[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                      DIVERSITY IN THE BOARDROOM:
                         EXAMINING PROPOSALS TO
                         INCREASE THE DIVERSITY
                          OF AMERICA'S BOARDS

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 20, 2019

                               __________

       Printed for the use of the Committee on Financial Services
       
                           Serial No. 116-33
                           
                           
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                                __________
                                 
 
                     U.S. GOVERNMENT PUBLISHING OFFICE                    
39-494 PDF                  WASHINGTON : 2020                     
           
 --------------------------------------------------------------------------------------

 
 

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 20, 2019................................................     1
Appendix:
    June 20, 2019................................................    53

                               WITNESSES
                        Thursday, June 20, 2019

Akutagawa, Linda, President and CEO, Leadership Education for 
  Asian Pacifics (LEAP) and Chair, Alliance for Board Diversity..     9
Creary, Stephanie J., Assistant Professor of Management, The 
  Wharton School of the University of Pennsylvania...............    12
Gurkin, Chelsa, Acting Director, Education, Workforce, and Income 
  Security, U.S. Government Accountability Office (GAO)..........     4
Lumbra, Ron, Managing Partner, Centers of Excellence, and 
  Partner, CEO & Board Practice, Heidrick & Struggles............     7
Martinez, Ambassador Vilma (Ret.), on behalf of the Latino 
  Corporate Directors Association (LCDA).........................    11
Visconti, Luke, Founder and Chairman, DiversityInc...............     6

                                APPENDIX

Prepared statements:
    Akutagawa, Linda.............................................    54
    Creary, Stephanie J..........................................    57
    Gurkin, Chelsa...............................................    64
    Lumbra, Ron..................................................    86
    Martinez, Ambassador Vilma...................................    89
    Visconti, Luke...............................................    94

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of Catalyst................................    96
    Written statement of DiverseForce............................    97
    Written statement of The Executive Leadership Council........   100
    Written statement of the National Bankers Association........   103

 
                      DIVERSITY IN THE BOARDROOM:
                         EXAMINING PROPOSALS TO
                         INCREASE THE DIVERSITY
                          OF AMERICA'S BOARDS

                              ----------                              


                        Thursday, June 20, 2019

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, Sherman, 
Meeks, Clay, Scott, Green, Cleaver, Perlmutter, Foster, Beatty, 
Vargas, Gottheimer, Tlaib, Axne, Casten, Ocasio-Cortez, Adams, 
Dean, Garcia of Illinois, Garcia of Texas, Phillips; McHenry, 
Wagner, Lucas, Posey, Luetkemeyer, Huizenga, Duffy, Stivers, 
Barr, Tipton, Williams, Hill, Loudermilk, Mooney, Davidson, 
Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden, 
and Riggleman.
    Chairwoman Waters. The Committee on Financial Services will 
come to order. Without objection, the Chair is authorized to 
declare a recess of the committee at any time.
    Today's hearing is entitled, ``Diversity in the Boardroom: 
Examining Proposals to Increase the Diversity of America's 
Boards.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    Today, this committee convenes for a hearing on the lack of 
racial, ethnic, and gender diversity on Federal and corporate 
boards. Strong diversity in the boardroom is critical to 
continued U.S. competitiveness and to ensuring that consumers 
of all backgrounds are served and not excluded.
    Unfortunately, corporate and Federal boards are not living 
up to their responsibility to reflect America's rich diversity. 
According to the Alliance for Board Diversity, over 80 percent 
of new board directors at Fortune 500 companies in 2017 were 
white males.
    The Federal Government also has a long way to go. For 
example, our own Federal Reserve System has been in existence 
since 1913, but it wasn't until 2017 that Raphael Bostic became 
the very first African American and first openly gay man to 
serve as a Federal Reserve Bank President.
    At the same time, America continues to become more 
demographically diverse. According to the 2018 census 
projections, youthful minorities will be the leading source of 
future workers, taxpayers, and consumers. In our May 1st 
Diversity and Inclusion Subcommittee hearing entitled, ``Good 
for the Bottom Line: A Review of the Business Case for 
Diversity and Inclusion,'' we set the record straight that 
highly inclusive companies outperform their competitors, rate 
themselves 170 percent better at innovation, and generate 1.4 
times more revenue.
    Despite the clear benefits of inclusivity and diversity, 
white males still remain in the majority of seats on corporate 
and Federal boards. Women of color, in particular, have been 
excluded from participation on boards, although some reports 
show that the percentages of women on boards may be increasing. 
The raw numbers reveal that compared to white males and white 
women, African American, Asian, and Latino women still have the 
fewest seats.
    In order to understand these trends, we must continue to 
have access to board diversity data. Diversity is one of the 
best investments a company can make. Diverse boards 
intentionally guide companies and industry toward business 
solutions that maximize returns on that diversity investment.
    Before us today are witnesses who can share perspectives on 
the status of board demographics. I look forward to drilling 
down on the current state of board diversity and discussing 
solutions so that more women and minorities can be appointed to 
board seats.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 2 minutes for 
an opening statement.
    Mr. McHenry. Thank you, Chairwoman Waters. Thank you for 
your leadership on this very important issue.
    I want to start by thanking the ranking member of the 
Subcommittee on Diversity and Inclusion, Mrs. Wagner, for all 
her work. She and her colleagues on the subcommittee have spent 
a great deal of time gathering information about diversity and 
inclusion in our jurisdiction. I also want to commend 
Chairwoman Waters and Chairwoman Beatty for their leadership on 
these issues as well.
    It is extremely important to increase the diversity 
inclusion of American boardrooms. Pursuing more diverse boards 
is the right thing to do as a matter of economic interest for 
these institutions, but there is also a good reason for 
corporate leaders to prioritize diversity. Research shows that 
when you have a more diverse array of inputs, you actually get 
better outcomes. Wider experience and perspectives actually 
lead to better decision-making and risk management.
    The statistics show that women and minorities continue to 
be underrepresented, though. Women and minorities only hold 
approximately 38 percent of board positions at America's top 
100 companies. While we have made progress, progress does not 
mean we have arrived. Progress does not mean we have completed 
the job. We have a lot more work to do in order to ensure that 
we have diverse boardrooms and diverse decision-making at the 
top level and all levels of corporate America.
    We are fortunate today to have witnesses who can share the 
strategies that have been effective. Nominating committees 
cannot simply rely on a pile of resumes from C-suite social 
networks and personal relationships. Recruiting more diverse 
board members is only part of the challenge. Dr. Stephanie 
Creary, who is testifying today, interviewed board directors 
across a variety of industries and found that the board's 
culture is also critically important. I look forward to hearing 
about Dr. Creary's research today and to hearing from the 
distinguished panel.
    And with that, I yield back.
    Chairwoman Waters. Thank you.
    I now recognize the Chair of our Subcommittee on Diversity 
and Inclusion, Mrs. Beatty, for 1 minute.
    Mrs. Beatty. Thank you, Chairwoman Waters, for examining 
diversity in the boardroom. It is simple: America's boards 
should be more representative of our rich, diverse culture. 
According to research, greater diversity in leadership leads to 
better possibility, more financial stability, and creates 
better gains for shareholders.
    It is in that spirit that I am honored to have this point 
of personal privilege to introduce a good friend of mine, Skip 
Spriggs III, the president and CEO of the powerful Executive 
Leadership Council, who is here today with his colleagues. His 
organization of some 300 Fortune 1,000 companies leads the 
efforts to increase the number of global black executives in C-
suites and on corporate boards. We are honored that he and his 
colleagues have pledged their support to help us with this 
movement.
    With that, I yield back. And thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    I now recognize the ranking member of the Diversity and 
Inclusion Subcommittee, the gentlewoman from Missouri, Mrs. 
Wagner.
    Mrs. Wagner. Thank you, Ranking Member McHenry, and thank 
you, Chairwoman Waters, for holding this hearing today. 
Chairwoman Beatty and I have been speaking with many experts 
versed in these issues and are proud of the steps that 
financial services leaders are taking to ensure that workforces 
are more diverse and inclusive.
    Many of the most successful corporations in the financial 
sector and throughout the economy are proactively seeking to 
improve the diversity of their workforce. It is the right thing 
to do and a highly effective way to increase innovation and 
profitability. Studies continue to show that diverse 
corporations outperform their less diverse competitors.
    We must continue to treat diversity and inclusion as 
complementary, but separate, issues. Although a company may be 
able to increase recruitment, it is also critically important 
to focus efforts on making sure an environment is inclusive for 
retention purposes. More can be done in both areas, but it is 
encouraging to see that more corporations are taking on this 
mission. Efforts to diversify should include entry level 
positions all the way through executive and director-level 
positions.
    My goal today will be to identify the conditions that lead 
to meaningful diversity and uncover best practices so more 
companies can follow the lead of the firms that have already 
been successful on this front.
    I look forward to hearing about strategies for improving 
diversity and inclusion, and I am proud, very proud, of this 
committee for examining these very important issues. I welcome 
our witnesses, one and all, and look forward to their 
testimony.
    I thank you, Madam Chairwoman, and I yield back the balance 
of my time.
    Chairwoman Waters. Thank you very much.
    I would like to welcome today's distinguished panel:
    Ms. Chelsa Gurkin, acting Director, Education, Workforce 
and Income Security Team, U.S. Government Accountability 
Office; Mr. Luke Visconti, founder and chairman, DiversityInc; 
Mr. Ron Lumbra, managing partner, Heidrick and Struggles; Ms. 
Linda Akutagawa, Chair, Alliance for Board Diversity; 
Ambassador Vilma Martinez, who represented the United States in 
Argentina from 2009 to 2013, and has served on numerous 
corporate boards and public commissions; and Dr. Stephanie 
Creary, assistant professor of management, Wharton School of 
Business, University of Pennsylvania.
    Without objection, all of your written statements will be 
made a part of the record. Each of you will have 5 minutes to 
summarize your testimony. When you have 1 minute remaining, a 
yellow light will appear. At that time, I would ask you to wrap 
up your testimony so we can be respectful of both the 
witnesses' and the committee members' time.
    Ms. Gurkin, you are now recognized for 5 minutes to present 
your oral testimony.

    STATEMENT OF CHELSA GURKIN, ACTING DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY 
                          OFFICE (GAO)

    Ms. Gurkin. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for the opportunity to 
share GAO's work on strategies to increase diversity on boards 
of directors. Over the years, GAO has worked with the Financial 
Services Committee to share information on progress for 
minorities and women in the financial services industry. I look 
forward to continuing to work with you and with today's 
witnesses to address the challenges to increasing board 
diversity and identify strategies to boost representation.
    Boards of directors make decisions that affect the lives of 
millions of employees and consumers, and influence the policies 
and practices of the global marketplace. Research suggests that 
diversity in the workplace can help organizations better 
identify and address risks, provide innovative solutions to 
complex problems, and enhance the quality of decision-making 
and monitoring.
    My statement today draws primarily from two key GAO reports 
on board diversity: one of the reports examines the 
representation of women on corporate boards; and the other 
examines the representation of women and minorities on the 
Federal Home Loan Bank boards. I will discuss the challenges we 
found that contribute to fewer women and minorities on 
corporate and Federal Home Loan Bank boards and the strategies 
that we identified to address them.
    It is well known that women and minorities have fewer seats 
at the table when some of the most important decisions are 
being made in corporate America. Our analysis in 2015 of 
corporate boards found that while women's representation on 
corporate boards had increased, it would likely take decades 
before women and men had an equal number of seats in America's 
boardrooms.
    We also found that while the share of women on the 11 
Federal Home Loan Bank boards across the country increased from 
2015 to 2018, women still comprise less than one-fourth of all 
of those directors. We found a similar increase in the number 
of Federal Home Loan Bank Directors from minority groups, 
including African American, Hispanic, and Asian, but they also 
made up only a small portion of all board seats.
    To understand these trends and to identify what can be done 
to increase the representation of women and minorities on 
boards, we spoke with industry representatives, board members, 
and with other stakeholders.
    We found three key barriers to increasing board diversity 
and a number of strategies that could help overcome them. 
First, organizations were not always prioritizing diversity in 
their board recruiting efforts. Second, organizations looked to 
the traditional CEO pipeline for potential board candidates, 
often overlooking other talent pools of potentially qualified 
directors. And third, few board seats open up each year.
    For each of these three broad challenges, we identified a 
number of strategies that could address them, and along the way 
we heard from industry representatives and others that there 
was no silver bullet, no one-size-fits-all solution to these 
challenges.
    They said boards should pursue diversity using whichever 
strategies best suit their organization. While industry 
officials we spoke with generally agreed on the potential 
benefits of having more diverse boards, they also identified 
some advantages and disadvantages to the specific strategies 
discussed today. However, despite the strategy employed, 
stakeholders generally agreed that without an intentional and 
deliberate commitment to increasing diversity, increased 
representation on boards would remain slow.
    Among the strategies we identified was that boards could 
prioritize diversity by requiring a diverse slate of candidates 
any time a board position became available, for example, a 
slate would have to include a number of women for 
consideration. Boards could look beyond their traditional CEO 
candidates and recruit talent from other senior level 
positions, for example, accounting or legal executives or from 
other institutions like academia. And boards could consider 
increasing their size, either permanently or temporarily, to 
overlap with long-tenured board members or as a tool for 
succession planning and to create more opportunities for women 
and minorities to join.
    Many stakeholders we interviewed supported improving 
disclosure requirements to include more specific information on 
board diversity. These disclosures not only increased the 
transparency, but they demonstrated the board's commitment to 
diversity to their investors and to the public.
    I look forward to further discussing strategies to increase 
board diversity. This concludes my remarks, and I look forward 
to your questions.
    [The prepared statement of Ms. Gurkin can be found on page 
64 of the appendix.]
    Chairwoman Waters. Thank you.
    Mr. Visconti, you are now recognized for 5 minutes to 
present your oral testimony.

 STATEMENT OF LUKE VISCONTI, FOUNDER AND CHAIRMAN, DIVERSITYINC

    Mr. Visconti. Good morning, Chairwoman Waters, Ranking 
Member McHenry, and distinguished members of the committee. 
Thank you for inviting me to testify. I am Luke Visconti, 
founder and chairman of DiversityInc. I stepped aside as CEO on 
May 7th of this year. Carolynn Johnson, our CEO, asked me to 
provide today's testimony. She is with us here today.
    DiversityInc is a business publication dedicated to the 
business benefits of diversity. The cornerstone of our 
publication is the annual top 50 companies for diversity 
competition.
    Diversity is commonly seen as an issue concerning everyone 
but white men. This is erroneous. Diversity is a concern of 
every American, because our destiny is shared by all. Professor 
Steve Phillips, author of, ``Brown is the New White'', recently 
wrote that, ``There are 7,000 more people of color added to the 
U.S. population every single day as compared to just 1,000 
whites through a combination of birth, deaths, and legal 
immigration.''
    From a business perspective, diversity is an issue of 
profitability, ethical corporate governance, and, for publicly 
traded companies, return on equity. It is not an issue for the 
future; it is an urgent issue of today.
    A lack of diversity on corporate boards of directors is an 
ongoing and persistent problem across all industries, but in 
the banking industry, it has an especially deleterious effect 
on our country, holding back our national GDP by denying equal 
access to finance, and as a result of poor workforce diversity, 
thwarting innovation and the talent needed to compete.
    We have been conducting our top 50 competition for 18 
years. It is voluntary and open to any company with more than 
1,000 employees. There is no cost to compete and results have 
no association with business conducted with our company. 
Thousands of companies look at our survey every year, and 
hundreds complete it. The survey takes a deep look at human 
capital performance and governance, including supplier 
diversity. The survey has 1,200 fields of data, including 
boards of directors, top four levels of management, total 
management, total workforce, and management best practices 
statistically associated with superior human capital results.
    There are 5 banks on our 2019 top 50 list: Wells Fargo at 
13; TD Bank at 19; Key Bank at 36; HSBC at 40; and U.S. Bank at 
46. We do not disclose the companies who compete but do not 
rank; however, we do not provide anonymity to companies who 
choose not to compete. Wells Fargo and TD are the only top 10 
largest banks in the U.S. that compete for a spot in the top 
50; JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, 
Morgan Stanley, PNC, and Capital One do not fill out a survey 
or bother to compete. In contrast, heavily regulated companies 
such as AT&T, EY, PwC, Comcast, Abbott, Eli Lilly, Mastercard, 
and TIAA are all in the top 15 of our list.
    On the boards of the 10 largest U.S. banks, 30 percent of 
the directors are women and 22 percent are not white. This is 
better than the average for Fortune 500 companies, which is 16 
percent women and 23 percent not white, but far worse than the 
diversity in the top 10: 30 percent women and 34 percent not 
white. It is important to note, however, that for people in the 
age range of directors, more than half of 4-year degrees were 
earned by women, and today, more women than men earn 4-year 
degrees, master's degrees, and Ph.D.s.
    There are several diversity management best practices that 
we have measured to be associated with superior results. The 
only one appropriate for board of directors purview is an 
executive diversity committee, or EDC.
    In the top 10 companies on our list, 86.7 percent in the 
top 10 includes 6 companies which were previously number one on 
our list; 86.7 percent of the top 10 companies have a CEO 
chairing the committee, and it meets monthly. And if you 
consider that meetings focus on metrics-driven results and the 
accountability of diversity management efforts, particularly 
regarding advancement and retention of non-majority groups, 
especially high-potential people, this is why they are on the 
top 10 of our list. The results bear out the attention to 
detail that the CEOs provide.
    This would be an easy report-out to a board and, 
standardized, could be included in the EEO-1 report, which 
would make everybody equal in that regard in terms of 
measurement. However, the board has to be competent to 
understand the diversity report. Unfortunately, boards of 
financial institutions are not competent in managing their own 
diversity.
    The progress of everyone not white and male in banking, 
executive leadership, and board seats is too slow to lead to 
nonaccountable techniques, in my opinion. For example, the 
Rooney Rule was established in the NFL in 2003, but the NFL is 
still a plantation; 88 percent of head coaches, and 97 percent 
of owners are white; and only 30 percent of players are white.
    Fair access to capital is an essential competitive 
advantage for our country and it will remain an aspiration 
until boards of directors develop the discipline to have fair 
representation themselves. The lack of transparency in the 
process of selecting board members and of the data in general 
is a real hindrance, and I recommend that regulation be 
implemented.
    [The prepared statement of Mr. Visconti can be found on 
page 94 of the appendix.
    Chairwoman Waters. Mr. Lumbra, you are now recognized for 5 
minutes to present your oral testimony.

     STATEMENT OF RON LUMBRA, MANAGING PARTNER, CENTERS OF 
   EXCELLENCE, AND PARTNER, CEO & BOARD PRACTICE, HEIDRICK & 
                           STRUGGLES

    Mr. Lumbra. Good morning. Thank you, Chairwoman Waters, 
Ranking Member McHenry, and members of the committee, for this 
opportunity to speak with you today and provide remarks on this 
important topic.
    My name is Ron Lumbra. I am managing partner for Centers of 
Excellence, and a partner in the board and CEO practice at 
Heidrick & Struggles. I am in New York.
    We are a global executive search firm that advises 
companies around the globe on leadership, on board succession, 
on leadership development, and succession. I have had the 
privilege of being in the executive search business for 21 
years and have had the privilege to advise boards throughout 
the economy in various industries on board succession and board 
recruitment.
    Over this period, I have seen a number of trends emerge. 
The biggest one, the most prominent one we are currently facing 
is diversity in the boardroom. It is a hot topic that companies 
are acting on and calling us to act on with them.
    In 2019, our U.S. Board Monitor, which is a survey we do 
that talks about director trends in the Fortune 500, was just 
published. We saw that women last year--2018--filled 40 percent 
of new board seats. That is double from a decade ago. 
Minorities filled 23 percent of new board seats, up from 14 
percent in 2009.
    Despite the recent progress and gains, however, the total 
share of minority and female directors on boards is still quite 
low. According to a 2018 report from Deloitte and the Alliance 
for Board Diversity, from 2010 to 2018, the percentage of women 
on boards only moved from 16 to 22.5 percent. The movement of 
minorities on boards only moved from 13 to 16 percent in that 
nearly a decade period of time. Progress has been slow, as you 
can see.
    We have observed a few key obstacles that are standing in 
the way of the progress of diversity on corporate boards. 
First, as was mentioned previously, low turnover. Most 
directors who run corporate boards serve on the board for more 
than a decade. Turnover is slow.
    On average, companies only add a director approximately 
every 18 months. For example, in the Fortune 500, over the last 
decade, in any particular year, about two-thirds of companies 
would add a director, to give you a sense of the velocity of 
how new directors come on corporate boards.
    Second, demand for CEO experience: It is a key attribute 
that boards look for. There are reasons for that. Having 
strategic perspective matters, having a CEO perspective 
matters. However, we understand that the pool of Fortune 500 
CEOs is not a particularly diverse pool, so concentrating on 
that pool, by definition, has you looking at nondiverse 
populations to join corporate boards.
    Third, board culture: Culture matters. Typically, boards 
like to bring on people that they can get familiar with 
quickly, who are often in their networks, known to them, or 
easily referenced or introduced to their networks. It makes it 
very difficult if those networks don't happen to be diverse.
    Those are three inhibitors we see that are fairly universal 
in slowing the trend of bringing diverse talent onto corporate 
boards. Despite these challenges I have talked about, some 
progress has been made recently, and that progress continues. 
Here are some of the things that are helping.
    First and foremost, board assessment. Rather than waiting 
for terms to expire, for directors to retire, best-run boards 
are looking carefully at their constituencies, looking at, are 
we bringing the best skill set for the challenges and the 
strategy the board is facing at the moment or could we do 
better, and they are moving away from directors whose skill 
sets no longer fit, and bringing on new contemporary directors. 
Those new directors are often diverse.
    In addition, the best boards expand opportunistically. 
Although some boards have been shrinking in size, boards that 
see great diverse talent will occasionally expand in order to 
capture diverse talent and bring it on. That has been a best 
practice.
    Casting a wider net is a critical factor. Rather than 
looking in the networks that already exist, looking at the CEO 
network, looking at business unit heads, division heads, and 
P&L leaders, considering people from academia, former 
government officials, and former military veterans provides a 
much broader, more diverse pool to look at. And best companies 
are now doing that, looking at diverse pools.
    Having a disciplined process-oriented approach: Being 
intentional about the desire for diversity on boards. Companies 
that have the discipline to follow a process and not jump at 
the first person they see that they might know have more 
success bringing on diversity than others. It requires 
patience, and it requires discipline.
    Last year, at Heidrick & Struggles, 57 percent of our board 
placements--57 percent--were diverse. That tells you it can 
happen. Boards can bring on diverse talent. If you cast a wide 
net, are disciplined, and look in new areas, you have the 
ability to do it; that has been proven. It is our belief that 
that will continue. This is a passion for me.
    Thank you for the opportunity to share these remarks with 
you today.
    [The prepared statement of Mr. Lumbra can be found on page 
86 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Akutagawa, you are now recognized for 5 minutes to 
present your oral testimony.

   STATEMENT OF LINDA AKUTAGAWA, PRESIDENT & CEO, LEADERSHIP 
 EDUCATION FOR ASIAN PACIFICS (LEAP); AND CHAIR, ALLIANCE FOR 
                        BOARD DIVERSITY

    Ms. Akutagawa. Thank you.
    Chairwoman Waters, Ranking Member McHenry, and members of 
the committee, thank you for the opportunity to testify before 
the committee today on behalf of diversity in the boardroom.
    My name is Linda Akutagawa, and it is my honor to be here 
in my dual roles as president and CEO of LEAP, Leadership 
Education for Asian Pacifics, a national nonprofit organization 
dedicated to developing, growing, and uncapping the talent of 
Asian and Pacific Islander leaders, and as the Chair of the 
Alliance for Board Diversity, a collaboration of four 
leadership organizations working together to increase the 
representation of women and minorities on corporate boards.
    LEAP, together with Catalyst, the Executive Leadership 
Council, and the Hispanic Association on Corporate 
Responsibility are the partner members of the Alliance for 
Board Diversity (ABD), along with our adviser, Diversified 
Search, and our report partner, Deloitte.
    Individually, our organizations are advocates for our 
communities, and we provide programming from board 
preparations, sponsorship, research, and referral that is 
uniquely tailored to the needs of our constituencies. Fifteen 
years ago, we formed the Alliance for Board Diversity as a 
means of combining our collective strengths to better address 
our common goal.
    There is a saying that you may be familiar with: What gets 
measured gets done. Our report, ``Missing Pieces: The Board 
Diversity Census of Women and Minorities on Fortune 500 
Boards'', shines the spotlight on the fact-based board census 
numbers to dispel misunderstandings and misconceptions. In 
addition to our research, we also collectively identify and 
refer diverse candidates for board opportunities because, while 
the numbers tell a significant story, we know it is not enough.
    From 2016 to 2018, the total number of available corporate 
board seats increased by 230. That is good news. The pie is 
slightly larger, and that has enabled women and minorities to 
go from sharing a sliver of the pie to sharing a slice. It is 
nice to have more than one bite. Before we cheer, though, 
advancement does continue to be slow, and corporate boards are 
still not fully reflective of the change in demographics.
    In disaggregating the women and minority data, you will see 
that African Americans grew fastest in the Fortune 100, Asian 
Americans grew fastest in the Fortune 500, and Hispanics grew 
the least overall.
    I also offer this caveat for context. On the Fortune 100, 
African-American women grew by what seems like a whopping 44.8 
percent, but that in raw numbers was only 13 seats. For Asian-
American women, a 38.6 percent increase in the Fortune 500 and 
30.8 percent growth rate in the Fortune 100 may seem like 
progress, but in the Fortune 100, the raw number is really only 
4 seats. For Asian Americans, the starting number was small to 
begin with, so any growth will seem significant. And despite 
being one of the fastest growing populations, Hispanic women 
experienced the smallest number of board appointments from 2016 
to 2018.
    A noteworthy indicator is the recycle rate or the rate at 
which individuals are serving on more than one board. The 
higher the number, the more boards a person sits on. Fortune 
100 boards were better at seeking out unique directors versus 
recycling the same directors. African-American men, however, 
had the highest recycle rate among Fortune 500 board members, 
and Hispanic women have the highest recycle rates among Fortune 
100 board members. Interestingly, Asian Americans have the 
lowest recycle rates on both Fortune 500 and Fortune 100 
boards, but remember, Asian Americans still only occupy 4 
percent or less than 4 percent of total board seats.
    On a closing note, there is a bright spot for optimism. In 
2018, there were 35 Fortune 500 companies, up from 29 in 2016, 
that had at least one director from each of the four major 
racial and ethnic groups, and at least one female director.
    Diversity works, it matters, but supporters, policymakers, 
and advocates like us need to stay aware to ensure that we and 
the boards don't get complacent. With each census, we get a 
better lay of the land, we know the gaps, and where to keep 
strengthening. Our great nation needs the best that all of our 
diverse communities can bring to the boardrooms.
    Thank you for inviting me today. I look forward to 
answering any of your questions.
    [The prepared statement of Ms. Akutagawa can be found on 
page 54 of the appendix.]
    Chairwoman Waters. Thank you, Ms. Akutagawa.
    Ambassador Martinez, you are now recognized for 5 minutes 
to present your oral testimony.

STATEMENT OF AMBASSADOR VILMA MARTINEZ (RET.), ON BEHALF OF THE 
         LATINO CORPORATE DIRECTORS ASSOCIATION (LEAP)

    Ms. Martinez. Madam Chairwoman and members of the 
committee, I thank you for this invitation and the opportunity 
to provide the views of the Latino Corporate Directors 
Association (LCDA) at today's hearing. I am Vilma Martinez. I 
am pleased to present my views and the summary of LCDA's full 
statement submitted to your committee.
    I want to thank LCDA's Board Chair Roel Campos, founding 
Chair Patricia Salas Pineda, and CEO Esther Aguilera, for their 
contributions.
    As you noted, I am the former U.S. Ambassador to Argentina, 
the first woman to represent our country in that post. I also 
had the privilege of serving as a director on the boards of 
Anheuser-Busch companies, Fluor Corporation, Burlington 
Northern Santa Fe Corporation, as well as Sanwa Bank 
California, Bank of the West, and the U.S. Board of Shell Oil 
Company.
    LCDA is comprised of U.S. Latinos who serve on publicly 
traded and large private company boards, along with C-suite 
executives and board-qualified candidates. Our mission is to 
support Latino directors, develop the next phase of Latino/
Latina directors, and increase their numbers serving on 
corporate boards.
    We thank you and the committee for providing a forum to 
have this important conversation.
    As you know, our duties as directors are to add shareholder 
value and promote good governance as we strive for healthy, 
sustainable, long-term corporate growth.
    Today, U.S. Latinos total nearly 59 million or 18 percent 
of the U.S. population and are projected to add, on average, 
over 1.2 million people a year between 2017 and 2060. We 
account for the vast majority of the growth in the U.S. 
workforce; 74 percent of the 10.5 million workers projected to 
be added to the U.S. labor force from 2010 to 2020 will be 
Latino. The U.S. Latino gross domestic product is $2.13 
trillion and is on a par to grow $80 billion to $90 billion a 
year.
    An additional good news aside: Latino entrepreneurs are 
driving job creation and economic growth. There are 4 million 
Latino-owned businesses that together contribute in excess of 
$660 billion to the American economy.
    Unfortunately, despite a strong talent pool, Latinos and 
Latinas are the least represented on America's corporate 
boards. Based on our analysis of new data released today on 
boardroom demographics, women, racial, and ethnic groups 
continue to lag, with Latinos following far behind.
    As part of LCDA's and my statements, we have released a 
comprehensive table based on data compiled by ISS Analytics on 
board composition of S&P 1500 companies comparing the 2019 
statistics to 2008. In summary, the data demonstrate that over 
the last 10 years, gender diversity on corporate boards has 
increased by about 11 percent, with more room to go, but at the 
same time, the rate for board diversity has been much slower 
for communities of color, with an increase of 3.12 percentage 
points.
    By all measures, Latinos and Latinas are woefully 
underrepresented. In 2019, Latinos overall held only 2.28 
percent of these board seats, an increase of just .56 
percentage points from 2008. Latinas represented only less than 
one half of a percent of board seats, and this despite the 
growing body of research which has been testified to today 
demonstrating the correlation between board diversity and 
positive corporate financial performance.
    Disclosure and transparency on the diversity composition of 
boards is an important step to advance board diversity. 
Disclosure of this information helps investors and shareholders 
make informed investment decisions since board composition is 
an important component of good corporate governance. For this 
reason, LCDA endorses the Improving Corporate Governance 
Through Diversity Act, which would require public companies to 
disclose data based on self-identification of the racial, 
ethnic, and gender composition of their boards of directors, 
nominees for the boards, and corporate officers.
    In summary, LCDA seeks to be a part of the solution to 
close this underrepresentation gap of U.S. Latinos on corporate 
boards. Ultimately, greater boardroom diversity that includes 
Latinos is an integral component to accelerating the growth 
potential of our U.S. companies.
    LCDA and I stand ready to be a resource to help advance 
these efforts. We appreciate your consideration of these views. 
Thank you, again, for your consideration on this issue and the 
time today.
    [The prepared statement of Ambassador Martinez can be found 
on page 89 of the appendix.]
    Chairwoman Waters. Thank you very much, Ambassador 
Martinez.
    Dr. Creary, you are now recognized for 5 minutes to present 
your oral testimony.

   STATEMENT OF STEPHANIE J. CREARY, ASSISTANT PROFESSOR OF 
      MANAGEMENT, THE WHARTON SCHOOL OF THE UNIVERSITY OF 
                          PENNSYLVANIA

    Ms. Creary. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee, for this opportunity to 
testify today.
    My name is Stephanie Creary, and I am an assistant 
professor of management at the Wharton School of the University 
of Pennsylvania. I will focus on sharing excerpts from an 
article published on March 27, 2019, by Harvard Business 
Review, highlighting some of the findings for my recent 
research on corporate board diversity and board culture.
    Based on interviews with 19 board directors who held seats 
on 47 corporate boards in the United States, across a variety 
of industries, my colleagues and I found that diversity doesn't 
guarantee a better performing board and firm; rather, the 
culture of the board is what can affect how well diverse boards 
perform their duties and oversee their firms. Specifically, we 
found that board diversity matters, but concentrating on only 
one form of diversity isn't enough.
    Our interviewees suggested that social diversity, for 
example, gender, race, ethnicity, and age diversity, and 
professional diversity are both important for increasing the 
diversity of perspectives represented on the board. Many of our 
interviewees suggested that their boards had made progress on 
gender diversity, but not on other forms of diversity, such as 
race, nationality, and age.
    They also raised concerns with what they referred to as 
checking-the-box initiatives and tokenism for the sake of board 
diversity.
    One interviewee revealed how she turned down a board 
position because she felt that the interviewing board members 
were not able to comment on her expertise, only on their desire 
to have gender diversity on the board. She shared, ``I can 
understand what it means to be a token person. I don't like 
that.'' I said, ``If you think my only value is the fact that I 
am a female, I can't add value to your board.''
    To offset these concerns, some boards are ensuring that 
skills and expertise along with demographics are front and 
center in their recruiting processes. One board member shared, 
``We look at diversity in a lot of different ways: experience; 
age; ethnicity; and gender.''
    Many boards are also broadening the range of professional 
backgrounds considered for board member positions, allowing 
them to attract socially diverse directors. This is easier to 
achieve when boards avoid filling open seats with people 
already in their personal and professional networks.
    One interviewee with current boards said they are shifting 
to a different approach, a process of assessment where the 
board periodically looks at the skill sets that they would 
ideally want on the board, given the business the firm is in, 
and then the skill sets that are represented on the board and 
then identifying any missing. So as long as they are going to 
look for a new board member, they use it as an opportunity to 
build diversity.
    It is also important to consider recruiting from outside of 
the CEO and CFO pool to increase board diversity. One 
interviewee commented on how having social diversity wasn't 
good enough if all board members were former CEOs or CFOs. She 
said, ``Having board members that come from a different 
background is really good, such as chief information, chief 
technology, and chief human resource officers.''
    My colleagues and I also found that diversity doesn't 
matter as much on boards where members' perspectives are not 
regularly elicited or valued.
    Some boards are more hierarchical in their communication 
orientation while others are more egalitarian. These dynamics 
appear to shape whether diversity on the board actually matters 
to the board's work. On more hierarchical boards, the CEO, 
chairman, or lead independent director tends to dominate board 
meetings. In contrast, more egalitarian boards have a more 
collegial board culture.
    One interviewee explained that their collegial board 
culture resulted from information being shared openly with 
little back channeling or meeting outside of the formal meeting 
to raise concerns.
    Collegial boards are more likely to accept and integrate 
differences of opinion. Members of these boards believe that 
both their expertise and willingness to learn is recognized and 
incorporated into the board's work.
    Interestingly, several interviewees told us that boards 
that value open communication are more likely to engage in 
conversations about diversity. One interviewee commented on how 
longer-term board members still struggled to understand the 
value of diversity. Another explained raising issues around 
diversity in the leadership pipeline and his desire to make 
this a higher board priority. He said, ``One of our board 
members who is African American came up to me after I raised 
this issue and said, `Thank you for bringing this topic up, 
because I brought it up years ago, not so delicately, and 
nothing ever happened. Maybe if we get more of us board members 
looking at this issue, it will move the needle.'''
    In closing, it is clear from this research that the 
benefits of having a socially and professionally diverse board 
cannot be realized without an egalitarian board culture where 
different perspectives are regularly elicited and integrated 
into the board's work. Therefore, I encourage the committee to 
consider, not only how to increase board diversity, but also 
how to create more inclusive boards.
    I thank the committee for considering these important 
issues.
    [The prepared statement of Dr. Creary can be found on page 
57 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I now recognize myself for questions.
    The first thing that I would like to talk about or the 
question I would like to ask is about what we hear so much 
about from corporations and Federal agencies, that they are 
taking steps to expand their recruitment efforts more deeply 
into diverse communities, such as Historically Black Colleges 
and Universities (HBCUs) and affinity groups. We also know that 
the talent is out there, but these efforts alone may not be 
enough.
    Can any of you, starting with Ms. Gurkin and going right, 
in the few minutes that we have, tell me what you think can be 
done to improve recruitment, because we hear so much, ``Well, 
we are interested but we can't find the talent.''
    Ms. Gurkin, have you heard that?
    Ms. Gurkin. Yes. That was actually one of the key 
challenges that we heard was that board members relied on their 
personal networks or on the CEO position to identify new 
talent. Some of the strategies that we heard from our industry 
stakeholders, however, were that there were a lot of potential 
talented board members out there, if they were willing to look 
in other professions. Someone mentioned the chief human 
resources officer or in the chief technology or even looking at 
supply chain logistics experts who are retired military.
    Chairwoman Waters. Okay. Mr. Visconti, what about you? What 
can be done to dispel this argument that, ``We can't find any 
of them?''
    Mr. Visconti. Well, the talent hasn't been treated very 
well in corporate America. It has failed to be promoted and 
recognized to reach the levels where people are considered for 
boards of directors. So, we have to look a little bit lower 
than what is traditionally in terms of hierarchy, in terms of 
where we normally select board members. They are there. There 
is plenty of talent. It has to be looked at differently.
    Chairwoman Waters. Thank you.
    Dr. Creary, do you have any thoughts about that?
    Ms. Creary. Yes. I think one of the biggest issues that we 
found was that there weren't established criteria, other than 
needing a CEO or a CFO, in order to take a board position or in 
order to recruit for a board position. And when prompted, there 
wasn't consensus around why a CEO or CFO was actually needed, 
and there is a long history of research established both in 
academia and in the practical sector that the criteria are too 
narrow and they are not necessarily objective.
    So, I think by focusing on what are the criteria, some of 
these issues around who is talented and who should be 
represented will go away.
    Chairwoman Waters. Mr. Lumbra?
    Mr. Lumbra. A disciplined process works very well. Defining 
what a board truly needs in terms of the skill set and then 
having the discipline to look for that kind of person will 
often yield diverse results, rather than someone who is already 
known and easy to find.
    Chairwoman Waters. Ms. Akutagawa?
    Ms. Akutagawa. I am going to add that looking to some of 
the nontraditional sources for potential candidates is another 
opportunity to expand that or cast that wider net. I think that 
there are organizations like the Alliance for Board Diversity 
members who do have access to a wide array of very qualified 
diverse leaders who can step up into these board roles.
    Chairwoman Waters. Ambassador Martinez?
    Ms. Martinez. Yes. If I could just reiterate some of the 
comments that were already made, such as require a diverse 
slate of candidates. The board assessment process that Mr. 
Lumbra spoke about is very effective in articulating what this 
particular board might need at any point in time and casting 
that wide net beyond the friends of people already on corporate 
boards.
    Chairwoman Waters. Thank you. It seems that we can find 
qualified people serving as presidents of colleges and 
universities, and we seem to have more minorities who have 
achieved that level of representation. So, why aren't we 
getting more from colleges and universities? Mr. Lumbra?
    Mr. Lumbra. I had the privilege of co-heading a 
presidential search committee for a university president 
recently, and I was stunned at the amount of diversity that 
showed up in the candidate pool. There are truly numbers of 
diverse talent in academia.
    I think one of the challenges and one of the differences 
between that world and the corporate world is demand on campus. 
In the campus community, there is a demand, a natural, latent 
demand for diversity, so it is top of mind. No one needs to be 
convinced of that, and that was apparent. It is a little 
different in the corporate world. The intentionality in the 
corporate world needs to be more disciplined and planful.
    Chairwoman Waters. Mr. Visconti?
    Mr. Visconti. Discipline is key, and right now, the process 
is not disciplined. And if it were disciplined, you would see 
different results. There is an acceptance of the bad results 
over and over and over again, which is why I think regulation 
needs to be put in place.
    Chairwoman Waters. So, this is an area that you think we 
can all do more in, in making sure that we develop databases, 
that we are able to identify people, refer people, et cetera.
    All right. Thank you very much.
    The gentleman from North Carolina, Ranking Member McHenry, 
is recognized for 5 minutes.
    Mr. McHenry. Dr. Creary, your research goes a level deeper 
than race, ethnicity, and gender, right? What is the practical 
effect? The discussion here in Congress is largely about that. 
Your research is a level deeper, which is simply--is that 
having a threshold question of diversity is only one layer of 
this conversation, not that it is meaningless or more 
meaningful, but that it is a separate question. But then, it is 
a practical effect.
    Having a diverse board does not actually mean you have 
diverse thought when you have those metrics of diversity. What 
you are saying is, they could all be former CFOs and CEOs, 
which actually doesn't give you a diversity of experience 
either.
    Go that next level deeper about what you do for a board to 
ensure that there is that openness. You said ``egalitarian'', 
but you get in and you say, I can actually share my perspective 
without it being a meaningful relationship, not a brittle 
relationship, so you can go in and have a strong perspective 
and you get a better outcome from that.
    Walk me through that, because this is a much deeper layer 
than the conversation that we have been accustomed to.
    Ms. Creary. Yes. Thank you. I think the first place to 
start is what makes a high-functioning or an effective board. 
What my research has shown is that effective boards are boards 
where the members are actually utilized for the skill sets for 
which they are recruited. But what we see time and time again 
is the person who is in the lead, whether that is the 
chairperson, the CEO, or the lead director, is dominating the 
board meeting, so the other 6, 7, 8, 9, 10 board members are 
actually not contributing much to what we think might be 
happening.
    If you start with that as the crux of the issue, then we 
add diversity on top of that. You can add any form of 
diversity: professional diversity; race; or gender ethnicity. 
If that board is not eliciting any perspectives, it is not 
going to matter. So, the issue becomes changing board dynamics 
so that it actually utilizes the expertise of the people on the 
board.
    The issue of which type of diversity is helpful is, I 
think, an issue that many of the boards aren't wrestling with 
so much as much as they want to begin to understand whether 
diversity actually can help. They recognize that different 
types of diversity may play different roles. So, race, 
ethnicity, and gender, social forms of diversity, help to 
connect to a wider market base. It is representative of the 
people in the economy.
    A professionally diverse board can bring different ideas 
about how the strategy should unfold in the company, so those 
are the complexities that we are wrestling with.
    Mr. McHenry. But you also get into this really--more of the 
behavioral piece, which is, you have a diverse board on paper, 
but they are not functionally diverse, right? Meaning, you go 
in, the Chair dominates the board, and it doesn't matter that 
you have these metrics of diversity because you may not have 
diversity of thought or a willingness to actually, say, object, 
right? So, that is a deeper level of conversation.
    Let me ask this question, within your research, is there a 
threshold by which people are more willing to speak up? 
Meaning, I have seen in other research, other behavioral 
research that simply having a woman in the meeting with 15 
other men actually doesn't mean that you have an empowered 
woman. There is a threshold question here by which you then 
have women willing to speak up, as an example. Is that 
consistent with your research on boards?
    Ms. Creary. Yes. I would say there is the side of the 
equation that is about if we have a critical mass of people who 
are willing to push on the chairman, the CEO, or the lead 
director, then voices will be heard. But in all actuality, it 
really is the competency and the willingness of that person in 
the lead seat to actually ask people what it is that they 
believe.
    Even if there is only one woman or one African American on 
the board, if we actually have a chairperson who goes around 
the table and elicits perspectives, that one voice can be 
powerful.
    Mr. McHenry. Right. So, recruiting based off of race and 
ethnicity alone is not sufficient for empowered boards. We need 
to have diverse candidates who are well-qualified, and diverse 
and diverse thoughts, diverse experience, and it is a 
multilayered effect, is one of the takeaways.
    Ms. Creary. Certainly. Board dynamics are critical.
    Mr. McHenry. A part of the takeaway?
    Ms. Creary. Yes.
    Mr. McHenry. Thank you.
    Chairwoman Waters. The gentlewoman from New York, Mrs. 
Maloney, who is also the Chair of our Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, is 
recognized for 5 minutes.
    Mrs. Maloney. Thank you so much, Madam Chairwoman.
    I thank you and the ranking member and all of the panelists 
today for holding this important hearing which will address a 
bill, H.R. 3279, which I have introduced for the past several 
Congresses, the Diversity in Corporate Leadership Act.
    Back in 2015, I asked the Government Accountability Office 
to look at the gender makeup of corporate boards, and the 
result of this study convinced me that we need to do much, much 
more. Women make up 47 percent of the workforce in America, yet 
they hold only 21 percent of board seats at S&P 500 companies.
    The most startling finding in the GAO report was how long 
they project it will take to achieve gender parity on corporate 
boards. They found that even if we assume that equal 
proportions of women and men started joining boards right now, 
it would take more than 40 years for there to be an equal 
number. Clearly, something needs to change.
    And let's be clear, increasing diversity on corporate 
boards is not just a social issue; studies show that it is 
very, very good for business.
    Study after study has shown that companies with greater 
gender, racial, and ethnic diversity on the boards outperform 
other companies financially. McKenzie found that companies with 
the highest racial diversity on their boards were 33 percent 
more likely to have above-average profits. And a study by 
Credit Suisse found that companies with at least one woman on 
the board, just one, outperformed their competitors by at least 
3.5 percent a year for the last decade.
    With these kinds of numbers, investors actually want the 
companies they invest in to increase the diversity of their 
boards. And, actually, I introduced the legislation and the GAO 
study at the request of investors, pension fund investors, and 
others who want to know this information because their clients 
say that they want to invest in diverse boards.
    My bill would help investors accomplish this by requiring 
public companies to report the gender, racial, and ethnic 
composition of their boards in their annual proxy statements. 
The GAO found that this one very simple metric is actually 
very, very important to investors. And by putting this 
information in one place that is easily accessible without 
requiring them to go look at pictures of board members or guess 
the gender, race, or ethnicity of board members based on their 
names, the bill would enable investors to quickly sort the 
companies that do and do not have diverse boards.
    And my bill would also establish a diversity advisory group 
at the SEC which would support best strategies, best practices 
to increase gender, racial, and ethnic diversity on corporate 
boards annually.
    My bill would not be burdensome on companies. I worked 
closely with the business community on this bill, and it is 
supported, actually, by the U.S. Chamber of Commerce and many 
other businesses. I would like to put in the record letters 
from the Chamber of Commerce, CalPERS--without objection--
Catalyst, and LPL Financial, just to name a few.
    Chairwoman Waters. Without objection, it is so ordered.
    Mrs. Maloney. I have one brief question, if I have time for 
a question. I wanted to go down the line and ask all the 
witnesses, do you think requiring companies to disclose the 
gender, racial, and ethnic diversity of their boards to their 
investors every year would help investors make more informed 
and better decisions and would enable investors to put more 
pressure on companies to improve the diversity of their boards?
    Because of time, just a yes or no answer and submit in 
writing any other ideas you have on this question.
    First, Ms. Gurkin, yes or no?
    Ms. Gurkin. Yes.
    Mrs. Maloney. Okay. Mr. Visconti?
    Mr. Visconti. Yes.
    Mrs. Maloney. Mr. Lumbra?
    Mr. Lumbra. Yes.
    Mrs. Maloney. Ms. Akutagawa?
    Ms. Akutagawa. Yes and yes.
    Mrs. Maloney. Yes and yes. Okay.
    Ms. Martinez?
    Ms. Martinez. Yes.
    Mrs. Maloney. And, Dr. Creary?
    Ms. Creary. Yes.
    Mrs. Maloney. Well, I think it is unanimous. We need to 
pass this legislation. We need to get more diverse boards. It 
is good for the economy, it is good for the country, and it is 
the right thing to do. It has taken us a long time to get to 
this point.
    And I want to congratulate the chairwoman for having a 
hearing on this important issue. I have been trying for well 
over 10 years to get a hearing on this issue. Thank you.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Missouri, Mrs. Wagner, is recognized 
for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman.
    Dr. Creary--and by the way, I am just overwhelmed by your 
expertise and the research that you have done--found that 
diversity in the boardroom leads to better outcomes when the 
board's cultures, as we have been talking about, is such that 
all, all directors, in fact starting at the top, are empowered 
to engage and apply their experiences.
    In her study, she states that--and I want to quote this, 
because I found this to be something that I just totally agreed 
with: ``To make diverse boards more effective, boards need to 
have a more egalitarian culture, one that elevates different 
voices, integrates contrasting insights, and welcomes 
conversations about diversity, welcomes conversations, 
encourages conversations about diversity.''
    I couldn't agree more, Dr. Creary.
    Dr. Creary has also identified numerous companies that have 
broadened their candidate pool to increase boardroom diversity 
and enjoyed all the advantages that come with a diverse board.
    Dr. Creary, we have seen laws enacted in other countries, 
such as Norway, Spain, France and Iceland, that require--
require--that women comprise at least 40 percent of boards at 
publicly listed companies. Can you describe the effects of some 
of those laws with respect to the culture of the board?
    Ms. Creary. That is unclear. We have had quite a few 
studies in both academia and the practical arena looking just 
at the direct relationship between diversity and performance. 
What we have not been doing, which is what my study hopes to 
contribute, is examining what is actually going on in the 
boardroom to help us understand whether, and under what 
conditions, the diversity might matter.
    It is still an open question as to what getting us to 40 
percent women actually does to change the board's ability to do 
the work that it does.
    Mrs. Wagner. In your research, can you tell yet? Do you 
believe that these laws have created an environment where 
diversity of ideas can flourish, or is that unclear yet?
    Ms. Creary. It is unclear, because what we haven't 
accounted for is the type of board. The reason why in the 
research we specify hierarchical versus egalitarian is because 
it gives us one dimension to think about.
    The idea would be, if we are looking at egalitarian boards 
that are 40 percent diverse in some capacity, we would imagine 
that those would be the boards that would actually be 
performing better and contributing to firm performance. But 
because we don't know whether these are hierarchical or 
egalitarian, we can't measure that, it is hard to make sense of 
the findings.
    Mrs. Wagner. What policy initiatives can we develop to 
bring greater transparency into women and minorities being 
represented on corporate boards while not creating a burdensome 
and costly disclosure process?
    Ms. Creary. While I think it is important to make the 
numbers known, because any time we can acknowledge that there, 
in fact, is an issue, it actually motivates people to begin to 
solve it, I think we have to continue to dig deeper.
    From my perspective as an academic, it is hard for me to 
speak as to what policies, particularly at the governmental 
level, might be helpful, but I can speak to what policies at 
the board level might be helpful. And that is actually for the 
board to implement policies that speak to utilizing the skill 
sets that are there. How do they begin to engage? How do you 
use your board members most effectively, is really the 
important issue here.
    Mrs. Wagner. How can companies cast a wider net to identify 
applicants with diverse backgrounds and experiences, do you 
think?
    Ms. Creary. From my research, the issue is not that there 
aren't resources. There are many organizations. We have heard 
about the Executive Leadership Council. Another group that I am 
familiar with is The Athena Alliance based out of California 
that looks at gender diversity, and certainly companies that 
are represented here. The issue is not that there aren't pools; 
the issue is actually the board directors who are selecting the 
nomination and governance committees and vetting the board 
members.
    Mrs. Wagner. And this is something that I want to delve a 
little deeper into, because we have heard some testimony with 
regard to this idea about those that are interviewing and 
things. Would having gender, racially, or ethnically diverse 
interviewers lead to a more successful recruiting process? We 
have heard about how we need to have candidates who are 
diverse, but it seemed like a lot of the testimony we received 
said that interviewers have to have that culture and be diverse 
in their backgrounds and expertise.
    Ms. Creary. There is evidence, based on recruitment for 
other positions in companies, that having a recruiter who is 
somewhat similar in some dimension is important.
    Mrs. Wagner. I think I am out of time. Anything else that 
you could send us in that regard, I would very much appreciate. 
Thank you, Dr. Creary.
    And thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
New York, Mr. Meeks, who is also the Chair of our Subcommittee 
on Consumer Protection and Financial Institutions, is now 
recognized for 5 minutes.
    Mr. Meeks. Thank you, Madam Chairwoman. And first, I want 
to thank you for your visionary work in making sure that in 
this Congress, we have a Diversity and Inclusion Subcommittee. 
It is tremendous work and vision on your part, and I want to 
thank you very much for doing that.
    I also want to thank Chairwoman Beatty, who has been 
extraordinary as the Chair of the subcommittee, and the 
individuals who come before that subcommittee. I hear 
everywhere when they come before that subcommittee, the kinds 
of questions and how she is holding people accountable to try 
to make sure that we have diversity in our corporate boards. It 
is extraordinary at this time that that is happening, and it is 
because of your leadership, and I want to thank you for that.
    Let me also thank these witnesses. I have been sitting here 
listening to you intently. You all are tremendous. Many of the 
questions that I initially was going to articulate or ask, you 
have covered in your statements. And it is tremendous. And even 
with the ranking member of the subcommittee, Mrs. Wagner, and 
the ranking member of the Full Committee, Mr. McHenry, it just 
seems that we really need to get at this question of board 
diversity to make our corporate America reflect our country. 
And it makes us all better. It is better for business, and it 
is how to do that.
    And my colleague from New York, Mrs. Maloney, who has a 
bill and I have a bill; it just shows how we are trying to move 
in the right direction to get things done. It is tremendous.
    And so let me ask, because one of the things--you all 
touched on it, because one of the things that concerned me all 
the time is the number of folks who get on a board, it seems to 
me, particularly, I think, with African-American males, you get 
one and you put that one on every board, and then you say you 
have met your requirement because you have that one person who 
is on several different boards. And everybody on all of those 
boards are scoring that one person as their diverse candidate, 
to show that they have diversity on their board.
    I am trying to figure out, as far as best practices are 
concerned, what do we do to defeat that? One of the things that 
we were thinking about and I know I had in my bill was to have 
the Director of the Office of Minority and Women Inclusion 
(OMWI) publish, the SEC to publish every 3 years best practices 
for compliance with disclosure requirements, and also to have 
OMWI at the SEC establish an advisory council that includes 
issuers and investors to advise on best practices. What do we 
do? How do we do it so that we can try to eliminate that? I 
will start with Mr. Visconti.
    Mr. Visconti. I think if you looked at Congresswoman 
Maloney's bill and you think about what committees those board 
members are on--and anybody who has been on a nonprofit board 
or a board knows that if you are on governance, if you are on 
the important committees, compensation, you don't have time to 
serve on many boards. You have time to serve on one or two.
    I think identification of who is on what committees in 
these boards will have its own factor in limiting the number of 
people who are counted on several boards.
    Mr. Meeks. And with that same question, let me go to Mr. 
Lumbra. Do you want to add anything to that?
    Mr. Lumbra. Representative Meeks, I am happy you raised the 
issue, because I am a little surprised it hasn't come up yet in 
the conversation. There is a strong preference for experienced 
directors. First-time directors, regardless of race, regardless 
of gender, have a difficult time coming on boards, because 
there is a preference for people who have been there and done 
that.
    There is a theme in the room about how best boards are run: 
Egalitarian, inclusive. There is a developmental part of that. 
We talked about assessment and effectiveness. Having boards 
that think about, how do I bring on a first-time director and 
mentor that person, teach them how to be a director, et cetera, 
that is a really important part of the solution to both casting 
the wide net as well as getting people on the board and making 
them successful. So, that first-time director issue is the one 
that you have hit on very clearly.
    Mr. Meeks. And one of the things that you mentioned too 
and, people talk about is it seems as though at times the only 
folks that they want on a board is a CEO or a former CEO as 
opposed to other individuals who might have come from the field 
of technology or others. Even when I think HR, some HR 
executives sometimes can be the person, because they understand 
the industries and how you can have better folks in there.
    Dr. Creary, in the limited time I have, can you comment on 
that?
    Ms. Creary. Yes. I think we actually do see today--I 
believe Bed Bath & Beyond is one company that recently 
overhauled its board and actually does have representatives 
from some of these more diverse professional backgrounds on it. 
So, there is a move to move in that direction, to expand the 
capacity of boards to do their work by recruiting people who 
are from, for example, HR and academia. It just hasn't happened 
to the extent that we would like to see.
    Mr. Meeks. Thank you.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman, and I thank you and 
the ranking member for holding this hearing today.
    In one of my other roles in this body in Congress, I am 
ranking member of the Science, Space, and Technology Committee. 
And we held a hearing on promoting a diverse workforce in the 
science/engineering/mathematics fields. We highlighted the lack 
of diversity in many STEM fields and how it prohibits the 
United States from reaching its full economic potential and 
hinders American competitiveness. It would seem that the same 
can be said for the lack of diversity in our corporate boards.
    My first question is to Ms. Gurkin. In your written 
testimony, GAO identifies strategies that stakeholders and 
corporate boards are currently implementing to increase 
diversity. Can you elaborate on how some companies are taking 
steps to prioritize diversity, particularly diversifying that 
pool of candidates?
    Ms. Gurkin. I think one of the common themes that we heard 
from all of the industry officials that we spoke with is that 
there are a number of different strategies that can be 
employed, but what is most critical is that there is a 
commitment to ensuring greater representation on the board.
    And so the stakeholders we spoke with talked about a lot of 
different strategies in terms of looking beyond the CEO 
pipeline, being in kind of a continuous recruiting system 
where, as you identify great candidates, you bring them on, 
even if maybe you aren't actually having an active search and 
have an active opening, or expanding the number of board 
positions. But the stakeholders we spoke with commented that 
while there are a number of great strategies out there, it is 
that commitment to diversity among the board that was the most 
effective and important strategy.
    Mr. Lucas. For my next question, I think I will turn to Dr. 
Creary. You explain in your testimony that even though a board 
is diverse, the company still may not reap the rewards that 
diversity brings. Can you elaborate on that challenge for us, 
please?
    Ms. Creary. Yes. So, for example, we have people in my 
sample who do represent that one African-American board member 
who is on multiple boards, who has commented on the fact that 
they have tried to raise, for example, issues of diversity, and 
no one listens. That is an example of the fact that just by 
increasing the diversity does not mean we are going to get to 
the results that we want to, particularly if the result is to 
tackle issues of diversity in the leadership pipeline.
    Mr. Lucas. Lastly, I know this issue exists across 
industries. As I mentioned earlier, women are underrepresented 
in the engineering, science, and math fields. To anyone on the 
panel, how does the diversity of the financial services 
industry compare across industries, and are there any fields 
that are leading in their efforts to create a more diverse 
workforce? How does the financial services industry, when it 
comes to board participation, compare to other boards across 
different industries?
    Please.
    Mr. Visconti. I had a journalist who reports to me count 
heads. And the financial services, the top 100 banks are 
average compared to other industries. The top 10 banks are 
slightly above average compared to other industries. This is a 
common problem across-the-board.
    Mr. Lucas. Anyone else wish to address that? Please, 
Ambassador?
    Ms. Martinez. Yes. I was going to add that having served on 
two bank boards that were quite diverse, for foreign-owned 
companies, in fact, one Japanese, the other French, and the 
regulation is so intense that you actually need quite a diverse 
skill set among the board directors. And it was an area where 
the board directors really taught each other whatever it was 
they brought to the table. I think that has had a very 
beneficial impact on that industry.
    Mr. Lucas. Absolutely. Anyone else?
    Mr. Lumbra. To your other question, not about financial 
services but broadly speaking, we are seeing more progress in 
consumer. Those companies tend to be more sensitive to the 
marketplace, who they are selling to, what their employee base 
looks like. So, I would say they are inching ahead in terms of 
this being top of mind.
    Mr. Lucas. Thank you. If no one else wishes to address 
that, I will yield back the balance of my time, Madam 
Chairwoman.
    Chairwoman Waters. Thank you very much.
    The gentleman from Missouri, Mr. Cleaver, who is also the 
Chair of our Subcommittee on National Security, International 
Development and Monetary Policy, is recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. Let me express my 
appreciation to you for this hearing. I was reading someplace 
about criticizing somebody else and you have a plank in your 
eye. The Federal Government has a bad record as well. There is 
a recent article in Politico talking about the lack of 
diversity in the Department of the Treasury, even at a time 
when they are denying a $20 bill in the memory of Harriet 
Tubman.
    So, there are some components of our Federal Government 
that are embarrassingly absent of any diversity. Having said 
that, I am fascinated by this nation's heterogeneity, but I am 
frustrated by the homogeneity of the higher ranks of 
homogenized corporate America. And it is really an issue that 
we have to keep up front.
    I just spent some time with one of these high-tech 
companies, these new high-tech companies where these 
billionaires are born every 5 minutes. And I would go in and 
the CEO would be 13 and the director of the production was 
still in the crib and made decisions after he would suck on the 
bottle. But there were no brown and black babies in the cribs 
in those places.
    And I think we cannot have this discussion without 
discussing the ever-growing high-tech industry and a very, very 
visible absence of diversity. And I am wondering if any of you 
have had any views, based on the things that you are concerned 
about, of what is going on in the high-tech world and how we 
can impact them other than maybe starting to regulate them and 
making some requirements. Any ideas on how we can pierce this 
barrier that has been there with high-tech companies and the 
lack of diversity?
    Ms. Martinez. I would suggest that it is really important 
to try to get them to link in with K through 12 educators, 
because in most school districts they do have magnet schools or 
similar institutions where they emphasize STEM or high-tech 
fields, and there are invariably students and there are many 
students of color in the public school system. So that linkage, 
I think, could be made stronger. It exists in bits and pieces 
here and there, but I think that is a good area to look at.
    Mr. Cleaver. Yes.
    Ms. Akutagawa. I also want to suggest that I think that 
there are also issues around unconscious bias as well too that 
is going on in a lot of these areas, especially when you look 
at the leadership ranks of these high-tech companies. And I 
think that despite the media's portrayal that Asian men are 
overrepresented, they are overrepresented perhaps in the early 
to mid-career levels, but you certainly do not see them in the 
leadership ranks.
    But within that, you do see then that the folks who are 
making these decisions have stereotypes I think of what 
constitutes a good tech worker. And oftentimes, I think that 
unconscious bias leads to people not necessarily searching out 
the diverse talent that is out there and is highly capable of 
working in many of these high-tech companies.
    Mr. Cleaver. Thank you. Yes, please?
    Mr. Visconti. Sheryl Sandberg wrote, ``Lean In.'' She was 
the only woman on the executive committee of Facebook. She is 
still the only woman on the executive committee of Facebook 6 
years later. It doesn't work. The tech industry is the worst in 
this country, in my opinion, on this subject of diversity, the 
worst, bar none.
    Mr. Cleaver. I agree. My youngest son would point at things 
and say, ``It is worser.'' And so, I agree that they are 
``worser.'' But we have to figure out a way to penetrate or it 
is going to get worse. Thank you.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    The gentleman from Colorado, Mr. Tipton, is recognized for 
5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman, and I appreciate 
your holding this hearing today.
    Ms. Akutagawa, I would like to follow up a little bit on 
Mr. Cleaver's comments in terms of some of the workforce 
development as well in relation to board diversity. And maybe, 
Dr. Creary, you would like to comment on this as well.
    We have had a study that has come out from Glassdoor that 
found that two-thirds of job seekers said that workplace 
diversity is important to them when evaluating employers and 
job offers. Another from PricewaterhouseCooper found that 61 
percent of women specifically considered diversity of an 
organization's leadership team in deciding where to take a job.
    It is obviously clear that when people are looking for a 
job, they take in some of the leadership roles, obviously, for 
where they would like to actually be able to pursue, because 
they see upward mobility opportunities for them.
    Would you comment on the PricewaterhouseCooper's studies, 
and the Glassdoor studies? How can that really play a role in 
terms of helping create jobs for people and opportunities?
    Ms. Akutagawa. I think if you can't see it, you sometimes 
can't be it. And I think that having that diversity in and 
amongst the different ranks of a company is going to be highly 
important. And we are looking at a highly diverse millennial 
generation who is looking for people who look like them and 
want to see the opportunities that they too can become someone 
who is going to be leading a company, someone who is going to 
be on a board of a company. And I think with that said, there 
are lots of different things that companies can continue to do, 
I think, and that are being done right now.
    And just for the sake of the record, I would also encourage 
consideration of not just corporations, but when you look at 
all employers, not only the government but also nonprofits as 
well too and higher education institutions. And when you look 
at the leadership ranks of those areas, also lacking in diverse 
leaders as well too.
    Mr. Tipton. Just to follow up on that, are you starting to 
see companies starting to alter hiring practices, or is it 
still a work in progress?
    Ms. Akutagawa. I think it is a work in progress. And as was 
said earlier, I think you have certain companies, particularly 
those that are looking to serve consumers that are diverse. 
They are certainly much more conscious about that. I think we 
are also seeing ones in which they do need to have a really 
deep talent pool, that they need to, they are forced to cast as 
wide of a net. And I think that many of them are discovering 
that that is what they are finding.
    Mr. Tipton. Dr. Creary?
    Ms. Creary. Yes, I think this is an important question. 
Certainly, years of research has told us that people are 
attracted to places, particularly workplaces, where the people 
who are there in positions of success mirror somehow their own 
experience.
    It goes without saying, I think, that all of us in academia 
and the government and corporate America are doing a lot of 
work to make sure that our positions of power are represented 
by all people who come from our country. At the same time, what 
we know is that just because you are given access to the 
position doesn't mean that you will stay in it. And what is 
happening in corporate America in many sectors is that people 
who are being recruited for diversity or for any reason are 
leaving their positions. For many reasons, they are not having 
the best experience.
    And so I think it is important to make sure that when we 
have this conversation about boards, we understand and learn 
from the lessons of corporate America and all other sectors 
that just concentrating on getting people in the door doesn't 
mean that we won't have a revolving door.
    We need to concentrate on the experiences of people in 
organizations if we actually want them to stay and contribute 
meaningfully.
    Mr. Tipton. And would you maybe expand? We talked on this a 
little bit, but some of the best strategies to be able to 
expand some of that diversity that are yielding positive 
results?
    Ms. Creary. Yes. I think certainly, on the workforce side, 
we have employers at my campus. They come and they visit and 
they host different sessions for people who are, for example, 
from underrepresented groups, to introduce them to the company 
and to introduce them to mentors very early on.
    The whole recruiting process is one that is inclusive. If 
you think about it, some of these practices could actually be 
used at the board level. It is a courting possess, if you will, 
of helping people to understand that they can be--that that is 
a good fit for them as an individual and that they could be 
effective.
    It is not just about, I think for many of our young people 
today, particularly people at my institution, wanting to go to 
an organization that is diverse. It is that diversity to them 
signals opportunity and that someone like them can be 
successful there. And I think it is important to keep that in 
mind.
    Mr. Tipton. Great. Thank you.
    My time has expired, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Ohio, Mrs. Beatty, who is also the 
Chair of our Subcommittee on Diversity and Inclusion, is 
recognized for 5 minutes.
    Mrs. Beatty. Thank you, Chairwoman Waters. Please excuse my 
voice today. And thank you to all of the witnesses.
    This is an exciting and amazing day for me. As chairwoman 
of the Subcommittee on Diversity and Inclusion, I want to 
applaud you for your honesty and for helping us as we shape 
this vision under Chairwoman Waters. We have talked about a lot 
today. And what came to my mind was, and the first time I said, 
I have to give credit to Skip Spriggs with the ELC, because 
what he said is, ``If you fish in the same pond all the time, 
you catch the same thing.''
    If we are only looking for seated CEOs or COOs when we talk 
about corporate leadership, putting people in the room, we need 
a bigger pool.
    Now, I don't think that we have heard or that there is 
anything that has happened in the past that has gotten us there 
100 percent or we wouldn't have Chairwoman Waters taking this 
national/international leadership for everybody in this room 
and everybody on both sides of the aisle to become a part of 
history, because that is what is happening today.
    We talked about the Rooney Rule that started in 2003. Dan 
Rooney, I believe, had a great idea, and chaired the diversity 
committee for the NFL, because it was a start. It at least got 
people in the NFL talking about what they had not done, and yet 
they were making all this money on black players. And so we got 
great results, because it wasn't just putting a minority in the 
interview; it was a qualified great minority of thought, of 
gender, of race. And you can have diversity of thought and 
environment and end up with a black person. And that is what 
happened.
    Chairwoman Waters mentioned Raphael Bostic, and thank you. 
It was about that same time that with my legislation patterned 
after the Rooney Rule, the ``Beatty Rule'', we went after the 
Federal Reserve and we got Raphael Bostic.
    My question is to you, Ms. Akutagawa. Can you tell me, how 
does having a diverse slate of candidates positively impact the 
outcome of diverse candidates fielding the position?
    Ms. Akutagawa. Thanks for asking that question, 
Congresswoman Beatty. One thing that I want to just bring up is 
that when you have diverse board members, when you have diverse 
leaders or executives, I think that there is that perspective 
that they bring. And one of the things is that sometimes they 
can always also recognize leadership that may not show up in 
the normal way.
    I think that in this country there is a prevailing 
perspective of what leadership is supposed to look like, and 
that if you can't see beyond it then it may be difficult to 
then see someone who is diverse that they too can also--
    Mrs. Beatty. To Mr. Lumbra: According to your most recent 
Board Monitor report, women fill 183 of the 462 open boardroom 
positions at Fortune 500 companies. However, racially diverse 
candidates did not seem to get the same gains.
    Was your company retained to source diverse candidates or 
do you know how many diverse candidates were on the slate?
    Mr. Lumbra. To be clear, do we measure the slates and the 
amount of diversity on those slates?
    Mrs. Beatty. Yes.
    Mr. Lumbra. Indeed, we do. We made a commitment at the 
beginning of this year that we would, on a global basis in the 
aggregate, have diverse slates of at least 50 percent diversity 
introduced to clients around the world. What we have discovered 
in our business is, if you have a very small number of diverse 
candidates on a slate, it is almost a very low probability 
anyone will be chosen. If you have an amply diverse slate, then 
the probability of a diverse candidate being selected is much, 
much higher. So, we have endeavored that.
    Mrs. Beatty. Thank you. I have one last question that I am 
going to ask everybody to say yes or no to.
    Do you see the relevancy of why many of us--and I have been 
doing this ever since I have been in Congress--trying to 
advocate for getting Harriet Tubman, a woman, a woman of color, 
on the $20 bill? Do you see the value when we talk about 
diversity and inclusion here in this Financial Services 
Committee? Would you support that initiative?
    We will start with you, Ms. Gurkin. It is a yes or no.
    Ms. Gurkin. I don't think GAO has a position on it, but the 
symbolism of women in leadership--
    Mrs. Beatty. Is that a yes? Okay, we need to go. I only 
have 70 seconds.
    Mr. Visconti. Yes.
    Mr. Lumbra. Yes.
    Ms. Akutagawa. Yes.
    Ms. Martinez. Yes.
    Ms. Creary. Yes.
    Mrs. Beatty. Thank you, and I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Arkansas, Mr. Hill, is recognized for 5 
minutes.
    Mr. Hill. Thank you, Chairwoman Waters. I appreciate the 
opportunity to have this panel. And I agree with my friends on 
the other side that this is a good day to have this very broad 
and good discussion on this topic.
    Over my years in business--I am 40 now. I was looking at my 
college graduation notice. That is a little frightening. But in 
that time, I have spent a lot of time both in public companies 
and private companies over the years and have been the C-Suite 
officer responsible for HR in a public company.
    And then in my own business, I was reflecting on forming it 
back in 1999, and we had 7 directors and 3 of those were women. 
And we had an outstanding outreach across our business on 
trying to recruit both employees and officers of color as well 
as having diverse leadership.
    This is an important issue and I have studied it really 
even when I was going back to my days at the Treasury 
Department in the early 1990s, working on corporate governance 
issues. It led me to go to UCLA and become a certified 
corporate director, and I was a long-time member of the 
National Association of Corporate Directors. So, I am very 
familiar with the issues we are talking about today.
    And I do think this issue that Dr. Creary talks about, 
which is a matter of intention, is critical. Think of the 
burdens these boards have. Let's look at post Sarbanes-Oxley 
corporate America. Let's say we have 11 people. We have people 
saying you should have a smaller board, not a bigger board, 
because it is more in line with Dr. Creary's point of view. We 
can build cohesion.
    So, we move a board from 15 to 11 now. We want an odd 
number so we can't have an even vote split, right? Now, we are 
9 to 11. One of those people has to be a financial expert, 
according to the Sarbanes-Oxley Act. One is probably the CEO. 
So now, we are down to 6 or 7. Mr. Lumbra testified and 
Ambassador Martinez did that we don't have a lot of turnover in 
those people. Ambassador Martinez herself serves on multiple--I 
can't remember how many--three or four corporate boards.
    Now, we are down to this turnover issue. This is a hard 
job, is my point. All of the people here are working very 
diligently on it. One way that I think is a good way for 
corporate America to expand--and I want to thank my friend 
Joseph Vaughan at the Corporate Diversity and Inclusion Forum 
for helping me work on this in my district--was our HBCUs.
    Alma Adams is not here, but she co-Chairs our Historically 
Black College and University (HBCU) Caucus here in Congress. It 
is something I have been very involved in since I was elected 
to Congress. And I had an HBCU Summit in my district, and it 
was all about bringing all the corporate and philanthropic 
people in our district to Little Rock and to think about our 
HBCUs as a very robust recruiting forum for diverse recruiting 
for corporate business.
    So, Mr. Lumbra, if I could start with you, obviously, you 
are an expert in recruiting and retaining diverse talent, you 
have been doing it for a living for 2 decades. What is your 
best strategy when you recommend to your clients on that bench 
strength? You have a limited number of slots. You have to build 
expertise. What is your best--not employees now, but just stick 
with corporate governance now. What is your best way to build 
that bench that you recommend?
    Mr. Lumbra. There are a couple of things. You framed up the 
structure of a board really perfectly in terms of the world we 
are seeing today, smaller, tighter. Every seat matters even 
more. Being incredibly disciplined about what skill set do you 
need in that seat really. You need CEOs on the board, but you 
may not need seven of them. You need financial experts on the 
board. You may need people who do business internationally or 
know manufacturing or whatever the company's--
    Mr. Hill. And 50 percent of the S&P 500's revenues are 
international.
    Mr. Lumbra. Right.
    Mr. Hill. That is another diverse issue. Let's say you are 
an S&P 500 company and you have 50 percent of your revenue 
internationally, let's take one of our 9 to 11 slots and say it 
should be somebody from abroad. We are down another slot. How 
do you build those lists for IT, cyber, human resources, who 
are not C-Suite people and recommend them for boards? How many 
are on that list?
    Mr. Lumbra. First of all, you look for multidimensionality. 
You look for people who can do more than one thing. As an 
example, to use your notion, someone who has grown up in a 
Fortune 500, who has had international stints, who knows global 
business, who may be a woman or a minority.
    You get all of those things you are looking for in one 
person. So, research is very, very key, and knowing that market 
is critical to be able to achieve that.
    Mr. Hill. We want diverse boards that reflect--we want them 
with the skill sets to have the fiduciary obligations to meet 
the mission of a board of directors. And we thank all of you 
for your contributions to better boards.
    I yield back.
    Chairwoman Waters. Thank you. The gentleman from Illinois, 
Mr. Garcia, is recognized for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Madam Chairwoman. I also 
thank the Chair of the D&I Subcommittee for this hearing and, 
of course, I thank all of the panelists who have testified this 
morning.
    Walmart is America's largest employer and, according to the 
firm, 43 percent of its U.S. associates are people of color and 
55 percent are women.
    Is the panel aware of the racial and gender composition of 
Walmart's board of directors? Let me help you. There are two 
people of color and three are women. Given the makeup of 
Walmart's workforce, do you believe that reforming corporate 
governance laws to include worker representation boards would 
dramatically increase board diversity? Any of you?
    Mr. Visconti. Regulation is key. It has to be regulated. It 
is not working the way it is right now. And the impact of a 
company the size of Walmart on the average American is so 
outsized, we have a right to be represented on their board and 
in their senior management, we the people in our composition. 
So, yes.
    Mr. Garcia of Illinois. Anyone else? Ambassador?
    Ms. Martinez. I am going to make the point that mandates 
are, by definition, very hard to swallow, and I am sure you are 
familiar with this phenomenon. One of the thoughts that has 
been running through my head as I listen to all of you asking 
questions and answering them is you have now heard from people 
like us here, but what about inviting CEOs to get them to 
comment on all of the recommendations that your committee has 
put together and let's see what they would do with that, 
because ultimately they are the decision-makers. They are going 
to hire the high-driven struggles. They each have their own 
board culture to deal with. And trust me, as a person who has 
served on lots of corporate and nonprofit boards, every board 
has its own very distinct culture.
    Mr. Garcia of Illinois. Thank you. Not only do I think that 
worker representation would enhance gender and racial 
diversity, I also think that it would result in higher wages 
for workers. Beginning in the 1970s, for example, wages for the 
average American worker stopped growing in pace with worker 
productivity, and corporate boards began pursuing the business 
model that prioritized paying out their shareholders above all 
other considerations.
    Boards even began paying their executives more and more 
through stock, and that led to an increase in stock buybacks, 
where firms juiced their own stock price by purchasing their 
own shares on the open market.
    When firms adopt a shareholder-first mentality, they 
neglect other considerations: long-term business growth; 
research and development; and especially, worker pay.
    Yesterday, I introduced the Reward Work Act, which bans 
stock buybacks and requires that one-third of each public 
company's board be directly elected by its own board. Research 
shows that wages in countries that require worker 
representation on corporate boards are 18 to 25 percent higher 
than wages in the United States.
    For the panel, do you agree that worker representation 
would help lift wages and get companies to think beyond their 
wealthiest executives and shareholders? Anyone?
    If not, I would just close by noting that Walmart has 
authorized to spend $20 billion on stock buybacks in 2018 and 
2019. According to the Roosevelt Institute, if Walmart had 
ended its stock buybacks and spent $10 billion on increasing 
wages instead, one million low-wage Walmart workers would enjoy 
an hourly wage increase of $5.66.
    Moving to another topic, an analysis of Fortune 1000 
company boards found that 75 percent of those companies did not 
have a single Latino/Latina director. Ambassador Martinez, do 
you have any insight into why the number of Latino/Latina 
directors is declining?
    Ms. Martinez. It was never very big to start with, 
unfortunately. And I think, unlike other groups--I am thinking 
of women's groups. The women have been very creative, 
assertive, and they have developed many entry points.
    And I think this new organization that I am representing 
here today is an effort to correct that. Added onto the work 
of, say, HACR, the Spanish Association for Corporate 
Responsibility, I think this new group is going to be very 
helpful in that effort.
    Mr. Garcia of Illinois. Thank you.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you.
    The gentleman from Georgia, Mr. Loudermilk, is recognized 
for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. Thank you all 
for being here. It is a very interesting topic.
    Dr. Creary, I appreciate the research you have been doing. 
And from what I understand of your research, what is showing as 
diversity in boards is positive, but it seems to be more so in 
the diversity of ideas and perspective more than just the 
demographics of race and gender, et cetera.
    Does that summarize kind of what your findings have found, 
is more ideas and perspective?
    Ms. Creary. It is not suggesting that one form of diversity 
is better than another. It is suggesting that when we think 
about diversity of perspective in addition to thinking about 
demographics, that is when we actually begin to see, according 
to the people whom I have interviewed, positive effects.
    It is hard to say. We are not doing that kind of research, 
where we are saying which one is better and which one is 
contributing to the effect. I want to make sure that is clear. 
It is not like a horse race.
    Mr. Loudermilk. But sometimes perspective can transcend 
into gender or different communities, because of the needs of 
different communities or the customers who are in those areas. 
So, I can understand that.
    One of the things that I was trying to do is to categorize 
this into different industries, especially in financial 
services. Georgia has a lot of fintech and payment businesses, 
and we have seen a significant rise in these companies. And 
some in the traditional banking industry feel somewhat 
threatened by these new automated type industries. They feel 
that they are going to take some of their market share in the 
future, which very well could be.
    And it appears to me that it is because they are bringing 
in people with different ideas outside the status quo, bringing 
in ideas, bringing innovation, perspective, hitting certain 
customer bases that traditional banking may not be serving. Do 
you feel like that is kind of what drives these industries to 
innovate, is that they do go outside the status quo?
    Ms. Creary. Definitely. But I think the point that you are 
hitting on here is there is a level of discomfort with 
diversity. And so if we are trying to explain why there isn't 
diversity, it is because we have traditionalists who are 
concerned about what effect that will actually have on their 
firm. That is actually the issue we need to address, to help 
people who are traditionalists to understand why things need to 
change.
    I think at the same time, it is also important to think 
about the fact that diversity of thought, which is an idea that 
has captured I think the minds of many people in corporate 
America, is not necessarily the only piece of the story here. 
When we think about what we are trying to achieve as a board or 
as a company more broadly, we are actually trying to access 
talent and we are actually trying to access markets. And so, we 
do need different types of diversity in order to do that, 
including the social forms of diversity.
    What we are trying to accomplish, I think, through the 
research on boards and workforce, is to put all hands on deck, 
all forms of diversity on deck in order to target those two 
goals around accessing the best talent so that our companies 
will perform well and accessing the market so that our company 
will also and our economy will perform well as well.
    Mr. Loudermilk. Okay. And I appreciate that. When we look 
at these boards, especially with the technology era we are in, 
it seems like diversifying on the board to bring in people from 
different communities than what you would traditionally see in 
a banking industry or something can bring a perspective from 
that particular community of needs of those customers. What can 
companies do to foster this new thought of diversity, of 
bringing in new ideas and perspectives?
    Ms. Creary. I have an example for you. Recently, Shaquille 
O'Neal, famed basketball player, was appointed to the board of 
Papa John's after Papa John's had some issues with its chairman 
saying a racial slur on a conference call. And I think many 
were concerned about Shaquille O'Neal being on this board, what 
is he going to do, not knowing that Shaquille O'Neal has been a 
master investor in fast food restaurants, including 27 Five 
Guys in the last several years. But he is also somebody who is 
really connected to the urban community.
    And I think it is that narrative that is helping people to 
understand who might not at a surface level see his value that, 
in fact, he actually does have business value and he actually 
is connected to this community that you are actually trying to 
regain or to seek out in your efforts to diversify your market 
base.
    Mr. Loudermilk. I see I am about out of time. It is very 
fascinating. Thank you for your responses. I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Texas, Ms. Garcia, is recognized for 5 
minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman, and thank 
you for bringing this topic to the table. It is one that I have 
followed for years. And it is very distressing that some of the 
numbers that we are seeing are not really significant 
improvements. In fact, they are barely improvements.
    By way of background to the panel, I served as the elected 
city controller in Houston. In fact, it was my first elected 
position. And one of the things that always surprised me was 
that any boardroom that I was invited to, and especially 
whenever I went to Wall Street for any of the pricings that we 
did in our bond deals, I was faced with nice-looking white men 
in dark suits and a red tie maybe, but mostly blue ties. And 
there were no people who had my Spanish surname or women who 
looked like me. And it seems like we have not made much 
progress.
    And it was really interesting to look at the handout that 
you had, Ambassador, that clearly paints the picture of, while 
the percentage looks like it has improved, the actual numbers 
are really small.
    I just wondered, what is it going to take to really get 
some movement in this direction? Is it going to have to be this 
legislation? Is it more legislation? What do we have to do? And 
I wanted to start with you, because, as the only Latina at the 
table here--and Latinas have the worst record and, of course, 
all women of color have challenges in this area--what can we do 
so that when we look at diversity, we look at all of it?
    Ms. Martinez. I think what we need to do--and I think you 
want to especially focus on Latina diversity, if I understand 
your question. The Latino Corporate Directors Association is a 
very new organization. I think they have a very--
    Ms. Garcia of Texas. Right. My office has met with them. By 
reference, I was involved with that, I said at the very 
beginning. I attended one of the Harvard programs that was 
there at the business school.
    Ms. Martinez. Yes. What I think would be really beneficial 
is for them to grow as quickly as possible and as strategically 
as possible, but also to leverage the other institutions. And 
certainly when it comes to women, there are catalysts. There 
are women corporate directors. There are so many different 
organizations. And I know that the Latino Corporate Directors 
Association has some very strategic plans in its near future, 
in terms of things that they have--
    Ms. Garcia of Texas. But are you all getting the meetings 
with the CEOs who make the decisions on that to be able to 
implement the strategies, because we can have a great list of 
things to do, but if we don't have the meetings to effectuate 
that strategy, it might as well sit around collecting dust?
    Ms. Martinez. I agree. When you look at the membership 
roster, which I was just doing last night, it does seem to me 
that they have the connections, if you will. And as we all know 
in this room, it is all so much about connections and who do 
you know and who trusts you, who is going to vouch for you, who 
is going to say, ``She is not crazy, she is going to be able to 
walk in and ask questions in the proper manner'', sort of 
thing. That, I think, is the way for us to go at this point in 
time.
    Ms. Garcia of Texas. Mr. Visconti, I will follow up with 
you, then. One of the things that I also saw was that there was 
recruitment sometimes for some of us to sit on what they call 
community advisory boards, which was really not the board. Is 
that still happening? Is that just another trick that is played 
with some of these numbers, or are all these numbers reflective 
of full board paid memberships?
    Mr. Visconti. I am not an expert in that area, but what I 
will say is it is the accountability that drives home results. 
So, if a CEO or chairman of the board is holding people 
accountable, and firing people who cannot perform, that is when 
you see the numbers change, without excuses.
    Ms. Garcia of Texas. Right.
    Ms. Gurkin, when folks get on these boards, are they being 
pigeonholed, if you will, to serve on the committee on 
community relations or the committee for--I forget what other 
committee there was, but there were committees that were not 
the finance committee. They are not the decision-making 
committees on the major issues impacting those banks.
    Ms. Gurkin. We actually didn't look at where women and 
minority board directors, which committees they were on, but 
one of the strategies that we actually heard was strategically 
putting women and minority board members on the governance or 
on the nominating board committee, to ensure that they were put 
into a position of power to increase the commitment to 
diversity and continue to recruit for more diverse board 
members. So, it is kind of the flip side.
    Ms. Garcia of Texas. All right. Thank you.
    And I yield back, Madam Chairwoman. I think I am out of 
time.
    Chairwoman Waters. Thank you.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you, Madam Chairwoman. I thank you all 
for your devotion to this cause and your efforts to make the 
public more aware about it and to inform me and my colleagues. 
I want to ask something that hasn't come up yet. And I don't 
know for sure if any of you are prepared from looking through 
your comments to address it, but how diverse are our boards in 
America compared to corporate boards around the world?
    Ms. Martinez. May I address that, because--
    Mr. Davidson. Please.
    Ms. Martinez. --when I served as Ambassador to Argentina, 
there are 500 American companies doing business there, and 
there is an Argentine-American Chamber of Commerce, and I did a 
lot of work with that Chamber. And it was very interesting to 
me that the Argentine companies really valued the interaction 
they had with the American companies; and they especially were 
interested in the American companies' commitment to corporate 
social responsibility, to professional development of its 
employees, and they were starting to really look at board 
composition.
    In Argentina, I don't know if it has a law with respect to 
corporate board service per se, but they do have a law with 
respect to their Congress, that X percentage of the Congress 
has to be women.
    Mr. Davidson. Thank you for that. And that is one comment 
you were quick on. And some people would talk about Europe, and 
they do have a mandate in the European Union for sex and really 
male and female, I believe. And here, I have I haven't heard 
the word ``sex'' used a single time. I have heard ``gender.''
    So if I could just go down the line, maybe starting with 
Ms. Gurkin, do you differentiate between ``sex'' and 
``gender?'' Just yes or no.
    Ms. Gurkin. For the purposes of our work, we looked at male 
and female board members.
    Mr. Davidson. Mr. Visconti?
    Mr. Visconti. Yes, the phrase ``gender'' is the one that is 
used commonly.
    Mr. Davidson. Okay. So, no differentiation. You just blur 
the two.
    Mr. Visconti. I haven't used the word ``sex'' to describe a 
board member, so ``gender'' is the one that we use commonly.
    Mr. Davidson. Okay.
    Mr. Lumbra. ``Gender'' is also the word that we use.
    Ms. Martinez. ``Gender'' has been the commonly accepted 
term used, and I have used it.
    Mr. Davidson. All right.
    Ms. Creary. Same.
    Mr. Davidson. Okay. Some of the datasets are blurring sex 
and gender because we spent a lot of time talking about gender 
here lately and the concept of a social construct where 
biologically male and female are different. Does that kind of 
diversity matter?
    Ms. Martinez. Yes. Diversity is diversity, and it takes all 
shapes and forms. Curiously, some of the diversity that I 
provided on some of the boards on which I served was political 
diversity, that I was one of the few Democrats on the board.
    Mr. Davidson. We spent a lot of time on some of our things 
in the military talking about this. It came up as--clearly, 
there has been a difference in the current Administration and 
the past Administration on transgender and transsexual people, 
but you also have historically looked at sexual difference, 
male and female categorically versus gender. Only recently did 
we start to use gender to differentiate people other than male 
and female for some of these categories.
    And that is my concern on the dataset. When you look at 
racial and ethnic diversity, our country really is different 
than most of the world. We have become the melting pot, truly 
the world's land of opportunity. Everyone around the world has 
people who are leaving their places and coming to our places. 
And to be fair, some Americans do leave here and go elsewhere. 
We have a large expat community, but truly this is the world's 
land of opportunity.
    Our companies flourish, and I would say part of the reason 
we have flourished is we do actually have diversity in America. 
And so I am encouraged by the amount of progress that I have 
seen in diversity in my lifetime. I know, as a kid growing up, 
first, you don't know any difference about anything and then 
you see how people treat you differently. And then when you are 
with one group of friends, you will see how things happen 
differently with this group of friends, and when you are in a 
homogeneous group how things happen differently there. And 
sometimes that is with peers. Sometimes that is with people 
from an older generation. Sometimes, unfortunately, that is 
with people from law enforcement and other communities.
    With respect to corporations, I think you have done a nice 
job highlighting some of it. I think we should do more to 
celebrate how strong the United States of America is, and, in 
fact, partially because of our diversity.
    I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is 
recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. I thank the ranking 
member, I thank the witnesses for appearing, and I would 
compliment the Chair for hosting this hearing and I acknowledge 
that the Chair is probably the hardest working--maybe I will 
just say one of the hardest working Chairs in Congress. She 
sits through these hearings, if you have noticed, and I think 
that sends a very strong message about the concern that she 
has. So, I compliment you, Madam Chairwoman.
    Dear friends, I believe that a picture is worth a thousand 
words, and as a result I have a couple of pictures that I would 
like to show you. Ambassador Martinez, it is my belief that you 
have indicated that we should quiz the captains of industry 
about their circumstances with reference to having persons who 
are minorities, women.
    Ms. Martinez. As a diplomat, I would say invite them for a 
conversation. Yes, sir.
    Mr. Green. All right. Let me just share this with you. We 
did that, and I would like to just share some of the 
conversation with you. But I did make a mistake when I had this 
opportunity. I mentioned women, and I mentioned persons who are 
of color, but I did not mention LGBTQ. I think we have to be 
inclusive in all ways. I don't think we can leave out any 
segment of society.
    With this as my confession, I posed a question to the 
captains of industry, the heads of major lending institutions. 
The names need not be made available at this time, but I would 
like to show you this picture, because in this picture with 
these captains of industry, you will note that they are all 
seated and looking quite like the captains of industry they 
are. They all happen to be white men, all white men. I found 
that to be something worthy of noting at the hearing, and I 
did.
    But I posed the question to these captains of industry, all 
of whom are white men. You ought not be afraid to state facts. 
There are some people who don't want to hear me say, ``white 
men'', but you have to state facts. These were all white men, 
captains of industry.
    The question that I posed was one that dealt with their 
successes: ``If you believe that your successor is likely to be 
a woman or a person of color, raise your hand.'' This is the 
response. Raise your hand. Not one hand. Captains of industry, 
brilliant people all, not one hand.
    Well, understanding that maybe that was just a circumstance 
for the immediate future, I then posed the question to all of 
these white men--remember, we cannot avoid facts. I then said, 
in the next 10 years or decade, are you likely to have a woman 
or a person of color to succeed in your position? One, two, 
three, four hands, five hands. But notice, two of the captains 
of industry are indicating that in the next 10 years, they are 
not likely to have a woman or a person of color.
    That is why I am so grateful that the chairwoman is having 
this hearing. We have to be concerned about not only the 
lending that takes place in these institutions, but the 
leadership that takes place in these institutions. There is no 
empirical evidence to support the fact that doesn't exist, a 
fact that women, members of the LGBTQ community, and people of 
color, no empirical evidence supporting a notion that they 
cannot lead these organizations. There is none. We are beyond 
that old premise that we can't find any who are qualified. 
There are cable, competent, and qualified persons, and we have 
to change the circumstance.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Ohio, Mr. Gonzalez, is recognized for 5 
minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, for 
holding this important hearing. And thank you to our witnesses 
for your participation.
    One of the things I am most proud of and enjoying the most 
in my time in Congress is my time on the Diversity and 
Inclusion Subcommittee here inside of the Financial Services 
Committee. Chairwoman Beatty, who spoke earlier, is doing a 
phenomenal job, as is Ranking Member Wagner, and I just can't 
be more appreciative of that. And I know that Chairwoman Waters 
is largely responsible, so I thank her.
    Another thing that I work on a lot is diversity/inclusion 
inside of STEM fields on the Science, Space, and Technology 
Committee, as I mentioned earlier. And I will tell you, of all 
the work that I am doing here in Congress, when I am back home, 
which is the Cleveland area for me, when I am back home in 
northeast Ohio, the work we are doing here is probably that 
which folks are most excited to talk about. KeyBank, in 
particular, which is in many branches in my district, is doing 
a great job. I think, Mr. Visconti, you may have cited them in 
your testimony, so I am really pleased that we are having this 
hearing.
    Dr. Creary, I want to kind of turn to you for my question, 
my first question. You talk a lot in your testimony about the 
difference between hierarchical and egalitarian board 
structures, and it is not in a diversity--just a check-the-box 
form of diversity that drives business performance, but really 
it is how you conduct yourself in the board environment.
    How are those studies going? And are you finding direct 
causal relationships between the egalitarian version of a board 
meeting versus the hierarchical?
    Ms. Creary. We are not yet to the place where we can 
establish causality, so the report that I shared that was 
recently published on March 27th, is as far as I have gotten.
    Mr. Gonzalez of Ohio. Got it.
    Ms. Creary. We have conducted a larger survey, although it 
has been extremely hard, as you can imagine, to get board 
directors to participate. We do have about 100 board members 
who have participated in that. And so we are looking at 
analyzing the data, which will only establish correlational 
effects, which is, essentially, what we have to deal with at 
this time. I think it is not easy, in general, to do science 
and certainly on this population, I think they are busy, but 
also there is a lot of concerns around anonymity and 
confidentiality. So, while I would love to have these answers, 
and I am sure we all would, it goes a long way to say that even 
getting 20 people to participate is good information.
    Mr. Gonzalez of Ohio. Right. You said we can't--right now, 
the best we can do is the correlation component as opposed to 
the causation. What is holding us back? How could we get to 
causation?
    Ms. Creary. It requires a critical mass of people 
participating--we need data. We need lots of data.
    Mr. Gonzalez of Ohio. Got it. Well, I encourage you to keep 
pushing forward on that. It is a great initiative, certainly.
    Dr. Martinez, I am a son of Cuban immigrants. My father 
immigrated here from Cuba in 1960. And when I am home and I am 
speaking to the Latino community specifically, in many 
instances, they feel left behind, like we are not getting the 
attention that we deserve back in the community.
    Are you seeing that? Yes or no? And if you are, what can we 
do to make sure we are more inclusive of the Latino community 
as well?
    Ms. Martinez. Get involved. Just stay involved, as you are, 
and encourage others to do the same. There is no substitute for 
involvement at whatever level interests you, you are especially 
interested in the STEM issues and diversity and inclusion, but 
education is going to be such a key, and there are more and 
more Latino advocacy groups near you in Cleveland and to get 
involved with all of them.
    Mr. Gonzalez of Ohio. Thank you. And for my final minute, I 
want to turn to Mr. Visconti. You had one part of your 
testimony that was interesting, to say the least. You said the 
NFL is a de facto plantation. I have some experience. I played 
in the NFL for 5 seasons. I think that is patently false, first 
of all. But let me ask you a question, have you ever watched 
the NFL draft? Have you ever watched it?
    Mr. Visconti. No.
    Mr. Gonzalez of Ohio. Never?
    Mr. Visconti. No.
    Mr. Gonzalez of Ohio. Okay. Just to kind of catch you up, 
the way it typically works is, you are sitting there for hours, 
and if you are lucky, your name gets called. And typically, 
what happens is you see a scene where family is all around the 
individual--this is my own story--family is all around the 
individual, and it is a joyous celebration.
    Normally, the individuals cry or they are giving hugs to 
whomever it is because it is a joyous occasion. It is literally 
the fulfillment of a lifetime of work and dedication. The 
average salary in the NFL is over a million dollars--$1 million 
average salary. This gives people an opportunity to take care 
of their family and a community in a way that they have never 
imagined. And I think words are really important and how we 
label things is really important, and to call the NFL a 
``plantation'', which evokes the worst original sin of our past 
as a nation, I think is false, and I hope you will correct the 
record.
    Mr. Visconti. May I respond?
    Mr. Gonzalez of Ohio. I yield back.
    Chairwoman Waters. The gentlewoman from Michigan, Ms. 
Tlaib, is recognized for 5 minutes.
    Ms. Tlaib. I would like to allow you to respond.
    Mr. Visconti. How do you describe a system where almost 100 
percent, except for one person, of owners are white, and 70 
percent of the players who earn those people their money are 
black? It is called a ``plantation'', and that is what it is.
    Mr. Gonzalez of Ohio. Can I get 30 seconds?
    Ms. Tlaib. No. I reclaim my time.
    Mr. Gonzalez of Ohio. Thank you.
    Ms. Tlaib. Thank you so much for--I love it, because I have 
a chairwoman who believes in allowing, especially women of 
color, to have access and a voice in this committee.
    I do want to tell you a story. When I first decided to run, 
it was like in February of last year, and there was a woman who 
comes up to me, and she is Palestinian like me, she also shares 
my faith, Muslim faith, and she kind of just, like, hugged me 
and looks at me and she said, you have to win. And, of course, 
the pressure. And I said, well, we have already won. The fact 
that I am running as is as a proudly Palestinian Muslim, as a 
woman, and all of these, important identifiers to me. And I 
paused and I look at her, and she says, ``No, you don't 
understand, you have to win, because if you win, that means we 
belong.''
    And it was a powerful moment because I thought to myself, 
as I was running, it was for me fighting against corporate 
greed, the fact that I represent the third poorest 
congressional district and I wanted to fight back, but to me, I 
understood there was so much more to me being in this space. 
And it is very telling of why this committee hearing is so 
important.
    And one of the things that I remember in the nonprofit 
sector is foundations would ask us the makeup of our board when 
we applied for grants to combat poverty. They wanted to make 
sure that the nonprofit boards and the folks who are serving 
those communities reflected the community. And I am wondering, 
in the corporate world, like, if I go to Walmart's website, if 
I go to these corporation websites, am I going to get that 
chart that many of these foundations ask these nonprofit 
agencies to do, the chart that said this is how many women, 
this is how many African Americans, Latino, all those, I think, 
important factors.
    Do you see a move and some corporate responsibility in 
sharing that on their websites and very publicly? And I would 
like each of you to have time to answer that.
    Ms. Gurkin. We actually didn't look to see if the 
information was available on their websites, but we did look, 
and we talked to a number of industry officials about sharing 
that information with their investors. And a number of industry 
officials said that the most powerful force of change is the 
demand of investors as shareholders to see increased levels of 
diversity on their board.
    Mr. Visconti. It should be there, but it is not. More and 
more, you are seeing boards being pictured and executive 
leadership being pictured, and I think that is a very positive 
step in the right direction. You could look on the company's 
own website and see who they position as leadership. That's 
very important.
    Mr. Lumbra. In my experience, it is uneven. For some 
companies, it is quite easy to find out and you can see; for 
others, you have to do some research, so it is not consistent.
    Ms. Akutagawa. Yes. As someone who looks at a lot of this, 
it is inconsistent. But I also want to say as someone who is 
also looking a lot at nonprofits and foundations, they are not 
showing their data either, and that is why--especially the 
bigger ones. The power dynamic there is a lot different, so--
    Ms. Martinez. I have the same experience as Ms. Akutagawa.
    Ms. Creary. I just want to remark on the question earlier, 
were we inferring gender and sex and using those 
interchangeably? We have a long history of doing research in 
academia that is inferring gender and sex and making 
conclusions about its effect on anything, including board 
performance, based on the pictures that we have seen. It would 
be interesting to know that if we actually started asking 
people about their gender identity, how would any of these 
effects pair out.
    Ms. Tlaib. No, it is important. And lastly, one of the 
things, and again, in the nonprofit sector, we did these 
diversity trainings. What is diversity training to you all? 
Because some of the trainings I have gone through, to me, they 
were not diversity. Can you shed some light into that? And I 
just want to get it on the record for this committee. I think 
there needs to be a discussion about what is defined as--people 
easily put ``diversity'' in front of something and say that is 
the training, diversity training, diverse board, and it is not 
reflective.
    Mr. Visconti. When Starbucks got into trouble, they decided 
they could fix their whole issue in 6 months. It is going to 
take them 4 years to get rid of plastic straws. It is garbage, 
most diversity training.
    Ms. Tlaib. Thank you so much. And I yield back the rest of 
my time, Madam Chairwoman.
    Chairwoman Waters. Thank you.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    And I would like to yield to the gentleman from Ohio, my 
friend, Mr. Gonzalez.
    Mr. Gonzalez of Ohio. Thank you.
    So, Mr. Visconti, you mentioned the Rooney Rule as a 
failure, and I want to just kind of go through some stats. From 
1921 to 2003, there were 7 minority coaches--1921 to 2003. From 
2003 to the present, 18. I think broadly, the NFL is like most 
of society, in my opinion. It is imperfect. There is a lot of 
work to do. There is a lot of progress still to be made, but to 
deny the opportunity that is created for the families and the 
athletes and call it a ``plantation''--again, I think words 
matter.
    I think we can talk about this and talk about the progress 
that we need to make and that will be a healthy productive 
dialogue, which I think has been the case for 99 percent of our 
time here in this hearing today, but I think we need to be very 
careful with how we are labeling things. And that is all I want 
to say.
    But with that, I will yield back to my friend, Mr. Barr.
    Mr. Barr. Thank you. And I appreciate your perspective, 
your personal perspective with the NFL. Not many of us have had 
the privilege or the talent to have played in the NFL, and I 
trust people with personal experience, and I appreciate your 
perspective.
    The good news is that the number of Fortune 500 companies 
with boards that consist of more than 40 percent women and 
minorities has doubled since 2012, and I think we can all 
celebrate that increased progress in diversity.
    Dr. Creary, can you speak to the recent trends regarding 
the diversity of boards, and what factors have contributed to 
that improvement over the last few years?
    Ms. Creary. That is a great question. Certainly, I think 
many would characterize the first wave of focusing on the 
business case for diversity, and we were there for a very long 
time just trying to establish some semblance of a relationship 
between the composition of a board and outcomes for the firm.
    We have moved recently, in the past 5, 10 years, into a 
wave of, I would say, peer pressure, where institutional 
investors and asset managers are beginning to understand, not 
only that this is important, but they actually have to engage 
in peer-to-peer tactics to help boards understand that this is 
an important issue.
    I would say that is where we are now, pressurizing boards 
to begin to take the responsibility for allowing the--all of 
the investment that we have done in research and in practice to 
actually be realized.
    Mr. Barr. Dr. Creary, were any of the factors since 2012 in 
terms of enhanced diversity government-imposed diversity 
mandates?
    Ms. Creary. This would be where the corporate arena is 
actually leading in implementing practices without regulation. 
Certainly, when you think about the evolution of the diversity 
and inclusion conversation in corporate America, there are only 
mandates right now in the U.S. as to engage in strategies that 
say that they are looking. And so much of the work that has 
been done has been done because firms have taken the 
responsibility, certainly with pressure from outsiders, to 
engage in this work.
    Mr. Barr. There obviously is evidence that board diversity 
can enhance company competitiveness and profitability, and that 
the market itself is rewarding diverse firms.
    My final question to you, Dr. Creary, is, I was very 
impressed with your testimony about the importance of culture 
and the fact that you might have tokenism, which is not real, 
meaningful diversity; it is more about boards actually 
utilizing the diversity, utilizing those diverse views as 
opposed to what I would say is superficial diversity.
    I am concerned, and I would like your feedback, that 
government-imposed diversity quotas, as opposed to these 
market-based incentives, would actually contribute more to 
tokenism, would contribute more to a superficial diversity, as 
opposed to that culture that you describe in which people are 
valued, not based on the color of their skin or their gender or 
their sexual orientation or immutable characteristics or their 
age, but actually the content of their character, actually 
things that matter, like their talent, like in the NFL, where 
it is really not about your race, it is about your talent. Can 
you win the Super Bowl? Can you catch the pass? Can you score a 
touchdown? I could not do that. My friend could.
    So, to me, a government-imposed quota on racial diversity 
within the NFL is really not ultimately what matters. What 
matters is raising a trophy over your head. What matters is 
profitability.
    And so, what I would worry about is not having the right 
culture but imposing artificial diversity.
    I yield back.
    Chairwoman Waters. The gentleman from Georgia, Mr. Scott, 
is recognized for 5 minutes.
    Mr. Scott. Thank you very much, Madam Chairwoman.
    First of all, this is a very powerful and much-needed 
hearing. Second, we have some very informed witnesses. And 
third, Madam Chairwoman, you are providing great leadership in 
a very important area.
    Now, there are, right now, only 3 black CEOs running 
Fortune 500 companies, and that is down from 8 just 3 years 
ago. The number of women serving as CEOs went down 25 percent 
from 2017 to 2018. I discussed this issue at a hearing a couple 
of weeks ago on diversity with the need to get financial 
literacy, and I think it is very important that we continue to 
raise this point. Those are the facts. That is the picture out 
there right now.
    Some can run, but they surely cannot hide from just 3 
African-American CEOs, down from 8 just 3 years ago, and the 
decline in women over the last year by 25 percent.
    Now, Mr. Lumbra, given that there are so few women and 
African Americans represented at the CEO level, how can board 
diversity increase more than marginally if boards do not expand 
their search pools beyond the CEO ranks? In other words, if you 
are truly apt to doing this, there are so many areas to reach 
into.
    I did a lot of recruiting in my day. I worked for a while 
for a firm called Recruiting Management Consultants. We went 
out and we would help major corporations--because it was one 
thing to tell the corporations to do this, and if you don't 
develop a mechanism to help them find where these qualified 
African-American women are, they quickly will come back and 
tell you, ``We tried but we just couldn't find them.'' They 
didn't have any plan to do that.
    And so I wanted to hear from you, Mr. Lumbra, am I right 
about that? There were opportunities in other areas. We would 
go and take advantage of the fine training and executive 
talent, decision-making, and understanding how to handle 
pressure by looking at former military officers--a lot of that 
is still done--who had command over huge numbers of people, 
risky at the time, having the capacity of sending huge numbers 
into war. There are a lot of places you can go to find that.
    Am I right about that, Mr. Lumbra? I think you mentioned 
that in your deal.
    Mr. Lumbra. In my experience, you are right. The fact of 
the matter is, and you said it beautifully, if you focus on 
sitting Fortune 500 CEOs, by definition, you do not have a 
diverse pool to look at. The talent that is senior 
sophisticated coming out of the military, out of academia, 
people who have been in service firms, who have run big 
businesses for big corporations, it is much, much more ample.
    In our experience, clients who have the courage to go and 
look and the discipline to look in those pools, much, much more 
easily and readily find diversity for their boards.
    The other point you make is an important one, which is, who 
makes decisions about CEOs? Boards. So, if we are concerned 
about diverse CEOs, we should be concerned about diverse boards 
who are choosing the next CEO and thinking about succession 
planning. That is another benefit and a plus for having a 
diverse board to look further down the chain at a succession 
plan in a company.
    Mr. Scott. Absolutely. We must expand our territory if we 
are going to expand the number of African Americans and women 
as CEOs on our boards. Thank you very much.
    Chairwoman Waters. Thank you.
    The gentleman from Wisconsin, Mr. Steil, is recognized for 
5 minutes.
    Mr. Steil. Thank you.
    I thank you, Madam Chairwoman, for bringing today's hearing 
together. I served on--at two large companies, one a publicly 
traded company, and spent time advising in the boardroom, and I 
understand the importance of diversity in the boardroom and the 
value that that can add to our corporations.
    Dr. Creary, in an article entitled, ``When and Why 
Diversity Improves Your Board's Performance'', you wrote about 
how boards should expand their view of diversity and how they 
can make the most of diversity's benefits.
    Can you comment on how companies can successfully build 
more meaningfully diverse boards while avoiding, I think your 
phrase is, ``tokenism?''
    Ms. Creary. Yes. I think it is certainly about, first of 
all, having criteria for what an effective board member does 
and who they should be, and then hiring people or recruiting 
people onto the board according to those criteria. That would 
require the board actually understanding and interrogating 
itself to know what makes for an effective board member based 
on what makes for an effective board.
    And I know this sounds pretty rudimentary, but that, in 
fact, is the issue that we heard coming up with time and time 
again is people are being picked or recruited for board 
positions based on arbitrary criteria and like having been a 
CEO or CFO, but when pressed, there isn't a lot of 
understanding as to why that is the most effective board 
member. I think it is about establishing criteria, holding to 
those criteria, assessing for skills and expertise is really 
would move us in a good direction.
    Mr. Steil. I appreciate that. And I would like you to 
contrast that approach with what we have seen from several 
European countries that have enacted requiring public company 
boards to have a certain percentage of female or of other 
diverse groups. You have written about the importance of 
fostering a board culture that encourages more diversity and 
collegiality.
    Can you comment on how these politics impacted board 
cultures in the countries in which those types of policies have 
been enacted?
    Ms. Creary. Unfortunately, I can't comment on that 
particular issue. What I can say is that outside of the U.S., 
there are actually more and more boards. I think where our 
country, I think we are up to 17 now that are actually 
following the European way of mandating required representation 
on boards. We really haven't done the research to understand 
how that is working, other than it is actually getting them 
diversity. In the end, if we think about what is happening, we 
are increasing diversity, but we don't know what the diversity 
is actually doing, is sort of where we are stuck.
    Mr. Steil. Thank you. Maybe I will go back then and note 
that in your previous article that I referenced, you wrote that 
to make more diverse boards more effective, you need to have a 
more egalitarian culture. What are some of the key strategies 
that companies employ to benefit the most from diversity and 
foster an egalitarian culture?
    Ms. Creary. It goes back to this CEO who is hired by the 
board themselves. Having a CEO who understands that the most 
effective way to run the board--I say CEO, but I also mean 
chairperson or lead director, the person who is actually 
leading the meeting--having them understand that the process of 
eliciting perspectives from different people in the room is 
really one of the most important strategies that can be put in 
place to change the culture of what is happening in the 
boardroom.
    Mr. Steil. Thank you very much.
    I thank you, Madam Chairwoman, for holding today's hearing 
on this important topic. And I yield back the balance of my 
time.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Pennsylvania, Ms. Dean, is recognized 
for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman. And thank you to all 
of you who are here today. I apologize for being between two 
committees here, fortunately on the same floor, but don't 
mistake my in and out for an indifference towards this issue. I 
am pleased to be on the Subcommittee for Diversity and 
Inclusion.
    I held a roundtable at my office in my district--I am from 
suburban Philadelphia, so hello, Dr. Creary, from UPenn--and it 
was really fascinating. It was people from government, it was 
people from law, it was people from education, from industry, 
just all over--nonprofits, all over the board. And it was 
fascinating to hear the conversation because we prize 
diversity, we know it is the right thing. We know it is good 
for businesses and organizations.
    Here are quick takeaways that I had, and I would love any 
one of you to comment on some of them. Education was number 
one, from pre-K on. We have to have quality education and 
expose young people to multiple careers from an early age. High 
school is a great time, but man, oh, man, we ought to actually 
be showing them in the early years and in the middle schools 
career exposure. Relationships and mentorships, 
apprenticeships, those kinds of things are so invaluable.
    In my district in Montgomery County, we have pockets of 
real need and pockets of--for example, our county seat, 
Norristown, has a very big school system, but they don't have 
enough resources to see some of these opportunities.
    In the hiring piece, one of the things that one of the 
educators said, a superintendent said to make sure that the 
people who are sitting there doing the hiring are diverse, 
because otherwise they kind of just relate to people who look 
like them or have their similar backgrounds. That's very 
obvious, but really important.
    In seeking resumes, don't just seek from the ordinary 
pools. Pull from institutions or other partnerships that you 
have grown. Look for nontraditional backgrounds, and don't call 
experience the first thing. I heard one of you talk about the 
idea that people keep rising to the top because they have 
previous experience. Make sure that we are giving people the 
opportunity for experience.
    One of the most important things--and maybe I will end with 
this, and there were so many others. One of the most important 
things was a woman who is lead public defender in Montgomery 
County, now in Philadelphia County, an African-American woman 
said, ``When I became the head of the department, there was no 
leadership training. So, there I was. I had reached that level, 
but how do we retain leaders? We need leadership training.''
    I say all of that to say, when organizations figure out 
that they have a gap in diversity, what are some of the most 
important key takeaways as they set their goals that we should 
know about, and maybe it has to do with, if you could focus a 
little bit on the notion of leadership training. Maybe I will 
start with Mr. Lumbra, and then I will go to Mr. Visconti.
    Mr. Lumbra. The developmental pieces--I loved your analogy 
with the person in Montgomery County, in the role, who had no 
training. One of the challenges that we are seeing in 
leadership development is executives are being trained to be 
leaders, not being trained to be directors. Giving them 
exposure to governance before they are ready to go on a board 
helps create a board-ready pipeline for diverse talent. And 
that is one of the things we are talking about today is, how do 
you build that pool, a pool of people who are to become board-
ready?
    So, effectiveness in terms of training and developing 
executives to be ready to go on boards is really important and 
something we are part of.
    Ms. Dean. And is it something that you do in a sustained 
way that once somebody gets to that kind of a position, that 
you stay with them, or you have places where they can go for 
different kinds of training?
    Mr. Lumbra. There are a multitude of ways. Some educational 
institutions, like Wharton and Stanford and Harvard and others. 
Other firms, like ours, who are involved in that. Boards--some 
boards have great onboarding and development programs 
themselves to help their own executives and their own boards 
and new directors to become effective.
    Ms. Dean. Okay. Mr. Visconti?
    Mr. Visconti. To leverage what he said, it is 
accountability for failure of process that matters in making 
progress. And to give an example, PricewaterhouseCoopers was 
the first big four accounting firm to have a non-HR person in 
charge of diversity. When that person, a senior partner, in the 
firm rolled off of that job, he became responsible for the 
committee that took people who are accountants and made them 
partners. And when he would come to--they would have a board 
meeting and the peoples' files would be on the screen. When he 
would come to a person--and he said it was most likely a non-
white person or a woman--who didn't have the right experiences 
to be promoted to partner, he would stop the meeting, call up 
that person's boss, and say, why didn't Kathleen have the right 
experience? Her file is in front of this committee and she is 
not ready. You are her boss, why didn't it happen? That changes 
the conversation when there is accountability from the top.
    Ms. Dean. That is great.
    And, Dr. Creary, in your research, we talk about diversity 
and sometimes--oh, my goodness, I'm so sorry, my time has 
expired. Thank you.
    Chairwoman Waters. Thank you.
    The gentlewoman from New York, Ms. Ocasio-Cortez, is 
recognized for 5 minutes.
    Ms. Ocasio-Cortez. Thank you, Madam Chairwoman.
    Before I enter my mainline of questioning, there are just a 
few things I would like to clarify from some statements made 
across the aisle. One, there were some odd and bizarre comments 
made about sex and gender, and I just want to clarify. Would 
our transgender candidates for corporate boards welcome and 
celebrate being included as part of diversity on your board? I 
will just go down the line, yes or no?
    Ms. Gurkin. Yes. That would be within the definition of 
diversity.
    Ms. Ocasio-Cortez. Mr. Visconti?
    Mr. Visconti. Yes, it would.
    Ms. Ocasio-Cortez. Thank you.
    Mr. Lumbra. Yes.
    Ms. Akutagawa. Yes.
    Ms. Martinez. Yes.
    Ms. Creary. We didn't ask.
    Ms. Ocasio-Cortez. Okay. Thank you. I just want to make 
sure that that was clarified.
    Second, there was some conversation here about the NFL, and 
one of my colleagues across the aisle said the NFL is like most 
of society. And I would actually agree with him because the NFL 
is where white billionaires govern the majority of power, and 
women and people of color work for them and give them their 
margins.
    Mr. Visconti, would you say that that is what you were 
getting at?
    Mr. Visconti. It goes even further, because the players get 
to have their brains beaten in and have long-term healthcare 
problems that are not covered by the billionaires.
    Ms. Ocasio-Cortez. Right. And also, when we say the NFL is 
like most of society, we were talking about average wages and 
average salaries. So, the average is a million dollars, right? 
Maybe that is because the highest-paid player, Aaron Donald, 
has signed a 6-year contract for $135 million, and the lowest 
paid--one of the lowest paid first-year rookies is $480,000. 
So, we get to claim those salaries and it appears as though 
salaries are much higher than what is lived and enjoyed by the 
majority of people. Would you say that is correct?
    Mr. Visconti. It is a short lifespan as a career, too.
    Ms. Ocasio-Cortez. Okay. Thank you. And I will move on to 
my main source of questions.
    We are here talking about corporate boards. And to clarify 
and recenter, corporate boards, would you say, Ms. Martinez, 
are the main source of governing power over a given 
corporation, correct?
    Ms. Martinez. Yes, I would say that. They are legally the 
main power, yes.
    Ms. Ocasio-Cortez. And who sits on a corporate board? 
Corporate boards have power, predominant power over a company, 
and we are talking about massive companies as well--Walmart, 
McDonald's, et cetera. And so would it be fair to say that who 
sits on the board is who has large-scale power in a company, in 
a corporation?
    Ms. Martinez. Yes, I would say that is true. And in the 
past--and I have been privileged to have served on a corporate 
board starting in 1983, so I have seen some evolution there. 
And when I first went on a corporate board, it was basically 
the friends of the CEO, people who knew each other. Over time, 
the concept of board assessment came into play, and that plays 
a very important role because it speaks to Dr. Creary's point 
about, what does this board really need? So, there are changes 
that have taken place and continue to take place.
    Ms. Ocasio-Cortez. Thank you. And I find it fascinating 
that even in your experience, corporate boards were more of a 
friends and family situation. So if you were a CEO, you could 
put your friends and family in strong decision-making 
positions, correct?
    Ms. Martinez. Absolutely.
    Ms. Ocasio-Cortez. Okay. Thank you. So really, this is 
about power. And if a board is predominantly wealthy people, 
then it is wealthy people who have power in our private sector 
governance structure. If it is predominantly men, then it is 
men who have economic power. If it is predominantly white 
people, then it is white people who have economic power and 
decision-making over a company.
    And, in fact, in the first 6 weeks of 2019 alone, the 
Walton family of Walmart made $14 billion in 6 weeks, with a 
``B'', after its corporate board artificially inflated the 
price of its stock by authorizing buybacks. And the practice is 
extraordinarily controversial, but a lot of people believe that 
in making $14 billion, especially while paying its workers 
poverty wages, this could end if workers actually had power, if 
workers sat on corporate boards.
    Mr. Visconti, if you could guess, what would McDonald's or 
Walmart's corporate board look like if their boards actually 
reflected their workers? What percentage do you think would be 
women and people of color?
    Mr. Visconti. It would be the appropriate percentage.
    Ms. Ocasio-Cortez. And if you could just take a stab at it. 
I know you may not have the number right in front of you, but 
if you could guess what percentage of women and people of color 
would make up McDonald's board?
    Mr. Visconti. The majority of the seats would be women and/
or people of color.
    Ms. Ocasio-Cortez. I have a figure here, 73 percent.
    Mr. Visconti. That doesn't surprise me.
    Ms. Ocasio-Cortez. McDonald's board would be 73 percent 
women and people of color if it actually represented the 
workforce that makes up its company.
    Thank you very much.
    Chairwoman Waters. The gentleman from California, Mr. 
Sherman, is recognized for 5 minutes.
    Mr. Sherman. I have been listening back in my office, and 
much of what needs to be said here has already been said. If we 
have boards that are diverse, that will inspire young people to 
seek the highest positions in the corporate world. It will lead 
to better corporate governance because we will have boards that 
can understand the market that they are focused on, understand 
their workers, understand society. And I think that information 
about board diversity is going to be relevant to investors 
because a company that has diversity on its board is probably a 
better long-term bet.
    But we should also keep in mind that while officers of a 
corporation have power, directors have power, the ultimate 
power is with the shareholders. And if a corporation doesn't 
meet shareholder needs, either the board will be replaced or, 
more likely, the company will be acquired, because if 
shareholders don't bid high for the stock compared to the value 
of the company, some other company will be able to buy them 
inexpensively. Ultimately, the power is with the shareholders.
    There are two other elements of diversity that I don't 
think have been discussed much here; although, I think our 
colleague from New York brought up the importance of having 
labor leaders and representatives of workers on the board.
    Did any of the witnesses address the desirability of having 
a leader from one of the unions that represents workers from a 
particular corporation being on the board? I know that is 
required in some European countries.
    If those witnesses want to address that with supplemental 
material, they should do that.
    And then, the second issue on diversity is people with 
disabilities. I wonder whether any of the witnesses has, in the 
materials they have submitted or otherwise as a comment, 
discussed including people with disabilities on the board?
    Yes, the gentleman--the gentleman who raised his hand?
    Mr. Visconti. I am Vice Chair of the National Organization 
on Disability. The Chair is Governor Tom Ridge, so there can be 
Democrats and Republicans agreeing and having conversations on 
this subject. But absolutely, people with disabilities are the 
highest percentage of unemployed people in this country with 
college degrees. It is a travesty that they stay at home and 
are not productive in our society and don't have the 
fulfillment of the individual desire to go to work and 
accomplish something.
    So, yes, it would be absolutely a very positive move to 
count heads of people with disabilities on boards.
    Mr. Sherman. And it would make sense, as we take these 
steps with regard to gender diversity and ethnic and racial 
diversity, to also report on persons with disabilities?
    Mr. Visconti. Yes, sir.
    Mr. Sherman. Does anyone else on the panel have a comment 
on that?
    Yes, Dr. Creary?
    Ms. Creary. Yes. I want to comment on both of the questions 
because I think it is an important one about having workers 
represented. This is not the same as a union representation, 
but I will tell you that we are having a challenge just getting 
the chief human resources officer represented on a board, and 
those, arguably, are the people in organizations who know a lot 
about talent. And so I would say the reason why it is not 
coming up is because the pushback against having anyone other 
than a CEO or a CFO represented is very strong, so it makes it 
very hard to even talk about unions being represented, but also 
human resources being represented.
    To the point about people with disabilities, I think for us 
it is the same question of LGBTQ. What we know is, we are not 
in a place yet, particularly in America, where we can ask these 
questions without fear of repercussions for the individuals who 
are asking to check boxes.
    As researchers, one of the things that we are cognizant of 
is that these are not protected classes in the same way that 
women and minorities are, so we can do research a lot more 
confidently on women and underrepresented minorities because we 
have some semblance of how to handle issues of discrimination 
in that process.
    We do not have the same provisions or the same protections 
for people who are LGBTQ, so it makes it really hard to want to 
invite those questions for the sake of the people on the other 
side who are being asked to answer that question.
    Mr. Sherman. If I can have 10 more seconds?
    Apparently not. Thank you.
    I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from North Carolina, Ms. Adams, is 
recognized for 5 minutes.
    Ms. Adams. Thank you, Chairwoman Waters and Ranking Member 
McHenry, for convening this timely hearing. I have been running 
back and forth chairing a committee, so I apologize.
    I do want to thank Chairwoman Beatty and Ranking Member 
Wagner for their leadership on the Diversity and Inclusion 
Subcommittee.
    As many of your testimonies have outlined, making an 
investment in diversity and inclusion is not only the right 
thing or the moral thing to do; it makes good business sense. 
Companies and organizations function more effectively, and 
experience increased productivity, and greater profitability.
    When I first came to Congress, I was concerned about the 
lack of focus on Historically Black Colleges and Universities, 
so I launched the bipartisan HBCU Caucus. We have been focused 
on raising national awareness, educating Members of Congress, 
and increasing Federal investments in these schools. When I 
meet with companies and financial institutions, I always tell 
them, if HBCUs are not a part of the industry's diversity and 
inclusion strategies, then you are not doing it right. So, I 
look forward to this particular panel.
    For each of you, with such overwhelming evidence around the 
financial benefits of investments and racial and gender equity, 
why has it still not been achieved across-the-board, and why 
are companies still struggling with or, in some cases, 
resisting diversifying and building inclusive workplaces and 
boards?
    I am going to open that up to any of you who want to 
answer.
    Yes, Mr. Visconti?
    Mr. Visconti. I would say there is, in some cases, a benign 
neglect of the reality of our demographics and who is 
graduating from universities and, in some cases, it is over 
racism and sexism.
    Ms. Adams. Okay. Would anyone else like to comment?
    Yes, sir?
    Mr. Lumbra. We have talked about a few things today: one is 
the need to look outside of traditional networks; and one is 
the need to have turnover and think carefully about what is 
needed on boards and use that turnover to bring on diverse, 
contemporary talent.
    Ms. Adams. Okay. Thank you.
    Let me ask Mr. Visconti and Mr. Lumbra, in your 
observations of companies and organizations that are doing D&I 
effectively, what are they doing to ensure their boards are 
diverse?
    Mr. Lumbra. A couple of examples jump to mind. 
Intentionality is really important, to take a close look at the 
board, to look at what the company needs, what are the 
challenges, what is the strategy, and to find directors who can 
address those issues. If you do it with purpose, you will find 
terrific, diverse talent. I worked for a company in Washington 
recently, where the last four directors were all women, and two 
were minorities. I worked for a company in the Midwest, the 
last three, two African Americans, one woman, all fitting 
exactly what those companies need. So, this is achievable, but 
it takes intention and purpose to get there.
    Ms. Adams. Mr. Visconti?
    Mr. Visconti. I would tell you that the CEOs we deal with--
and we don't deal with boards, we deal with CEOs--are supported 
by boards that provide a support to the CEO, that emphasizes 
diversity and inclusion in a measurable, accomplishable way.
    The boards that are already supporting their CEOs and 
making progress on this subject tend to be very diverse boards, 
and that is borne out in the data that is on our website about 
the top 10, the top 50, the S&P 500, Fortune 500. It is a 
purposeful intent of top leadership.
    Ms. Adams. Great. More specifically, what are the best 
practices that every organization could implement right now to 
begin meaningfully building an inclusive workforce?
    Yes. Go ahead, Mr. Visconti?
    Mr. Visconti. Structured mentoring that is measured and 
accountable so that people who are working their way up the 
corporate chain of command have the tools and learn the ropes 
that they need to be successful. Resource groups where people 
with disabilities, black people, Latinos can get together and 
share good ideas and business processes and business 
information. That is very important. And then executive 
diversity--
    Ms. Adams. Okay. Ms. Martinez?
    Ms. Martinez. Yes. And the Latino Corporate Directors 
Association endorses the Improving Corporate Governance and 
Diversity Act, which would require public companies to disclose 
data based on self-identification of the racial, ethnic, and 
gender composition of their boards of directors, nominees for 
their boards, and corporate officers.
    Ms. Adams. Okay. Great. I have a few more seconds, but what 
role do boards play in helping to develop the strategy for the 
organizations?
    Mr. Visconti. Accountability.
    Ms. Adams. Anybody else? One word would be good.
    Ms. Akutagawa. Yes. I was going to say I think it is really 
them holding the CEO's feet to the fire on that.
    Ms. Adams. Okay. Anybody else?
    All right. Madam Chairwoman, I yield back. Thank you very 
much.
    Chairwoman Waters. Thank you very much.
    So, I would like to thank all of our distinguished 
witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    And with that, this hearing is adjourned.
    [Whereupon, at 12:53 p.m., the hearing was adjourned.]

                            A P P E N D I X


                             June 20, 2019
                             
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