A comprehensive review of 2021: LGBTQ+ representation in the boardroom
While demand for LGBTQ+ candidates stagnated, other indicators turned full green: a good sign for 2022
While overall demand for LGBTQ+ candidates did not improve significantly, many signals indicate that change is resolutely on the way. The publicized appointment of key LGBTQ+ individuals, the disclosure of director’s sexual orientation and gender identity (SOGI) by mainstream companies in their proxies and inclusive developments in the Governance world all indicate a possible uptake in searches for LGBTQ+ Board members in 2022. Yet some resistance remains including lawsuits against AB979 in California and the NASDAQ proposal at the Federal level. The deliberate invisibilization of LGBTQ+ Board members by the specialized press and some Governance stakeholders also persist.
A wave of gay and lesbians on Boards
First, prominent out LGBTQ+ business leaders were appointed to seats in the Global Fortune 500 and Fortune 500 world. In February, Jim Fitterling, chairman and CEO of Dow Inc., was elected to 3M Co.’s board of directors. In September, Beth Ford, the CEO of Land O’Lakes Inc., joined the board of directors for BlackRock Inc., the world’s largest asset management company (the same week it became an Out Leadership member firm). In October, Accenture executive Sander van ‘t Noordende was named chief executive officer of Randstad in the Netherlands (previously he had joined the Board of AECOM, also a Fortune 500).
This trend was not limited to the Fortune 500 set. In March, Beth Brooke, formerly top dog at EY, joined the Board of Directors of The New York Times Company. Last week, Pamela Stewart, an accomplished leader at the The Coca-Cola Co., was named to the board of directors for snack food manufacturer Utz Brands Inc. The same week, Tony Prophet, formerly at Salesforce, was appointed to Dolby.
In smaller companies, appointments of OUTQuorum members to the Boardroom such as that of James Brady at Panavance Therapeutics or Art Torres at CareDx, Inc.
The diversity of these eight appointments: three women, two people of color and one latino are also a testimony of the intersectional virtue of LGBTQ+ inclusion in the boardroom.
Yet, many of our top candidates, some listed on the 2021 Agenda/Equilar Top 100 Diverse Candidates, who are natural fits for leading Boards have not been tapped despite their visibility. Examples include the brilliant Aaron Walton (trailblazer, thought leader and CEO of Walton Isaacson), Amanda Simpson (Airbus, Fmr. Deputy Assistant Secretary of Defense), 40 under 40 Amit Paley (CEO of The Trevor Project, former McKinsey), Arden Hoffman (fmr CHRO, Dropbox), Joseph Taiano (CMO, Accenture), Allyn Shaw (Fmr CTO RTS, now Wells Fargo) or Jen Wong (COO, Reddit). This best illustrates the private sector’s reluctance to expand the recruiting pool.
A resolute regulator
The legislator and the regulator also sent very clear signals. While the “Improving Corporate Governance Act of 2021”, sponsored by Senator Robert Menendez, is now stuck in Senate, the fact that a legislation that would mandate Board members’ SOGI disclosure passed the House is an unmistakable sign that LGBTQ+ representation in Governance is a mainstream political issue.
In fact, the House Financial Services Committee invited Out Leadership last month to testify in front of its Diversity and Inclusion Subcommittee in a hearing titled, “There’s No Pride in Prejudice: Eliminating Barriers to Full Economic Inclusion for the LGBTQ+ Community.” chaired by Rep. Maxine Waters. We testified on AB979’s implementation at the California legislature’s Select Committee on Corporate Board and California Workforce Diversity hearing in October.
We also held discussions with the U.S. Securities and Exchange Commission on the need to urgently amend their definition of Board diversity which leaves too much room to the interpretation of the private sector. And of course, the SEC approved this summer, the Nasdaq listing rule making it the first major exchange to require its 3,000+ companies to meet both gender targets on their corporate boards, as well as racial and LGBT representation. An initiative led by Nasdaq CEO Adena Friedman.
This is also the case in the United Kingdom, where a listing rule — somewhat inspired by the NASDAQ listing rule — was proposed for consultation by the Financial Conduct Authority (FCA). While the proposed focus was initially on ethnicity and gender, with LGBTQ+ and disability to be included in a second phase, Governance actors have been pressing FCA not to delay inclusion of all minorities in the Boardroom. You can read our comments here.
Finally, Mark Gossington, a Member of the Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia, penned an oped calling for Australian corporations to start taking some more concrete steps.
A consensus on the importance of LGBTQ+ representation by all stakeholders
The links we strengthened with other Governance diversity actors also showcased LGBTQ+ is now part of the conversation. In 2021, we partnered with Equilar and its Diversity Network, Diligent, Egon Zehnder, the Board Challenge (a campaign that calls on companies to add a Black director within the next 12 month), the Silicon Valley Leadership Group, the Latino Corporate Directors Association (LCDA — see our joint July 2021 Forbes oped), the Society for Corporate Governance, The Ellig Group and Bolster among others.
At the National Association of Corporate Directors Summit, Out LGBTQ+ Directors Terrence Boone, Denice Torres, Romy Diaz and Myrna Soto were featured speakers. Fabrice was appointed to their Inclusive Governance Center as an advisor, recognized as a 2021 NACD (National Association of Corporate Directors) Directorship 100 honoree and guest-blogged on their website “LGBTQ+ inclusion in the Boardroom is Simply Good Governance”.
The BoardIQ and How Women Invest built their own list of top LGBTQ+ candidates (see theboardiQ Pride Hall of Fame).
Similarly, Out Leadership Partner Susan Angele, Senior Advisor at KPMG’s Board Leadership Center; was included in the 2021 OUTstanding Top 50 Ally Executives. A well-deserved recognition as Susan, a recognized leader in the Governance industry, has been leading the charge for LGBTQ+ Board representation for years.
Some actors dismissed efforts to improve LGBTQ+ representation in 2021 crying that it was woke, unlawful or even unconstitutional. The NYSE (New York Stock Exchange)’s Initiative to Advance Board Diversity has a council composed of 21 individuals. Not even one is openly LGBTQ+, a clear rebuke of the NASDAQ initiative. Similarly, the Alliance for Board Diversity (ABD)’s 2020 Report on Board diversity excluded LGBTQ+ people. In a rather tone-deaf move, the Alliance for Board Diversity published its 6th edition of the “Missing Pieces Report: The Board Diversity Census of Women and Minorities on #Fortune500 Boards” in collaboration with Deloitte, without a single mention of LGBTQ+ Board representation. In their comments on the Financial Conduct Authority Board Diversity Proposal CP21/24, mentioned above, Women on Boards suggested postponing the inclusion of LGBTQ+ Board candidates on the ground that: ”No comprehensive data has been made available on sexual orientation of board members and the groundwork to support suitable candidates and create inclusive environments has not been done. It is also important to note that individuals may wish — for good reason — not to disclose their sexual orientation and a drive for diversity should not pressurize them into doing so”.
The press has also been willfully ignoring the issue. The NASDAQ “woke” agenda was decried by the Wall Street Journal several times this year. French Les Echos managed to publish this summer a double page on Tim Cook’s 10th anniversary at the helm of Apple without mentioning once that he was the first Out LGBTQ+ CEO of a Fortune 500 company.
Voluntary disclosures by companies also remained an outlier. The Consumers Energy (CMS) 2021 proxy statement highlights that 1 of their 11 Board members, Myrna Soto, self-identify as a member of the community. But this remains an exception. The Spencer Stuart index 2021 showed marginal progress in S&P 500 companies on LGBTQ+ disclosures : 32 boards (6%) included LGBTQ+ disclosure in their 2021 proxy statement, although most did not identify the LGBTQ+ status of individual directors. Just five LGBTQ+ directors were identified by name. As a comparator, 60% of S&P 500 disclose the race of their directors. That number pretty much echoed my own findings in reviewing the Fortune 500 disclosures. Companies that have outstanding Out LGBTQ+ Board members such as Lorrie Norington (Colgate Palmolive) or Adam Stanley (GATX) fail to disclose this aspect of diversity.
While AB979 becomes truly effective at the end of this month, “No later than the close of the 2021 calendar year, a publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California shall have a minimum of one director from an underrepresented community on its board”, it faces an onslaught of legal challenges: I do not believe they will succeed (disclaimer: I am an expert for DOJ in one of them). By the end of calendar year 2022, corporations with more than four but fewer than nine directors will need to have at least two directors from underrepresented communities, and corporations with nine or more directors will need to have three.
In conclusion, we have no doubts that 2022 is the year all the forces we describe will conflate to create a demand for LGBTQ+ Board candidates. Already Californian companies have been tapping in underrepresented candidate pools ahead of the AB979 deadline. The challenge will be to ensure the demand is not limited to a small group of large progressive companies in the United States. You can count on OUTQuorum to ensure we keep the pressure on. We have the talent pipeline and are just waiting for Nom/Gov Committees to knock at the door.
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