African Americans Are Underrepresented on Corporate Boards
New report shows that African Americans, who make up 13 percent of the U.S. population, hold one in 12 seats on Fortune 500 company boards.
ANN ARBOR, Mich. Although two-thirds of Fortune 500 companies have at least one African American member on their corporate board, only 8 percent of board seats are held by African Americans, says a University of Michigan business professor.
In a new report released today, Lynn Perry Wooten, clinical assistant professor of corporate strategy and management at Michigan's Stephen M. Ross School of Business, and colleague Erika Hayes James of the University of Virginia's Darden Graduate School of Business found that of the 5,572 total board seats for Fortune 500 companies, 449 belong to African Americans.
These 449 seats are distributed among 255 African Americans, many of whom serve on more than one corporate board. Forty-five serve on at least three boards, 60 are on two boards and 150 serve on one.
African American men hold more than three times as many board seats as African American women, Wooten says. Of the 449 seats held by African Americans, 344 belong to men and 105 belong to women. In all, 201 African American men and 54 African American women hold at least one board seat.
"Research shows that having diversity in the corporate management ranks provides value to a firm's bottom-line performance," Wooten said. "What is less well understood is the extent to which African Americans are represented on corporate boards and the value their expertise and views provide to the corporations on whose boards they serve."
Among all Fortune 500 companies, 102 have at least two African Americans on their board, 233 have one African American board director and 165 have none.
Wooten and James found that the higher a firm is ranked on the Fortune 500 list, the larger its board size and the more African American board members it has. Nearly 11 percent of the board directors of the top 100 companies are African American and 89 of these firms have at least one African American member. In contrast, among the bottom 100 companies, 46 have at least one African American board member and just 5.5 percent of the corporate board seats are held by African Americans.
According to the study, tobacco (16.6 percent), food services (16.1 percent), beverages (14.3 percent), railroads (14.2 percent) and waste management (13.6 percent) are the industries with the highest representation of African American board directors.
On the other hand, four industries have no African American board members: pipeline, toys and sporting goods, transportation and logistics, and diversified wholesalersalbeit the latter three include just one company per industry. Industries such as homebuilders, semiconductors and electronic equipment, packaging containers, engineering construction, and food and grocery wholesalersall comprised of several Fortune 500 firmshave less than 3 percent African American representation on their corporate boards.
Finally, the report shows that a greater percentage of Fortune 500 companies in the Northeast (73 percent) have African American board members, compared to the South (68 percent), Midwest (67 percent) and West (53 percent). It also provides a breakdown of board composition by company and state.
"The 2004 Census of African Americans on Corporate Boards" is the first of two reports on the status and structure of African American representation on corporate boards. The second report, to be published this spring, will explore implications of the first report and make recommendations on ways to increase board membership of African Americans.
Both reports are sponsored by the Executive Leadership Council's (ELC) Institute for Leadership Development & Research. The ELC is the nation's premier leadership organization for senior African American corporate executives.
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