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SEC Chair: Low Level of Board Diversity in US is Unacceptable

In a recent speech, SEC Chair Mary Jo White gave an overview of board diversity in the United States, and lamented that the percentage of top 200 companies in the S&P 500 with at least one minority candidate declined from 90% in 2005 to 86% in 2015.  She added that 73% of new directorships in S&P 500 companies during 2015 went to men. 

Chair White stated that, consistent with its focus on other corporate governance issues, the SEC is focused on disclosure regarding diversity.  She reminded the audience that in 2009, the Commission adopted rules that require disclosure of whether (and if so, how) nominating committees consider diversity, and, if the company has a diversity policy, how that policy’s effectiveness is addressed.  Chair White lamented that the disclosures pursuant to the rule have been very vague, with very few companies reporting having a diversity policy and, therefore, little disclosure regarding how companies assess the effectiveness of these policies.  She did note, however, that a number of companies have begun to voluntarily provide information in their proxy statements regarding the gender, race, and ethnic diversity of the board. 

Chair White informed the audience that the SEC staff was preparing a recommendation for the Commission regarding a proposal to amend the diversity disclosure rule to require companies to disclose in proxy statements “more meaningful diversity disclosures on their board members and nominees where that information is voluntarily self-reported by directors.”  She acknowledged that there may be opposition to the proposal, but that in her view “the SEC has a responsibility to ensure that our disclosure rules are serving their intended purpose of meaningfully informing investors.  This rule does not and it should be changed.  Our lens of board diversity disclosure needs to be re-focused in order to better serve and inform investors.”