Corporate America’s boards are more diverse than ever, but racial diversity among new directors has recently slowed, a new study has revealed.
Between 2022 and 2024, the share of new Russell 3000 directors who are non-White dropped from 48% to 31%. Moreover, the share of new directors who are Black fell from 26% to 12%, according to a new report carried out by The Conference Board, ESGAUGE, KPMG, Russell Reynolds Associates, and The John L. Weinberg Center for Corporate Governance at the University of Delaware.
When it comes to gender diversity, the picture is more complex. While women hold a record level of overall board seats (29%), they hold only 8% of board chair positions. In addition to providing the latest data and insights on racial and gender diversity, the study also analyses board skills, qualifications and evaluations.
DIVERSE BOARD REPRESENTATION
The study reveals that racial representation dropped significantly in the 2024 Russell 3000 new class of directors. From 2022 to 2024, the share of new non-White directors fell from 48% to 31%. This slowdown may reflect progress toward demographic balance and ongoing gaps in representation.
“Research consistently shows that boards with a diversity of skills, backgrounds and demographics are more effective. Ensuring a pipeline of diverse talent is not just about representation, it’s also crucial for effective board oversight and decision making. Boards can take practical steps to optimise board recruitment by seeking director candidate pools that include diverse leaders, and by advocating for programs that develop high-potential diverse leaders for future board service,” noted Annalisa Barrett, Senior Advisor, KPMG Board Leadership Center.
Despite less diversity in the 2024 incoming class, overall racial representation is at an all-time high. From 2020 to 2024, the share of non-White directors increased from 20% to 26% in the S&P 500. It increased modestly in the Russell 3000, from 21% to 23%.
WOMEN ON BOARDS
Women hold about a third of board seats overall, but only about one in ten board chair seats. From 2020 to 2024, the share of women directors increased from 27% to 34% in the S&P 500. It also grew from 21% to 29% in the Russell 3000. Women hold 22% of lead director positions, and 11% of board chair positions in the S&P 500; and 17% of lead directors and 8% of board chairs in the Russell 3000.
“The share of female directors is at record levels, and the growing presence of women on boards has expanded the pool of candidates with the expertise, tenure, and relationships required for leadership roles. At the same time, boards may want to consider reassessing and refining their diversity hiring strategies to ensure continued momentum,” explained Andrew Jones, coauthor of the report and Senior ESG Researcher at The Conference Board.
DIRECTOR SKILLS
More Russell 3000 directors are coming from the C-Suite (non-CEOs) or below – a departure from the CEO-heavy trend. From 2020 to 2024, the share of active or former C-Suite executives (non-CEOs) increased from 14% to 18%. The share of directors who sit below the C-Suite grew from 17% to 21%.
“Sitting and former CEOs will always be in demand in the boardroom, but the trend this year in appointing non-CEOs, and more junior executives with deep expertise in certain areas, may indicate that boards are either trying to balance out the mix of expertise in the boardroom, or are trying to get ahead of emerging trends,” pointed out Richard Fields, Head of the Board Effectiveness Practice at Russell Reynolds Associates.
As geopolitics intensifies and cybersecurity threats escalate, there’s growing demand for directors with international and cybersecurity experience. From 2020 to 2024, the share with international experience increased from 40% to 51% in the S&P 500. It also grew in the Russell 3000 from 22% to 29%. From 2020 to 2024, the share with cybersecurity experience grew from 13% to 25% in the S&P 500. It grew from 7% to 16% in the Russell 3000.
OVERBOARDING POLICIES
Corporate America is cracking down on overboarding. From 2020 to 2024, the adoption of overboarding policies grew from 68% to 81% in the S&P 500. It also grew in the Russell 3000, from 44% to 53%.
“The increase in overboarding policies reflects heightened investor engagement from certain institutional investors and pressure from both dominant proxy advisory firms,” highlighted Lawrence A. Cunningham, Director of The John L. Weinberg Center for Corporate Governance at the University of Delaware.
EVALUATION & ACCOUNTABILITY
Amid heightened board scrutiny, performance evaluations and independent assessors are gaining momentum. From 2020 to 2024, the share of companies conducting full board, committee, and individual director evaluations increased from 43% to 55% in the S&P 500. The share grew from 24% to 38% in the Russell 3000. From 2020 to 2024, the use of independent assessment facilitators increased from 21% to 37% in the S&P 500. It grew from 10% to 17% in the Russell 3000.
“The move toward more comprehensive board evaluations marks a significant shift in governance practices. While most companies rely on in-house programmes for director orientation and education, we’re seeing a growing recognition that external perspectives can be valuable,” noted Umesh Tiwari, Executive Director of ESGAUGE.
Click here to download the report.
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