Classification Standards Largely Mirror OMB-15 for U.S. Government Administrative Reporting and Statistical Activities

ROCKVILLE, Md.  (September 15, 2020) – ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today announced the release of enhancements to its suite of data solutions to include racial and ethnic characteristics of senior leaders at more than 6,000 U.S. corporations. On an individual basis, data coverage includes more than 33,000 directors and 6,800 named executive officers (NEOs).

Where available, racial and ethnic characteristics are identified and sourced directly from corporate filings, as well as direct feedback in response to ISS’ outreach to U.S. companies. Where definitive information is not disclosed, ISS classifies directors—largely along standards put forth by the U.S. Office of Management and Budget’s Directive 15—by carefully assessing race and ethnicity through a variety of publicly available information sources. These include company investor relations websites, LinkedIn profiles, press releases, leading news sites, as well as through identifying affiliations between individuals and relevant associations and organizations focused on race and/or ethnicity, such as the Latino Corporate Directors Association.

“This data is both timely and highly relevant for the many institutional investors now working to incorporate these factors into their investment processes,” said Marija Kramer, Head of ISS ESG, the responsible investment arm of Institutional Shareholder Services. “The depth and breadth of this data, unrivaled for its scope of coverage, will also underlie new ISS ESG solutions including the launch later this year of a proprietary index covering both directors and named executive officers.”

An ISS ESG analysis of the data shows modest progress in the prevalence of minority directors across the S&P500. At the close of 2015, approximately 13.6 percent of all directors at large capital companies were racially or ethnically diverse compared with 16.8 percent today, representing a jump of 3.2 percentage points. By comparison, however, this pace of change was far more glacial than that for female directors whose ranks grew at a faster rate of 9.1 points during the same period, with women today representing 27.4 percent of all S&P500 directors.

When examining trends by sector (2-digit GICS) for NEOs, wide disparities exist with respect to the prevalence of non-Caucasians, with figures ranging from just 5 percent at Real Estate and Communication Services companies to 25 percent at Information Technology firms. In fact, in more than half of all sectors, the number of non-Caucasian NEOs is less than 10 percent. Drilling down further, no large capital sector shows more than 6 percent for Black NEOs (Utilities), with two (Real Estate and Communication Services) having none.

Interestingly and when analyzed alongside proprietary ISS compensation data, the analysis shows large capital companies now paying a premium for racially and ethnically diverse CEOs unlike in previous years. For the S&P500 in 2015, median total pay for a diverse CEO stood at $10.9 million per annum compared with Caucasian peers netting slightly more at $11 million. That changed in 2016 and today median pay for diverse CEOs averages $14.2 million per annum, roughly 10 percent higher on average compared with their Caucasian counterparts.

Institutional investors seeking more information on corporate diversity data can contact

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