Fortune 500 companies added 425 new board directors in 2020, showing a large rise in new Black directors, although other underrepresented groups saw little or no progress, according to research by executive search firm Heidrick & Struggles.
The share of new Black directors rose from 10% in 2019 to 28% in 2020. The share of new Latinx directors decreased by one percent and the share of female directors decreased three percent. As a result, Heidrick & Struggles shifted its forecast for gender equality among new Fortune 500 board appointments from 2022 to 2023.
“These smaller shifts among various aspects of diversity suggest that, at least on the margins, some boards are making trade-offs among diverse candidates based on where society is focusing in terms of diversity, rather than strategically considering what types of diversity will add the most value to the board over time,” the report said.
2020 also noted a sharp decrease in the representation of current or former CFOs and CEOs taking new board seats, from 62% to 51%, as well as a five-year low in seats filled by people with prior board experience. The share of new directors taking on multiple seats in a year has also fallen, from 4% to 2.4% over the past three years.
The push for wider professional backgrounds and fresher faces is also enabling greater diversity among this group, as many new areas, such as talent strategy and cybersecurity, are now entrenched as boardroom issues.
“A clear priority for boards this year is helping corporate leaders navigate a hybrid, still-uncertain return to offices,” the report stated. “We expect to see boards adding more people with expertise in technology and HR, as well as continuing to build the wide range of commercial expertise they focused on in 2020.”
Heidrick & Struggles also noted that the number of board directors hired in a given year is trending upward and that new seats may also become available to help address shareholder activism.
“There may be a rise in activist activity as economies reopen,” they wrote, “leading many boards to want to add expertise in capital allocation as well.”
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