Diversity in America: African-Americans lost ground on Fortune 500 boards; Blacks remain seriously under-represented
WASHINGTON, DC – A recent study on African Americans on boards of directors of Fortune 500 companies commissioned by The Executive Leadership Council(R) found that the number of board seats held by African Americans has declined since its inaugural board report released in 2004. The percentage of African Americans on corporate boards decreased from 8.1 in 2004 to 7.4 percent in 2008, a .7 percent decline. Four years ago, African Americans held 449 corporate board seats and today they hold 413 or thirty-six fewer.
“African Americans lost ground in the boardrooms of corporate America between 2004 and 2008,” said Dr. Ancella B. Livers, executive director of The Executive Leadership Council’s Institute for Leadership Development & Research. “The total number of board seats during the period declined as well, but not nearly as much as the number of seats held by African Americans. In light of current economic conditions and board reviews, there is an opportunity for companies to increase board diversity and reverse the downward trend.”
There were 5,556 director seats available in 2008, 16 fewer than the 5,572 available in 2004. The importance of diversity on corporate boards is likely to become more apparent as organizations recognize that changing demographics are altering the nation’s business needs. Many corporations realize the benefits they have achieved from a diverse workforce and are beginning to make inroads on their governing boards of directors. The study shows that the higher an organization is on the Fortune 500 list, the more likely it is to have African Americans on its board of directors.
“It’s been proven again and again that companies with board members who reflect gender & ethnic diversity also tend to have better returns on equity and sales,” said Carl Brooks, president and CEO of The Executive Leadership Council. “Businesses understand the economic benefits of diversity. They talk about it, but not all of them have a plan for achieving it. We expect this report to spur meaningful progress in this important area of management and governance.”
Even as many Fortune 500 organizations understand the importance of having diverse boards, gains are sometimes difficult to maintain. Since the original report in 2004, the mix of Fortune 500 companies has changed with some companies moving off the list and other, previously smaller organizations moving onto it. Companies are reevaluating their governance structure following the economic turmoil of the past year and now have the opportunity to introduce new experience and thinking on boards.
As a member of the Alliance for Board Diversity (ABD), The Executive Leadership Council is a strategic partner with Catalyst, the Hispanic Association for Corporate Responsibility (HACR) and Leadership Education for Asian Pacifics (L.E.A.P.). The Alliance uses a business focus to support and advance the business interests of executive women and minorities in the workplace, including increasing the diversity pipeline in corporate America and guaranteeing the fair representation of women and minorities on corporate boards.
Corporate boards remain overwhelmingly white and male. ABD partners are determined to make the business case for inclusion on corporate boards through the belief that shareholder interests are best served by promoting the diversification of boardrooms within publicly traded U.S. companies.
This is the third publication of the Census of African Americans on Boards of Directors of Fortune 500 Companies. This census is a listing of African American board members of Fortune 500 companies and is based on data from fiscal year 2007. In addition to presenting a listing of African-American board members of Fortune 500 companies, the 2008 census examines firm and industry data of Fortune 500 companies regarding the extent to which African Americans are represented on corporate boards. It also examines geographical data of Fortune 500 companies regarding the extent to which African Americans are represented on corporate boards.
— Provides demographic profiles of African Americans serving on corporate boards.
— Presents data comparing firms with “best diversity practices” and board diversity.
— Presents a trend analysis of African American board representation from the inaugural 2004 report.
In addition to the information above, the full census report provides a comparison of African American directors of Fortune 500 companies to other underrepresented groups (i.e., women, Hispanics, Asians) serving on Fortune 500 boards and analyzes committee membership (e.g., nominations, finance, etc.) of African American directors serving on Fortune 500 boards.