The number of Black appointees to corporate boards surged in the wake of George Floyd’s death on May 25.
DreamstimeThe number of Black appointees to Russell 3000 corporate boards surged in the wake of George Floyd’s death and the racial justice movement that ensued, with Procter & Gamble, Pinterest, PepsiCo, Target, and UPS among the companies that appointed Black directors, according to research that BoardProspects, a digital platform for companies to find board talent and C-suite executives, shared with Barron’s.
In the five months since Floyd’s death in police custody on May 25, Russell 3000 companies appointed 129 Black board members, compared with 38 Black directors appointed in the preceding five months, according to BoardProspects. The number of Black directors in the Russell 3000 isn’t readily available, partly because many companies don’t disclose the racial makeup of their boards. According to Equilar, which tracks corporate leadership and board data, 8% of directors at S&P 500 companies are Black, while 62% of S&P 500 companies have a Black director on the board. Companies in the S&P 500 are generally much larger than those in the Russell 3000.
The increase is “dramatic,” Mark Rogers, CEO of BoardProspects, said in an interview with Barron’s. “The cause and effect is clear.
“You can absolutely point back to George Floyd’s death.” Rogers adds: “Companies are looking at their boards and saying ‘We don’t have a Black perspective. We talk about diversity of perspective but we need to start from the top.”
Since May, five companies have added two Black directors, having had zero previously, including Dick’s Sporting Goods (ticker: DKS), Zogenix (ZGNX), BorgWarner (BWA), Pinterest, and Ralph Lauren (RL). Crown Castle International (CCI) added two Black directors, increasing the number on the board to three.
According to BoardProspects, companies that have added one Black director, up from zero, include Adobe (ADBE), Procter & Gamble, Under Armour (UAA), Hilton Worldwide (HLT), Chipotle Mexican Grill (CMG), Wynn Resorts (WYNN), Expedia (EXPE), Sirius XM Holdings (SIRI), Intuit (INTU), Citrix Systems (CTXS), and iHeartMedia (IHRT).
Of the 129 new Black directors, 72 are male and 58 are female, according to BoardProspects. Among the directors were former White House counselor Valerie Jarrett and Ford Foundation chief Darren Walker, both named to the board of Ralph Lauren; Equifax (EFX) executive Beverly Anderson, named to the board of Expedia (EXPE); former BET Networks CEO Debra Lee, named to the board of Procter; Robin Hood Foundation CEO Wes Moore, named to the board of Under Armour (UAA); private equity financier Eric Mullins, who joined the board of ConocoPhillips (COP); and former CVS Caremark president Derica Rice, who joined the Target Board.
The push for board diversity has accelerated this year, as companies seek to deal with risks by increasing the number of diverse viewpoints in leadership. This week, California signed into law a requirement that publicly traded companies headquartered in the state must add minority board members by the end of 2021.
“Civil rights issues are at the front door of corporate America in ways they haven’t been before,” said Mellody Hobson, co-chief executive of fund firm Ariel Investments, in October. “You have to recognize the risk embedded in not talking about these issues and not having representation in business.”
Meanwhile, the U.S. Securities and Exchange Commission amended its corporate disclosure rules to require companies to report on their management of human capital, a first step to expand disclosure from the standard focus on property, plant and equipment to recognize how human capital drives value creation.
Investors have pushed for more diverse boards. The New York City Comptroller has called out companies that don’t have a policy requiring women and people of color be considered for every open director seat. Meanwhile, the Business Roundtable this month outlined steps companies could take to advance racial equity and justice.
“The scrutiny of board diversity practices will continue to intensify,” the Conference Board recently wrote in a report on corporate board practices.
Write to Leslie P. Norton at leslie.norton@barrons.com
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October 27, 2020 at 11:14PM
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The Number of Black Board Members Surged After George Floyd's Death - Barron's
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