QUORUM, an initiative of

LGBTQ+ Visibility Counts:

Board Demographics
Reporting Guidelines

Board Demographics Reporting:
The Business Case
In 2019, Out Leadership and Ropes & Gray published self ID guidelines finding many companies
measure LGBTQ+ identity in their rank and file employees internally. There is a distinct lack ofmeasuring LGBTQ+ identity in board diversity metrics across the world. Through Out Leadership’s
10 years of work and research we know that visibility, especially at the top, matters to people andto the bottom line.
Diversity on corporate boards is good for business, andstakeholders are increasingly seeking transparency andengagement with regard to the demographic composition ofthe board. In particular, investors such as BlackRock1,CalPERS2, CalSTRS3, New York City Retirement Systems, andState Street Global Advisors4 actively encourage portfolio
companies to improve board diversity, and are using their
proxy voting power to engage with companies on this topic.
In its “Guidance on Enhancing Gender Diversity on Boards”,
State Street Global Advisors noted, “In the event thatcompanies fail to take action to increase the number ofwomen on their boards, despite our best efforts to actively
engage with them, we will use our proxy voting power
to effect change — voting against the Chair of the board’s
nominating and/or governance committee or the board
leader in the absence of a nominating and/or governancecommittee, if necessary.”5
In an open letter to corporate board chairs, State Street
Global Advisors asks companies in its portfolio to provide
information about “…Diversity characteristics, including
racial and ethnic makeup, of the board of directors.”6“This decision is rooted first andforemost in our conviction thatcompanies with diverse
leadership perform better.
Consider this:since 2016, US companies thathave gone public with at least one
female board director outperformed
companies that do not, one year
post-IPO. But in addition to thereal commercial benefits, it’s
clear that changing thestereotypes associated withcorporate decision-making will
have many positive effects forsociety asa whole.” -David Salomon,
CEO of Goldman Sachs, February 2020

Citing the positive impact of diversity on share price performance, Goldman Sachs announced
in early 2020 that it will no longer underwrite an IPO for a company unless it has at least one
woman or other diverse member on its board. Goldman’s IPO requirement increases to two
diverse directors in 2021.7

1BlackRock Investment Stewardship: Corporate governance and proxy voting guidelines for U.S. Securities, January 2020.

2

CalPERS’ Governance and Sustainability Principles, September2019.

3

California State Teachers’ Retirement System: Corporate Governance Principles, November 7, 2018.

4

State Street Global Advisors, “Open Letter” to Board Chairs, August 27, 2020.

5State Street Global Advisors’ Guidance on Enhancing Gender Diversity on Boards, page 1, 2019.

6State Street Global Advisors, “Open Letter” to Board Chairs, August 27, 2020, p. 2.

7Diverse Leadership Is Needed More Than Ever – Here’s What We’re Doing, David M. Solomon, LinkedIn, January 23, 2020.

Board Demographics Reporting Guidelines2

And with the passage of SB-826 in 2018 and AB-979 in September 2020, California became the firststate to require boards of publicly-held companies headquartered in the state to have at least aminimum number of female directors and directors from underrepresented communities8. The
California Secretary of State is expected to establish requirements for companies to report on thedemographic composition of their boards, and will publish annual reports documenting compliancewith the law’s requirements.
Comprehensive data on board demographics is not easily obtained from most publicly-traded
companies’ reporting, and is even more difficult to gather from privately-held and venture-backed
companies. Director biographies include some demographic data – for example, in the form ofgendered pronouns, surnames or accompanying photographs – that allow investors to assess board
diversity across a few dimensions, but major gaps in reporting make it difficult to discern the fullpicture.
Only 12 companies out of the Fortune 500 (2.4%) have LGBTQ+ included in their definition of board
diversity.
The companies are:*current or former members of Out
Leadership
The lack of director demographic information reported bycompanies in their public filings and other investor
communications has given rise to an inefficient andincomplete patchwork of workarounds, as investors seek
this information from other sources. By failing to reporton boardroom demographics, companies miss anopportunity to communicate with their stakeholders
about their commitment to boardroom diversity, andstakeholders are frustrated in their efforts to understandthe governance priorities of companies in which they
have invested or may invest.

According to research conductedby Quorum and Ropes & Gray, only
twelve Fortune 500 companies
included sexual orientation in
the board diversity guidelines
published in their 2020 annual
proxy statements. That’s only
2.4% of companies in the Fortune
500.

Enhanced disclosure enables companies to explain how their directors are qualified to serve, andto demonstrate the demographic diversity of their boards, without asking investors to makeassumptions based on incomplete data, or to waste resources sourcing demographic informationfrom third parties.

8 AB-979 defines a director from an under-represented community as one “who self-identifies as Black, African-American, Hispanic, Latino, Asian, PacificIslander, Native American, Native Hawaiian or Alaska Native, or one who self-identifies as gay, lesbian, bisexual or transgender”. The law requires covered
companies to have at least 1 director from an under-represented community by the end of 2021, and by the end of 2022 boards with more than 4 but fewer
than 9 members must have 2 such directors, and boards with more than 9 members must have at least 3. SB826’s requirement of at least one woman on
boards of covered companies became effective at the end of 2019, with similar numerical increases required by the end of 2021.

Out Leadership’s LGBT+ Board Diversity Guidelines3

Board Demographics Reporting:
Recommendations
1.

Goldman Sachs Board
Diversity Language:

We recommend that companies provide information to their stockholders
about the demographic composition of their boards, at least annually,in a clear, comprehensive matrix format.

2.

We encourage companies to provide demographic data for each board
member, including gender and gender identity, ethnicity/race and sexual
orientation, international experience, disability or veteran status.
For companies traded publicly in the U.S., this disclosure may be includedin the annual proxy statement filed with the U.S. Securities and Exchange
Commission (SEC). (See language from Goldman Sachs’ and Mastercard’s
Proxy statements as examples). For privately-held companies, disclosure
may be included in their annual proxy statements, information statementsdistributed to stockholders (if applicable) or other communications.
Companies should also consider disclosing this information in thegovernance section of their corporate websites.

3.

We recommend a matrix format for disclosure of board demographic
information such as the example on the following page, which wasadapted from a format by the New York City Comptroller, Scott Stringer,
and Pension Funds with support and advocacy from Out Leadership.

“Our GovernanceCommittee considers anumber of demographics
and other factors, including
race, gender identity,ethnicity, sexual
orientation, culture,nationality and work
experiences (including
military service), seeking
to develop a board that,as a whole, reflects
diverse viewpoints,
backgrounds, skills,experiences andexpertise.”
Mastercard Board
Diversity Language:“While the Board does nothave a specific diversity
policy, our Corporate
Governance Guidelines
provide that the NCG
should seek to foster
diversity on the Board
when nominating directors
for election by taking
into account geographic
diversity to reflect thegeographic regions inwhich we operate in amanner approximately
proportional to ourbusiness activity, as well asdiversity of viewpoints,age, gender, sexual
orientation, race,ethnicity, nationality andcultural background.”

Out Leadership’s LGBT+ Board Diversity Guidelines

Board Matrix
Board of Directors
name

name

name

name

name

name

name

name

Board of Directors Experience[Specific] Industry Experience
CEO/Business HeadSkills & Experience

International
Human Capital Management/Compensation
Finance/Capital Allocation
Financial Literacy/Accounting(Audit Committee Financial Expert or “ACFE”)
Government/Public Policy
Marketing/Sales
Environmental Science/Policy/Regulation
Academia/Education
Risk Management
Corporate GovernanceTechnology/SystemBusiness Ethics
Real Estate
Other:
Board Tenure

Demographic BackgroundYears
Sexual Orientation
LGBQ
GenderMaleFemale
Non-Binary
Transgender Male
Transgender Female
AgeYears oldRace/Ethnicity
AsianBlack or African American
Hispanic or Latino
Native American or Alaska Native
Native Hawaiian or Pacific IslanderWhite
Two or more races

Board Demographics Reporting Guidelines5

Board Demographics Reporting:
Recommendations
1.

One simple approach to collect demographic data about board members is through Director and Officer(“D&O”) questionnaires, which are typically completed annually to provide data for corporate compliance,
disclosure, governance, insurance and other purposes, and (for publicly-traded companies) to enablepreparation of proxy statements.

2.

Example demographic questions are shown in the following page, and may be customized by eachcompany. The ethnicity and race categories included in this example align with the categories generally
used in the United States, and may be adapted for companies in other regions of the world.

Companies are asking for LGBTQ+ individuals to self-identify at the employee
level. They need to also be asking at Board level.
Findings from Visibility Counts report, by Out Leadership and Ropes & Gray, 2019

Out Leadership’s LGBT+ Board Diversity Guidelines

6

Example D&O Demographic Questions(1)At our Company, diversity and inclusion are part of our values. Your voluntary responses
to the following questions help us to understand and report to our stockholders on thediverse backgrounds, skills, and experiences that our directors bring to the Company.
(a) Ethnicity and Race Categories9 — Please indicate all that apply to you:
Asian10
Black or African American11
Hispanic or Latino12
Native American or Alaska Native13
Native Hawaiian or Pacific Islander14White15
Two or more races16(b) Gender – Do you identifyas:Female
MaleNon-Binary(c) Sexual Orientation — Do you identify as a member of the lesbian, gay, bisexual,
transgender or queer (LGBTQ+) community?
YesNo(d) Please describe components of diversity that apply to you which are not coveredby the questions above.17[Please describe]

Ethnicity and race categories are drawn from the U.S. Equal Employment Opportunity Commission Standard Form 100, March 2018.
Asian (Not Hispanic or Latino) - A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent,
including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.
910Black or African American (Not Hispanic or Latino) - A person having origins in any of the black racial groups of Africa.
Hispanic or Latino - A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race. 13
Native American or Alaska Native (Not Hispanic or Latino) - A person having origins in any of the original peoples of North and South America(including Central America), and who maintain tribal affiliation or communityattachment.
14 Native Hawaiian or Pacific Islander (Not Hispanic or Latino) - A person having origins in any of the peoples of Hawaii, Guam, Samoa,or other Pacific Islands.
111215White (Not Hispanic or Latino) - A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.

16Two or More Races (Not Hispanic or Latino) – A person who identifies with more than one of the above five races.

17A company may add questions about other dimensions of diversity relevant to its business.

Board Demographics Reporting Guidelines

7FAQ’sWill board members be uncomfortable if asked to provide
their demographic data?
Publicly-traded companies routinely ask directors to complete extensive D&O questionnaires for proxy
disclosures, compliance, corporate governance and other purposes. Demographic data about directors
represents a minor expansion to these requests, and one that solicits information requested by proxyadvisory firms, investors and other company stakeholders, and which is required in some states. In
addition, since companies routinely collect demographic data from their employees, many directors
will be familiar with this data collection from their executiveroles.

Will expanded disclosure of board demographics add litigation
risk for companies?
Our discussions with corporate governance experts at leading law firms have not identified any
incremental risk to companies in providing more expansive board demographic reporting. We
encourage companies to consult with their corporate secretary and outside counsel in connection
with proxy and other disclosures.

How can institutional investors help?
Institutional investors can engage with the management teams and boards of their portfolio companies
and encourage companies to report on the demographic diversity of their boardrooms. Investors can also
formally recommend that companies report on the demographics of their boards: For example, CalPERS’
Governance and Sustainability Principles specify:Boards should annually disclose their demographic information including race, ethnicity
and gender. Ideally, companies should disclose their Employer Information Report, known
as the EEO-1 report, or similar workforce demographic data to enable shareowners toassess the board’s diversity relative to its workforce and compare companies in similarindustries.18
Investors may also recommend disclosure formats, such as the New York City Comptroller’s “BestPractices in Board Matrices” guide.19

CalPERS’ Governance and Sustainability Principles, September2019.
“Best Practices in Board Matrices”, New York City Comptroller, August 2018. https://comptroller.nyc.gov/wp-content/uploads/2018/08/NYCComptrollers-Office-Matrices-Compendium-8-2018-FINAL.pdf

1819

Board Demographics Reporting Guidelines

8How can general counsel, corporate secretaries and law firms help?
Outside and in-house counsel are a vital source of advice for Boards on corporate governance matters.
Nominating committees and boards will look to their legal department leaders and to outside law firms
for guidance regarding disclosures, and often rely on law firms’ “best practice” approaches.
We encourage law firms to:• Update their D&O questionnaire templates and example proxy disclosures to reflect theserecommendations.
• Discuss with clients the opportunity to provide enhanced disclosure of board demographic
diversity in proxy statements and other documents.
We encourage general counsels and corporate secretaries to:• Discuss emerging trends in board demographic diversity disclosure with their boards andcommittees.
• Lead in the development of D&O questionnaires that collect expanded demographic data.
• Provide context and advice to board members to help facilitate the transition to expanded disclosure.

How can employee affinity groups help?
Operating within their companies, employee affinity groups representing under-represented
communities can:• Review their companies’ director demographic disclosures, and encourage enhanced reporting.
• Collaborate with other employee affinity groups to encourage improved demographic disclosures.

How can board diversity advocacy organizations help?
Organizations advocating for other communities of directors, including those focused on diversityof gender and race/ethnicity, can partner to encourage companies to collect and report data on
the demographic diversity of their boardrooms.

Board Demographics Reporting Guidelines9About theDiverse Corporate Directors Coalition
The vision of the Diverse Corporate Directors Coalition (DCDC) is a corporate America whereboardrooms leverage the strength of America’s diversity as a competitive advantage. The DCDC iscomposed of representatives from the leading associations that support diverse corporate directors
as follows: Ascend Pinnacle, the Black Corporate Directors Conference (BCDC), the Latino
Corporate Directors Association (LCDA), Out Leadership’s Quorum, and the WomenCorporateDirectors
Foundation (WCD).
This coalition has been formed to accelerate change and equity, as the progress toward inclusive
diversity continues to be slow. Diversity, equity, and inclusion (DE&I) make good business sense. A
growing body of research has demonstrated the correlation between board diversity and corporate
financial performance. For example, according to the 2018 McKinsey report Delivering through diversity,
companies in the top quartile for ethnic diversity were 43 percent more likely to see above-average
profitability20.
Supply is not the issue. The combined membership of our organizations demonstrates that there is
ample supply of diverse experienced directors and board-qualified executives. Our groups represent
among the most respected and accomplished business leaders at the pinnacle of corporate
governance; therefore, we are paying it forward by preparing and opening doors for experienced
C-level executives.
In August 2020, the DCDC released a groundbreaking Call to Action for public boards in an effort
to finally bring diversity, equity, and inclusion (DE&I) to one of the least diverse environments inAmerica—the corporate boardroom.

20

Delivering through diversity, McKinsey, January 2018.

Board Demographics Reporting Guidelines10Out Leadership Members
OUT LEADERSHIP GLOBAL SPONSORSQUORUM SPONSORS

Board Demographics Reporting Guidelines

11

Acknowledgements
Thank you to our Quorum Sponsors:

Todd Sears

Founder & CEO

Matt Fust

Senior Advisor

Jane Barry-MoranManager of Programs& Partnerships

Marco Martinot

CFO

Fabrice Houdart

Managing Director of
Global Equality Initiatives

Board Demographics Reporting Guidelines

12Egon Zehnder's Key Global Board Contacts

Artemio Garza
Miami

Artemio.Garza@egonzehnder.com
t. +1 305 569 1081

Peak Hong TAN
Singapore

PeakHong.TAN@egonzehnder.com
t. +65 6422 0868

Charlie Beasley
LondonCharlie.Beasley@egonzehnder.com
t. +44 207 943 5911

Ashley Summerfield
LondonAshley.Summerfield@egonzehnder.com
t. +44 20 7943 1915

Lisa G. Blais
BostonLisa.Blais@egonzehnder.com
t. +1 617 535 3540

Board Demographics Reporting Guidelines

11Top 10% of B-corps for the last 8 years

Disclaimer Out Leadership has made all efforts to ensure that the information
contained within this report is accurate and up to date as of November 2020. This work
is provided for educational and informational purposes only, and should not beconstrued as legal advice. The information is not guaranteed to be correct, complete orcurrent. If you would like to suggest an edit to this ongoing project, please contact
info@outleadership.com