Business

This year’s influx of directors will change the diversity of the board

The largest US company surged the number of new black and Latino directors appointed to the board this spring. Toward diversification of conference rooms, A new study was found.

The S & P 500 company has tripled the share of new black directors and more than doubled the share of Latino Americans. Due to this shift, nearly 80% of the company’s board seats are occupied by white directors and about 70% by men.

The S & P 500 Board of Directors has added 456 new independent directors over the past year. This is the highest number since 2004, according to an analysis of corporate agency applications from management and board recruiting company Spencer Stuart.

Almost three-quarters of new directors are women or of racial or ethnic minorities, up from about 60% last year to 31% ten years ago. One-third of all are blacks, up from 11% last year, and 7% are Latino Americans, up from 3%.

S & P 500 companies that have added one or more blackboard members over the past year include insurance companies

All state Co., Ltd.

all 0.86%

, Retail giant

the goal Co., Ltd.

target -0.21%

And car suppliers

BorgWarner Co., Ltd.

BWA 0.23%

“It’s our responsibility to enter the room, not just to close the door behind us, but to open it even wider,” said Darren Walker, chairman of the Ford Foundation.


Photo:

Jay Godwin / LBJ Library / Planet Picks / Zuma Press

Darren Walker sitting on the board

PepsiCo Co., Ltd.

PEP 0.01%

Square Inc.and

Ralph Lauren Co., Ltd.

RL 0.77%

Said to those companies last year There is one black director It wasn’t enough like him.

Walker, chairman of the Ford Foundation, said: “If we limit these seats, it’s not true diversity, it’s Tokenism.”

Diversity is “discussed in an unprecedented way,” he said. “And if someone like me wasn’t in the room, it wouldn’t have been discussed this way.”

Walker said PepsiCo had already made such an appointment. Segun Agbaje, CEO of Nigerian banking, joined the board of directors of the Soda Giants last July. In October, Ralph Lauren appointed former Obama adviser Valerie Jarrett to the board. Last month, rapper and music executive JAY-Z I joined the Square board After buying a majority stake in streaming startup Tidal.

BorgWarner said he has revamped the board of directors over the last three years, shortening his tenure and increasing the diversity of skills, backgrounds and experiences. Square’s board of directors included black directors until just before Walker joined in June 2020, with two in 2016. Ralph Lauren has been working to add Mr. Jarrett to the board since 2019, a person familiar with the matter said.

Rapper and music executive JAY-Z joined Square’s board last month.


Photo:

Mark J. Terrill / Associated Press

Target said it would add directors when it found an opportunity to expand its board expertise and perspective. Allstate said the board members added in October were selected for their financial and operational expertise.

Julie Henbrock Daum, head of Spencer Stuart’s North American Commission, has been struck by public attention to racial disparity following the police killing of George Floyd last year and the subsequent protests by Black Lives Matter. He said that a wider range of changes had occurred.

Institutional investors and policy makers are also encouraging more diversification of the board. During December

Nasdaq Co., Ltd.

NDAQ 0.65%

Proposed to require most US listed companies Include at least one woman Join the board of directors in addition to directors who are racial minorities or who are self-aware as lesbian, gay, bisexual, transgender, or queer. Similar board diversity obligations passed Last year in California.

Republican Senator Group Opposed to Nasdaq’s proposalSaid that it would undermine the ability of the board to govern in the best interests of shareholders. The head of the National Urban League said the proposal would minimize blacks’ opportunities by making blacks and LGBTQ directors interchangeable to meet requirements.

Not all underrepresented groups have increased among new directors this year. According to the survey, Asians make up about 7% of new candidates, a slight decrease from last year, and women make up 43% of new directors, down from 47% in 2020.

According to Spencer Stuart, about 11% of all directors of the S & P 500 board are black, 30% are women, 4% are Latino and 6% are Asian. Two are Native Alaska or Native Alaska, with less than 1% belonging to multiple racial groups.

All of these numbers, with the exception of Asian directors, are tracking group representatives in the US adult population, with recent US census estimates.

The May 25 killing of George Floyd triggered protests against police atrocities and organized racism. Darren Everson of the WSJ talked to a black expert to discuss their experience and the changes they wanted. Photo Illustration: Adele Morgan (Video from 6/10/21)

New directors are usually appointed when their predecessors retire. Many boards require directors to resign in the 1970s. But this year’s increase wasn’t due to increased sales, Daum said. Many boards, including Square and Ralph Lauren, have added more seats, often increasing diversity without waiting for their retirement to open.

“There aren’t many new directors,” Daum said. The company says, “You can’t design the board you need today. They need to slowly tweak the board they have.”

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Write to Theoflansis theo.francis@wsj.com And Jennifer Maloney jennifer.maloney@wsj.com

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This year’s influx of directors will change the diversity of the board

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