A new study by The Conference Board illustrates why progress remains slow in achieving gender diversity on companies’ board of directors.
The study – Corporate Board Practices in the Russell 3000 and S&P 500: 2019 Edition – documents corporate governance trends and developments at 2,854 companies registered with the SEC that filed their proxy statement in the January 1 to November 1, 2018, period and, as of January 2018, were included in the Russell 3000 Index.
According to a comprehensive review of SEC filings made in 2018, 50% of Russell 3000 companies and 43% of S&P 500 companies disclosed no change in the composition of their board of directors, The Conference Board reports.
More specifically, The Conference Board notes that companies neither added a new member to the board nor did they replace an existing member. In those cases where a replacement or addition did happen, it rarely affected more than one board seat. The Conference Board also finds that only one-quarter of boards elected a first-time director who had never served on a public company board before.
These findings provide some important context to the current debate on gender diversity and board refreshment.
“Corporate governance has undergone a profound transformation in the last two decades, as a result of the legislative and regulatory changes that have expanded director responsibilities as well as the rise of more vocal shareholders,” said Matteo Tonello, Managing Director of Environmental, Social and Governance Research at The Conference Board and author of the report. “Yet the composition of the board of directors has not changed as rapidly as other governance practices. To this day, many public company boards do not see any turnover that is not the result of retirement at the end of a fairly long tenure.”
While progress on gender diversity of corporate directors is being reported, a “staggering” 20% of firms in the Russell 3000 index still have no female representatives on their board, according to the study.
The study also finds that almost all board chair positions remain held by men (only 4.1% of Russell 3000 companies have a female board chair).