

A review of recent data suggests some increase in the gender diversification of boardrooms. As a sign of meaningful, if incremental progress, women now constitute 24% of all directors serving on the boards of the S&P 500; whereas a decade ago that number stood at 16%. Furthermore, 99% of S&P 500 boards have at least one woman serving on them; in 2008 women sat on only 89% of such boards. In an interesting turn of events, nearly 40% of new directors are women. Additionally, 87% of boards include two or more women, which represents a 7% increase over just the past year, while 33% of boards now have at least three women serving on them, representing a 6% increase over the same timeframe. In sum, boards now have 2.6 female directors on average compared with just 1.7 in 2008. Just three years ago, the number of men and women on boards was expected to equalize by 2032, but this recent spurt in growth now produces estimates that this will occur by 2025.

Although the S&P 500 has shown vast improvement in women’s representation on boards, smaller companies have witnessed much slower progress as 17% of all Russell 3000 companies are still all-male. Additionally, while women have seen increases in board representation, men of color have not experienced nearly as much growth. Although 90% of the largest 200 S&P companies have at least one male director of color (up from 84% in 2008), men of color still only composed 10% of new board appointees last year, which was actually a decrease from the previous year. With respect to the Fortune 500, only 11.5% of board members were men of color as of 2018. Furthermore, the number of new independent men of color directors actually decreased by a percentage point from 2017 to 2018 and women of color are the least represented in boardrooms.

Reprinted with permission from The Legal Intelligencer, November / 2019

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