Why should you care if an African American executive gains a seat on the board one of the nation's largest publicly traded companies?
John Rogers, chairman and CEO of Ariel Investments L.L.C. (No. 3 on the be asset managers list with $9 billion in assets under management), unequivocally states that no issue is more critical to the collective advancement of African Americans in the 21st century than expanding representation in the boardroom. At a time when the nation celebrates the 50th anniversary of the Civil Rights Act of 1964--the law that put an end to legal segregation and discrimination--he argues that the best way to honor those who marched and died for access to American institutions is to demand a voice in corporate governance.
"All of us have to be on message. Just imagine if the NAACP, Urban League, National Action Network, and Rainbow PUSH all agree that the No. 1 issue facing our futures for this year was making sure that the major corporations of the world have true diversity in their C suite and their board-level positions. [If] congressional leaders and electoral leaders, the faith-based community, and business leaders were all on message about how important that was. Once you get [black] people in board suites and C-suite jobs and they have the right attitude, it will transform our communities."
Diverse representation, Rogers argues, would exert a powerful ripple effect that would directly affect African Americans. Corporate directors oversee the actions of CEOs and senior management; determine their compensation; and hold them accountable to company policies, from financial management to human resources. Moreover, corporate directors monitor and measure hiring practices, supplier and media spend, and philanthropic contributions, among other areas. To put it bluntly, for black professionals to get job opportunities, black entrepreneurs to get supplier contracts, black media to get advertising dollars, and black communities to get corporate foundation grants, black directors have to be in boardrooms advocating for them. Rogers maintains: "If we hold people accountable and everybody's on message about how important these are, we'll make a difference."
Our editors developed the black enterprise Registry of Corporate Directors--this package represents our second such consecutive listing--not only to acknowledge some of the most powerful corporate directors but to identify public companies that fully embrace boardroom diversity as a business imperative (see index) and those corporations that continue to deny African Americans a seat at the table (see "No Room for Blacks").
Here's how we have chosen the board members on this year's registry. We started with a universe of the 250 largest companies culled from the S&P 500 (based on market capitalization as of May 16, 2014). Our editorial research team spent several months combing through proxy statements and annual reports as well as contacting investor relations departments, corporate governance experts, and professional organizations such as the Black Corporate Directors Conference and the Executive Leadership Council, the network of senior black executives, to confirm list members. This year, there are 182 black corporate directors at 176 companies versus 179 at 174 corporations last year. We also found that 74 major companies of the S&P 2 50 or 30%, did not have a single black board member, in 2013--and there has been zero improvement this year.
Since last year, the numbers regarding overall board inclusion remain pitiful: The Alliance for Board Diversity revealed in 2012 that white men held roughly 75% of board seats on the 500 largest publicly traded companies versus 5.5% for African American men and 1.9% for African American women.
What has made these figures so mind-numbing is the fact that our registry demonstrates the highest caliber of African American executive talent in the nation, including four CEOs of iconic corporations: American Express's Kenneth Chenault Xerox's Ursula Bums, Carnival Corp.'s Arnold Donald, and our corporate executive of the year, Merck's Kenneth Frazier. And in recent months, Microsoft board member John Thompson was named chairman of the company's board. As a group, the B.E. Registry of Corporate Directors has made shareholders, pension funds, and prospective retirees--maybe even you--trillions of dollars.
Charles A. Tribbett III, a senior partner with executive search firm Russell Reynolds Associates and co-founder of BCDC with Rogers and Ariel President Mellody Hobson, believes there must be an aggressive thrust to offer a pool of black directors to replace the 28% of board seats currently held by white men 68 years and older that are expected to turn over in the next half decade. And ELC CEO Ron Parker, whose organization has partnered with BCDC on key programs over the past year, has been using its Corporate Board Initiative to prepare black executives for board service (see Q&A).
To tackle the most egregious offenders promoting the colorless board, Rev. Jesse Jackson, founder and president of the civil rights group Rainbow PUSH Coalition, has taken aim at Silicon Valley tech companies like Apple, Yahoo, and Facebook. In recent months, he has used shareholder activism in his campaign to tear down the walls, buying shares, and then pressing top management at annual meetings and sit-downs (see Q&A).
BE inquired why such companies don't have black board representation and received comments through corporate spokespersons. Google Chairman Eric Schmidt found that despite lack of representation his company took diversity "very seriously" (see sidebar).
Rogers, Tribbett, and Hobson have emphasized action in BCDC's 7-year-old "Corporate Diversity Call to Action," encouraging black board members to advocate greater and more meaningful institutional diversity. At last year's session, the triumvirate urged attendees to become more aggressive in targeting companies. "I think we earned support from breakout groups in ways that we really never imagined, going by region," says Tribbett. "John and I have gone to each one of these regions and they've been pretty well attended and action-oriented."
Barry Lawson Williams, founder and former managing director of Williams Pacific Ventures Inc. and a BE Registry member, has been among those who have reached out to CEOs and heads of nominating committees as a means to crack through the Silicon Valley wall. "I undertook a study of the underrepresentation of black directors on the boards of major companies located in the Bay Area. I encouraged other black directors to utilize my study as a basis for discussions with other CEOs and directors that they know. Most CEOs expressed surprise at the extent of the underrepresentation, particularly in the tech sector. They were also quite surprised that local black CEOs were not given extensive opportunities. Finally, they were surprised with the inventory of locally based, qualified blacks that I presented. They wanted to know why such names were not being presented by the major search firms."
Ron Kirk, former U.S. trade representative under the Obama administration and a BE Registry member as a director of Texas Instruments, also engaged in the regional offensive, working with about a dozen other BCDC attendees to engage major companies in the Lone Star state. However, he...