L.A. Corporate Boardrooms Remain a White Bastion
SPECIAL REPORT – Banking & Finance: Boards Under Fire What Do They Know?
By CONOR DOUGHERTY
Staff Reporter
L.A. is a place where half of the population is considered minority, and yet people of color hold fewer than 6 percent of the board seats of the county’s 30 largest public companies. Women hold 11.3 percent.
While the picture in L.A. and nationally is brighter than it was a decade ago, the advances are seen only in pockets.
“What appears to be happening is the companies that are committed to diversity are slowly increasing it on their boards,” said Carol Bowie, director of governance research services at the Investors Resource Research Center. “Overall, the number of companies that have diversity is not going up.”
Women last year held three times the number of board seats at the largest companies than they did in 1991, according to data compiled by L.A. executive search firm Berkhemer Clayton Inc. Minorities held about nine times as many board seats than a decade ago.
Those who follow corporate governance say the gradual boardroom gains, however slight, are fed by two sources: businesses that actively pursue diversity, and a larger pool of women and minorities who serve as high-level corporate executives or run their own businesses.
“There is definitely a modest trend towards greater diversity on corporate boards,” said Betsy Berkhemer-Credaire, co-founder of Berkhemer Clayton, who conducted the survey of local companies to coincide with the 10-year anniversary of the Los Angeles riots.
The firm’s study reviewed the proxy statements of 30 L.A. companies with 2001 revenues greater than $1 billion. After the data was compiled, companies were asked to verify the information.
L.A. gains beat nation’s
The Investors Resource Research Center’s recently completed national study found an overall trend toward less diversity.
In a sample of 1,200 large-, mid- and small-cap companies in 2001, the center found that 64 percent of companies had at least one woman on its board, down from 66 percent the year before.
The same was true for ethnic minorities. In 2001, 36 percent of the 1,200 companies surveyed had at least one minority, down from 37 percent in 2000. The IRRC did not conduct a 10-year study.
In Los Angeles, the numbers show progress towards greater diversity at higher levels, but white males still make up most of the members of local boards. “Corporations are making an effort, but there could be a greater one,” Berkhemer-Credaire said.
Companies generally seek women and minorities to serve on boards, but finding qualified individuals who also are part of an underrepresented group presents a problem for which there is no quick fix, according to corporate governance observers.
“Most boards are looking for other CEOs, so until now there have been very few potential (female and minority) candidates,” Berkhemer-Credaire said. “In the past, they came out of universities, the chair of a business school for instance.”
That may be changing. L.A.’s rebounding economy is dotted with businesses that grew following the recession of the early 1990s some to substantial size owned by women and minorities.
Having run their own companies, this new crop is considered a fertile field for new board picks.
Stepping up effort
Willie D. Davis, president and chief executive of All-Pro Broadcasting Inc., said he’s noticed companies becoming more proactive in seeking out women and minorities. “Right now I am in several discussions to help find minorities for boards,” he said. “And some of the boards I’m on are looking for minority talent they would like to bring on.”
Davis, who is African-American and a Hall of Fame defensive end who played for the Green Bay Packers, serves on 11 boards, including Metro-Goldwyn-Mayer Inc., Kmart Corp. and Sara Lee Corp. He was quick to point out that as companies increasingly see value in minority customers, boards become more inclusive.
“Companies are interested in structuring the board so they get input that will help them better sell their products,” he said.
Davis has seen it first hand.
“I was at a board meeting where they were talking about multi-cultural advertising. I asked how some of the advertising would be executed and where it would air. Radio, for instance, is much more effective in reaching blacks and Hispanics,” he said. “There’s no doubt in my mind that black and Hispanic directors ask questions like that. And management can usually tell that they know what they’re talking about.”
In L.A. County, where whites make up less than half of the population, the ability to sell to minorities is important for any public company doing business.
“It is particularly important for companies doing business in Los Angeles to reach out to women and people of color,” said Vilma Martinez, a partner at Munger, Tolles & Olson and a member of four corporate boards including Bank of the West (formerly Sanwa Bank California). “If you want to market here you really need to understand how it works.”
Martinez said she finds that the number of women and minorities on area boards doubly encouraging given the amount of consolidation in the last decade. “At a time when there is a declining number of corporations, it’s exciting to me that the number of women and minorities is increasing,” she said. “It says minorities and women are more active in all walks of life, particularly business.”
Going forward, local women and minority executives and directors are hopeful that the still-meager advances mark the start of a larger trend not just a quirk. “I call this the first 10 years, our hope is that corporations will continue to become more diverse,” Berkhemer-Credaire said.
Martinez, whose first board appointment came in 1983, is also encouraged. “Of course I’d like to see progress more quickly,” she said. “But I’m happy to see results.”
