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Board compositions slow to change despite diversity push – study

Half of Russell 3000 companies and 43% of S&P 500 companies made no change in the composition of their boards of directors, despite investor demand for more diversity and other changes, according to a report released Wednesday by the Conference Board.

The study, Corporate Board Practices in the Russell 3000 and S&P 500: 2019 Edition, tracks corporate governance trends and developments at 2,854 companies registered with the Securities and Exchange Commission that filed proxy statements from January to November 2018 and were included in Russell 3000 index as of January 2018.

In addition to proxy statements, the data are based on corporate disclosure in other periodic SEC reports, as well as policy documents accessible through the EDGAR database and the companies' investor relations web pages.

Those companies not making changes neither added a new board member nor replaced an existing one. The report also found when there was a replacement or addition, it rarely affected more than one board seat, and only a quarter of boards elected a director who was new to serving on the board of a public company.

Report author Matteo Tonello, managing director of ESG research at the Conference Board, noted that corporate governance "has undergone a profound transformation in the last two decades, as a result of the legislative and regulatory changes that have expanded director responsibilities as well as the rise of more vocal shareholders," but board composition has not changed as rapidly.

The corporate board study project is a partnership between the Conference Board and ESG data-mining firm Esgauge, and it was developed with the support of the John L. Weinberg Center for Corporate Governance, law firm Debevoise & Plimpton and Russell Reynolds Associates.

Charles Elson, director of the Weinberg Center, said in a statement that the study "clearly underscores the need in corporate America to seriously consider differing methods of board refreshment."