Former drugstore.com CEO and chairman of the board of directors, Dawn Lepore, doesn’t need to be convinced that it is important to have diversity on company boards of directors. During her decades of corporate leadership, Lepore has had many opportunities to see value firsthand as a director of companies such as eBay, Walgreens, RealNetworks, and Accolade, among other roles.
She recently recalled a past experience on a smaller board, where she was one of two women. The board was tackling a talent-related issue and women viewed things quite differently from their male counterparts, a difference recognized by the CEO. His perspective, Lepore said, helped drive a better solution.
“Diversity matters, like everything else,” he said. “Different points of view and perspectives on life, you make better decisions. It’s just a fact. “
But when it comes to the boards that oversee and guide companies that can have a huge impact on all of our lives, white men dominate the ranks, with far fewer women and racially and ethnically diverse directors. Now there are efforts, some voluntary and others legally mandated, to change that.
To get an idea of where Pacific Northwest companies are starting out, GeekWire investigated the composition of the board of directors of 30 publicly traded biotech and technology companies in Washington. The results suggest that efforts launched in recent years to increase gender diversity are beginning to bear fruit: almost 27% of the 251 positions on the board are held by women. But racial and ethnic diversity lags behind in many areas. About 6% of the directors are black and only 1% are Hispanic or Latino. Asian directors performed better, occupying almost 9% of the seats; most are Indians.
But Northwest tech companies on average compare favorably to corporations across the country. TO analysis last year Of the 3,000 largest publicly traded companies they found that only 4% of directors were black, 21% were women, and 12.5% were from underrepresented non-white racial and ethnic groups.
In June, Seattle’s Perkins Coie launched the Black Boardroom Initiative Increase the diversity of the S&P 500 corporate boards by training pools of potential candidates. The law firm set a goal of 12.5% black directors in Washington by 2028, a proportion that matches the fraction of the black population in the United States. The murder of George Floyd last year was a major motivation for creating the effort, according to Perkins Coie.
The initiative is supported by the Northwest’s leading technology companies and offers a free six-month training program for “board-ready” black executives. Participants receive instruction in corporate governance issues and have networking and mentoring opportunities. The Black Boardroom Initiative can help match candidates with companies seeking directors.
As for Washington’s largest tech companies, among the 15 publicly traded companies with nine or more directors, one has two black directors, nine have one, and five have none. Amazon currently does not have a black director, recently losing Rosalind Brewer, who took over as CEO of Walgreens. Myrtle Potter was its first black board member and she left in 2009. With Andy Jassy taking over as CEO this week and joining the board, Amazon’s diversity percentages dropped even further.
Charlotte Guyman supports initiatives like the Black Boardroom Initiative. She is the founding senior strategist of BoardReady, a nonprofit organization that provides board diversity analysis and helps match companies with multiple directors. As a seasoned board member and former Microsoft manager, Guyman applauds using data and goals to drive progress.
“You have to start with the goal, and it has to be aggressive,” he said.
Other efforts to increase the number of underrepresented populations on councils include:
- California Laws requiring racial and gender diversity on boards, with racial diversity rules approved in October.
- A year ago, Washington became the second state pass a law requiring companies (with some exceptions) to appoint boards of directors with 25% female members, or give an explanation why they have not done so.
- Many European countries require 30-40% gender diversity on boards of directors.
- Nasdaq submitted a proposal with the US Securities Commission in December to require Nasdaq-listed companies to have at least two diverse board members, including a woman and a person who is an underrepresented minority or LGBTQ +.
- Goldman Sachs has agreed to only underwrite IPOs of private companies that have at least two different directors.
Voluntary programs include Women on board, a Seattle-based effort that began in 2014 to increase the number of women on public boards. The board challenge launched in September, asking companies across the country to add a black director over the next year.
Zillow is one of the companies that made the Board Challenge pledge and, in October, appointed its first black director, Claire Cormier Thielke, CEO of global real estate firm Hines.
“Talent exists, it’s about meeting people where they are and fostering opportunities,” Kristina Adamski, vice president of corporate relations for Zillow, said by email. “We need to be intentional to get out of our usual networks to find the right people and make sure there is a seat for them at the table and their voice is heard.”
Corporate leadership experts also emphasize the importance of considering a variety of attributes for true diversity. That may include nationality, specialty sector, age, and socioeconomic background. In addition to gender, race, and ethnicity, GeekWire also looked at where directors were educated, and found that more than 27% of board members have Ivy League degrees and 14% attended Stanford University.
Boards of directors have challenging roles that address far-reaching issues. That includes guarding against cybersecurity attacks, responding to climate change, serving an increasingly global economy, and keeping up with technological advancements that move at breakneck speed.
Interestingly, the research does not provide meaningful evidence that a diverse board will improve market performance, but it does reduce the amount of prosecution by regulators, said Mary-Hunter McDonnell, associate professor of management at the Wharton School of the University of California. Pennsylvania.
There is a possibility that a more diverse board is proactively putting out fires that could have had a negative effect on financial results, he said, but that’s hard to prove. At the very least, a more diverse board doesn’t help or hurt market performance, McDonnell said, in which case boards should pursue diversity given the important benefits in terms of greater equity and social well-being.
“If you’re seeing a null effect,” he said, “there’s no reason why it shouldn’t be diverse.”
In decades past, boards of directors were often filled by current or retired CEOs, creating a small group to draw money from. Today, companies perform much broader functions.
But there are obstacles on the road to diversity. The rotation occurs slowly. Board members rarely retire from their duties, except in the event of a crisis. Strategies to increase diversity include implementing term limits or adding more positions. There is also the problem of selecting the same racially and ethnically diverse women and directors to serve on many boards at the same time, stretching them. And sometimes a board needs a candidate with a specific and rare experience that is hard to find.
At the same time, programs to promote diversity, investor and shareholder pressure, and increased awareness help drive progress.
“Do you wish the change was faster?” asked Lepore. “Of course, we all do.”
Survey methodology: GeekWire examined the boards of directors of publicly traded biotechnology and technology boards in Washington state. For the 30 companies that met that definition, we investigated public records on education, awards, organizational memberships, news, and other sources to determine the gender, racial and ethnic identities of the directors. We also contact companies to verify our results; 22 responded, although three could not confirm our analysis. The analysis does not include other important measures of diversity, such as LGBTQ status, age, and nationality. We chose to include the Middle East as one of our categories. The US Census did not recognize this distinction in 2020, but many community members support the option.
Companies included in the survey: Accolade, Achieve Life Sciences, Adaptive Biotechnologies, Alpine Immune Sciences, Amazon, Aptevo Therapeutics, Athira Pharmaceuticals, Atossa Therapeutics, Avalara, BioLife Solutions, BSQUARE, CTI BioPharma, Expedia, F5 Networks, Impinj, IsoRay, Marchex , Microsoft, MicroVision, NanoString Technologies, nLIGHT, Omeros, RealNetworks, Redfin, Seattle Genetics, Silverback Therapeutics, Smartsheet, T-Mobile, Zillow, and ZoomInfo.