For much of the last decade, there’s been a full-court press on among institutional investors and proxy advisors to get America’s corporate boards to add greater diversity around the table. That effort appears to be working.
According to a new study by proxy advisory firm Institutional Shareholder Services released this week, the number of both women and ethnic minorities either joining or serving as directors at Russell 3000 companies hit a record high in 2019.
Some 45 percent of new Russell 3000 board seats were filled by women in 2019, compared with only 12 percent in 2008, and 19 percent of all seats, according to ISS.
“As a result of the record-setting recruitment of women on boards, 2019 saw the biggest jump in the overall gender diversity,” Subodh Mishra, Executive Director at Institutional Shareholder Services, writes. “The S&P 500 is well on its way of reaching 30 percent directorships held by women in the next couple of years, much earlier than we had predicted….Obviously, female director recruitments has seen exponential growth in the past two years, which has accelerated the trend.”
The study also found approximately 10 percent of all Russell 3000 directors now come from an ethnic minority group—an all-time high—and 15 percent of new directors were from an ethnic minority. Still, when it comes to ethnic diversity on boards, Mishra’s outlook is less optimistic. While the fact that ethnic minorities “crossed the 10-percent threshold” for the first time in 2019, that’s only two percentage points better than it was in 2008, and hardly representative the 40 of the white, non-Hispanic population of the United States as a whole.
ISS culled its data from a survey of almost 20,000 directorships among 2,175 Russell 3000 companies, including 401 of the S&P 500.
Some of the other trends they observed include a rise in the number of board renewal rates and an increased focus on non-financial skills among new directors, with many more board seats going to people with backgrounds in international business, ESG and human resources.
ISS also found that the average age of directors has continued to rise “with only 7.2 percent of new directorships filled by directors younger than 45 years, compared to 11.5 percent of new directors in 2008. More on that here.