David A. Bell and Dawn Belt are partners and Ron C. Llewellyn is counsel at Fenwick & West LLP. This post is based on their Fenwick memorandum. Related research from the Program on Corporate Governance includes Politics and Gender in the Executive Suite (discussed on the Forum here) by Alma Cohen, Moshe Hazan, and David Weiss; Will Nasdaq’s Diversity Rules Harm Investors? (discussed on the Forum here) by Jesse M. Fried; and Duty and Diversity (discussed on the Forum here) by Chris Brummer and Leo E. Strine, Jr.
The intense focus on board diversity from a variety of stakeholders over the last several years has spurred many companies to examine the composition of their boards and to take action to diversify their boardrooms. While the boards of U.S. companies have slowly diversified over time, the pace of diversification has accelerated since 2018 as a result of legislation and other initiatives, particularly following the calls for racial justice in 2020.
In this post we examine these recent trends in board diversity and other developments in 2022, with a particular focus on efforts to increase racial and ethnic board diversity. In doing so, we examine the board racial/ethnic diversity disclosure practices and resulting demographic data gleaned from the companies in the Standard & Poor’s 100 Index (S&P 100) and the technology and life sciences companies included in the 2022 Fenwick-Bloomberg Law Silicon Valley 150 List (SV 150). For the 2022 proxy season, which generally ran from July 1, 2021 through June 30, 2022, 146 of the SV 150 companies filed proxy statements.
Key Takeaways Include:
- All of the S&P 100 and 83% of the SV 150 companies provided racial/ethnic board diversity
data in their proxy statements for the 2022 proxy season. - The majority of companies in each group disclosed the racial/ethnic composition of their
boards by specific racial/ethnic categories. - Racial and ethnic minorities have experienced recent gains in board representation, but still
face many of the same challenges encountered by women. - One can extrapolate even from the limited number of companies that disclose racial and
ethnic diversity information that both the S&P 100 and the SV 150 are significantly far from
proportional board representation for racial and ethnic minorities compared to the national
workforce at-large. - The demand for greater diversity on U.S. corporate boards and related disclosure of such
information will likely continue until equitable gender, racial and ethnic representation is
achieved.
