Local Firms’ Boards Gain in Diversity

The Southland’s largest publicly traded companies have tripled the number of women and ethnic minorities on their corporate boards during the last 10 years, a new study found, although observers were split over whether the gains were impressive or merely modest.

Women and people of color held 16% of the board seats on the 41 largest publicly traded companies in Los Angeles, Orange and Ventura counties last year, the study said. That’s up from 5.4% in 1991.

The study, released this week by Los Angeles-based executive search firm Berkhemer Clayton Inc., examined companies with at least $1 billion in 2001 revenue.

Women and minorities held 68 of 416 seats on those boards last year, compared with 20 of 369 seats for the same corporations in 1991.

Part of the growth stems from companies that have expanded their boards by creating new seats. In other cases, companies made concerted efforts to increase diversity.

Ryland Group, a Calabasas-based home builder, went from no women or minorities in 1991 to two women and two minorities last year.

“Most of the decisions about buying a house are made by women--that’s just a fact,” said Ryland Chairman and Chief Executive Chad Dreier.

“And one-half of our houses are sold to minorities.”

George Ott, who heads the local chapter of the National Assn. of Corporate Directors, saw the increase as “a pretty good jump, considering that board seats just don’t turn over very much.”

Betsy Berkhemer-Credaire, whose company released the study, said she was happy to see some increase but called the growth modest.

“Corporations are moving in a positive direction, but 16% isn’t much,” said Berkhemer-Credaire, whose firm has launched a service to help corporations find female and minority directors.

Even with the growth, minorities and women still hold a small fraction of board seats locally.

In 1991, minorities held 0.5% of the board seats, and only two of the 41 companies--Burbank-based Walt Disney Co. and Century City-based Northrop Grumman Corp.--had minorities on their boards.

By 2001, the minority makeup on those boards grew to about 5%, but 28 of the 41 firms still lacked directors of color.

Women made up nearly 5% of the corporate boards in 1991. That figure grew to 11.3% by last year, when only nine firms had no female directors.

Experts said that in the next several years, the pace of change may pick up, thanks in part to the recent Enron Corp. scandal, which has triggered a wholesale review of corporate governance issues.

Among other changes, some chief executives are being pressured by shareholders, including institutional investors, to give up board seats on outside companies so they can concentrate more fully on their jobs, said Roger W. Raber, president and chief executive of the Washington-based National Assn. of Corporate Directors.

That will help address the low turnover that has stymied efforts to increase diversity, he said.

And several of the largest executive search firms are developing services devoted exclusively to helping boards find new, and more diverse, candidates, he said.

“There’s been an increasing interest in bringing more diversity to the board room,” Raber said. “What happened at Enron is going to hasten that.”

But even in Southern California, home to one of the most diverse business communities in the nation, there is much room for improvement, experts said.

Seven of the firms surveyed-- including Smart & Final Inc. in Commerce and Computer Sciences Corp. in El Segundo--had no women or people of color in either year, the report showed. Representatives from those firms either declined to comment or did not return phone calls.

The most diverse board could be found at Disney, which had three female or minority directors in 1991 and six last year.