Diversity Among CEOs and Corporate Directors: Has the Heyday
|% of U.S. population||% of directors||% male directors||% female directors||M/F ratio|
|Whites (n=3791)||74.6%||87.2%||74.4%||13.3%||5.6 to 1|
|African Americans (n=293)||13.6%||6.8%||5.3%||1.5%||3.5 to 1|
|Latinos (n=136)||16.3%||3.1%||2.4%||0.7%||3.4 to 1|
|Asian Americans (n=104)||5.6%||2.4%||2.0%||0.4%||5 to 1|
|TOTAL (n=4324)||84.5%||15.5%||5.5 to 1|
Ever since Supreme Court justice Louis D. Brandeis wrote an article in 1915 that condemned interlocking directors as creating "financial power so great that even the best men have found themselves unduly influenced," there has been constant concern about the role of those who create interlocking directorates by sitting on two or more corporate boards (Brandeis, 1915: 47-48). Even if there is doubt that being a director of several companies leads to great power that compromises the independent judgment of the best of people, there is the likelihood that interlocking directorships lead to the sharing of useful information or generate greater social cohesion among corporate leaders, which may help them create common policies that they can urge upon government. Holding several directorships is also said to be of use to the interlockers themselves in developing a larger perspective that can lead to appointments to top government positions (Useem, 1980, 1984).
Some interesting patterns emerged when I analyzed corporate directors by gender, race and ethnicity to see if there were differences in who sat on one board or multiple boards (Table 2). Of all the corporate board members who were white, only about 1 in 6 served on multiple boards. But nearly 1 in 3 African Americans were "interlockers," as were about 1 in 4 Latino directors.
|1 board||2+ boards|
|African Americans (n=293)||67.7%||32.3%|
|Asian Americans (n=104)||83.7%||16.3%|
To put it another way (as Table 3 illustrates): as the number of boards increased, the percentage of white males decreased, from 75.8% to 69.4% to 64.2%. In a striking contrast, the percentage of African Americans increased dramatically as the number of boards increased (from 5.7% to 10.3% to 16.2%), a pattern that held for both African American men and African American women. The results on African American directors corresponds to our earlier findings, so it may be that once African Americans show that they are acceptable on one board, other boards seek them out (Zweigenhaft and Domhoff, 1998, 2006). On the other hand, the numbers in Table 3 show no clear patterns of increases or decreases for white women, Latinos, or Asian Americans, but it is notable that the number of males was at least three times the number of females for every group, whatever the number of boards.
|1 board only (n=3501)||2 boards (n=650)||3 or more boards (n=173)|
|African Americans (n=293)||5.7%||10.3%||16.2%|
|Asian Americans (n=104)||2.5%||2.2%||1.7%|
Are the corporate directors in our various groups equally likely to sit on the boards of the largest Fortune 500 companies? Or are there more white women and people of color on the largest — and hence most visible — of these companies? First, I compared the directors in terms of the rankings of the boards on which they sat; for those who sat on more than one board, we used the largest company they sat on. As can be seen in Table 4, African Americans tended to serve on the boards of the largest companies, followed by Latinos, white women, Asian Americans, and white men. I also compared these directors in terms of what percentage from each group sat on the board of a Fortune 100 company. Once again, African Americans led the way, with 31.6% of them on at least one Fortune 100 company, followed by 28.2% of the Latinos, 26.9% of the white women, 22.2% of the white male directors and 22% of the Asian American directors. Thus, those directors who were not white males (with the exception of the Asian American directors) were more likely than the white male directors to sit on the boards of the largest companies. Taken as a whole, it appears that big companies are more concerned than smaller ones about having diverse boards.
|African Americans (n=282)||188.2|
|White females (n=565)||222.4|
|Asian Americans (n=100)||231.4|
|White males (n=3143)||238.6|
Sociologist Michael Useem (1984, p. 65) calls those who sit on three or more Fortune 500 boards "the innermost ring within the inner circle." In 2011 the innermost ring included 28 African Americans, 25 white women, six Latinos, and three Asian Americans as well as 111 white males. The 62 diversifiers within the innermost ring are highly educated, and they bring a wealth of business and legal experience to the boards on which they sit. Slightly more than half (34) were female, and almost all of the men and the women have been married and have had children.
Although I was not able to assess the class backgrounds for all of those in the innermost ring, I was able to do so for most (as in our previous work, I have relied on the educational and occupational backgrounds of their parents to estimate class backgrounds). All of the white women for whom I found information came from either upper class or upper-middle class backgrounds. For example, looking at the first three on the list alphabetically, Charlene Barshefsky, who in 2011 sat on the boards of American Express, Estee Lauder, and Intel, is the daughter of a chemical engineer; Crandall Bowles, who sat on Deere, J. P. Morgan Chase, and Sara Lee, is the great great granddaughter of the founder of Springs Industry, and she herself is the heiress to a family fortune worth hundreds of millions of dollars; Carolyn Corvi, who sat on the boards of Continental, Goodrich, and UAL, is the daughter of a senior manager at Boeing.
All three of the Asian Americans came from privileged backgrounds, though none of the three was born in America. Victor Dzau, who sat on the boards of Genzyme, Medtronic, and Pepsico, was born in 1946 in Shanghai, where his father owned a chemical factory and taught chemistry at the university. Andrea Jung, the former CEO of Avon, who sat on the boards of Apple, Avon, and General Electric, is the daughter of an architect and a chemical engineer. Arun Sarin, the CEO of Vadaphone Group (a British-based telecommunications company), who sat on the boards of Charles Schwab, Cisco, and Safeway, was born in India to a once-wealthy family. His father had become an officer in the military, and Arun attended a military boarding school before attending the elite India Institute of Technology, and then Berkeley for MS and MBA degrees.
The pattern is somewhat different for the six Latinos, and quite different for the 28 African Americans. At least 15 of the 28 African Americans did not come from economically privileged backgrounds. These include, for example, Joseph B. Anderson who sat on the boards of ArvinMeritor, National Oilwell Varco, and Rite Aid, and who is the son of a widower who worked for the Santa Fe railroad; Virgil Colbert (Bank of America, Black & Decker, and Sara Lee) whose father was a factory worker who died when Virgil (one of ten children) was 13 years old; and Donna A. James (Coca Cola, CNO Financial, Limited Brands, and Time Warner) whose father was a bus driver. As for the six Latinos, I was only able to determine class background for five of the six, but both Oscar Munoz (Continental Airlines, CSX, and UAL) and Ernesto Zadillo (Alcoa, Citigroup, and Procter & Gamble) are first generation college students from working class backgrounds, so at least 33% and perhaps half of the six are not from privileged economic backgrounds.
For those in the innermost ring, therefore, there is some diversity in that there are some white women, some African Americans, some Latinos and some Asian Americans, but within those four groups the only real class diversity occurs with African Americans and Latinos, and there are so few Latinos (six) that the sample is too small to draw meaningful conclusions. Thus, the general pattern we have found in our previous research on directors and CEOs holds here as well — with the clear exception of African Americans, the large majority of those who have made it to these highest circles are from upper or upper-middle class backgrounds (Zweigenhaft and Domhoff, 1998, 2006, 2011).
What about those who sat on the boards of the four policy groups that are in the center of the highly integrated corporate and policy-planning networks that are analyzed in the Power Elite section of WhoRulesAmerica.net — the Business Roundtable (BR), the Business Council (BC), The Brookings Institution (BI) and the Council on Foreign Relations (CFR). All four continue to be primarily the province of white men — 87% of both the BR and the BC, 73% of the BI, and 66% of the CFR. The 138 trustees of the Business Roundtable included seven white women, seven Asian Americans, two African Americans, and two Latinos; the numbers were very similar for the 119 trustees of Business Council.
There was slightly more diversity among the 45 trustees of The Brookings Institution, a mainstream think tank, with five white women, four African Americans, two Asian Americans, and one Latino. So, too, for the 32 trustees of the Council of Foreign Relations, once called a "school for statesmen" because so many of its members have been appointed to the state department over the past 70 years; its board included six white women, three African Americans, one Latino, and one Asian American. The full picture for all four groups, complete with percentages, is presented in Table 5.
|Council on Foreign Relations|
|Whites||127 (92.1%)||109 (91.6%)||38 (84.4%)||27 (81.2%)|
|men||120 (87.0%)||103 (86.6%)||33 (73.3%)||21 (65.6%)|
|women||7 (5.1%)||6 (5.0%)||5 (11.1%)||6 (18.8%)|
|African Americans||2 (1.4%)||3 (2.5%)||4 (8.9%)||3 (9.4%)|
|men||2 (1.4%)||3 (2.5%)||1 (2.2%)||1 (3.1%)|
|women||0||0||3 (6.7%)||2 (6.3%)|
|Latinos||2 (1.4%)||1 (0.8%)||1 (2.2%)||1 (3.1%)|
|males||2 (1.4%)||1 (0.8%)||1 (2.2%)||1 (3.1%)|
|Asian Americans||7 (5.1%)||6 (5.0%)||2 (4.4%)||1 (3.1%)|
|men||7 (5.1%)||5 (4.2%)||2 (4.4%)||1 (3.1%)|
Although there were no black women on either the Business Roundtable or the Business Council, there were more black women on The Brookings Institution and the Council on Foreign Relations than black men. Ann M. Fudge, a former executive at General Mills and Kraft Foods, who became President and CEO of Young and Rubicam, an advertising agency, before she retired in 2007, sat on both boards, as did Shirley A. Jackson, an MIT-trained physicist who has been the President of Rensselaer Polytechnic Institute since 1999. Beatrice W. Welters, a former IBM executive and foundation president who became the Ambassador to Trinidad and Tobago in March 2010, was on the board of Brookings. The only African American male on Brookings was Larry D. Thompson, a corporate lawyer who became Deputy Attorney General during the George W. Bush administration, and the only African American male on the Council on Foreign Relations board in 2010 was Colin Powell, the former chairman of the Joint Chiefs of Staff and the Secretary of State from 2001 to 2005.
Only four Latinos (all men) were trustees of any of the four policy groups: Alberto Ibarguen, former publisher of The Miami Herald and now the President of the Knight Foundation, sat on the CFR board; Antonio Perez, the CEO of Eastman Kodak since 2005, was a member of both the Business Roundtable and the Business Council; Edgar Rios, Executive Vice President and Chief Council at AmeriChoice Corporation, was a director at the Brookings Institution; and Enrique Santacana, the President and CEO at ABB Inc, who was a member of the Business Roundtable. Ibarguen, whose father was Cuban and whose mother was Puerto Rican, was born in Puerto Rico, but grew up in New Jersey (his father worked for a pharmaceutical company). Santacana was born in Cuba (his father was a professional photographer — the family left in 1962, shortly before the Cuban missile crisis). Perez was born in Spain (his father owned a fishing business). Rios grew up in the south Bronx; he was able to attend Princeton because of a scholarship he received from a publically funded Model Cities Program.
There were 16 Asian Americans on at least one of the four policy boards — seven at the Business Roundtable, six at the Business Council, two at Brookings and one at CFR. Only one of them is a woman: Andrea Jung, the former CEO of Avon, who sat on the Business Council.
This snapshot of diversity on corporate boards and on key policy groups shows continuing under-representation for all groups on corporate boards, and very little if any change since our study of directors for 2005 (Zweigenhaft and Domhoff, 2006). In addition, these findings are consistent with a large-scale study done in 2013 by the Alliance for Board Diversity, an organization that includes four important advocacy groups for corporate diversity, one for women (Catalyst), one for African Americans (the Executive Leadership Council), one for Latinos (the Hispanic Association for Corporate Responsibility, or HACR), and one for Asian Americans (the Leadership Education for Asian Pacifics, or LEAP). The ABD study compares current findings on board representation with previous studies they did in 2004 and 2010.
As of early 2014, the overall picture is not one of increasing diversity. There is a growing but still small percentage of white women who are CEOs of Fortune companies (4% of all Fortune 500 CEOs in 2013), but there has been a decline in the number of African American, Latino, and Asian American CEOs since high points between 2007 and 2011. And there is stasis at best since the turn of the twenty-first century in terms of the percentage of white women and people of color who sit on corporate boards. After decades of efforts to diversify, corporate boards are 87.7% white and 84.5% male. Domhoff and I explore these issues further in the introduction and Chapter 6 of the new paperback edition of The New CEOs — which we hope will provide a springboard for classroom discussions and future research.
Alliance for Board Diversity (2013). Missing Pieces: Women and Minorities on Fortune 500 Boards.
Brandeis, Louis D. (1915). Interlocking directorates. Annals of the American Academy of Political and Social Science, 57:45-49.
Useem, Michael. (1980). Corporations and the corporate elite. Annual Review of Sociology, 6:41-77.
Useem, Michael. (1984). The Inner Circle: Large Corporations and the rise of Business Political Activity in the U.S. and U.K.
Zweigenhaft, R. L. & Domhoff, G. W. (1982). Jews in the Protestant Establishment.
Zweigenhaft, R. L. & Domhoff, G. W. (1991). Blacks in the White Establishment? A Study of Race and Class in America. New Haven: Yale University Press. (Updated and extended in 2003 as Blacks in the White Elite: Will the Progress Continue?
Zweigenhaft, R. L. & Domhoff, G. W. (1998). Diversity in the Power Elite: Have Women and Minorities Reached the Top? New Haven: Yale University Press.
Zweigenhaft, R. L. & Domhoff, G. W. (2006). Diversity in the Power Elite: How it Happened, Why it Matters.
Zweigenhaft, R. L. & Domhoff, G. W. (2011; paperback edition, 2014). The New CEOs: Women, African American, Latino, and Asian American Leaders of Fortune 500 Companies.