Earlier this month, the U.S. House Financial Services Committee passed, with overwhelming bi-partisan support, three bills to promote gender, racial and ethnic diversity on corporate boards. Although there has been progress in diversifying board representation in recent years, the rate of change is slow. The Alliance for Board Diversity reported that among Fortune 500 companies, over 80% of new board directors in 2017 were white men and that among Fortune 100 companies, minority men have made a one percent gain in corporate board seats from 2016-2018, which is almost as much progress as achieved over the past 12 years. Below we provide a summary of the bills:
- H.R. 3279, the “Diversity in Corporate Leadership Act of 2019,” which would affirmatively require issuers to specifically disclose to shareholders the gender, racial, and ethnic diversity of their board of directors;
- H.R. 281, the “Ensuring Diverse Leadership Act of 2019,” which would require Federal Reserve Banks to interview at least one individual reflective of gender diversity and at least one reflective of racial or ethnic diversity when appointing Federal Reserve Bank presidents; and
- H.R. 1018, the “Improving Corporate Governance Through Diversity Act of 2019,” which would require public companies to annually disclose the voluntarily, self-identified gender, race, ethnicity and veteran status of their board directors, nominees, and senior executive officers.
Congressman Gregory W. Meeks, co-sponsor of H.R. 1018, stated that the bill is a “culmination of years of methodical work, built on the premise that transparency is the first step to accountability.” Moreover, according to Congressman Meeks, “Corporate America should reflect the diversity of America, and the markets they seek to serve.”