BLACK ENTERPRISE recently released our annual Registry of Corporate Directors, revealing that there are currently 308 African Americans sitting on the boards of 316 companies found on the S&P 500 – 63% of the index. That means that 37% of the nation’s largest publicly traded companies refuse to include blacks on their boards.
VIEW THE FULL 2018 REGISTRY OF BLACK CORPORATE BOARD MEMBERS
As we examine the underrepresentation of African Americans in corporate governance, we continue to field questions—especially from young professionals-–on how African Americans can become corporate board members. To discover the route to the boardroom, you should listen to DeForest B. Soaries, Jr., a Baptist minister, author and public advocate who created the “free financial freedom movement,” the faith-based wealth-building system targeted to black communities.
He’s also an independent director at three major companies: Federal Home Loan Bank of New York; Ocwen Financial Corporation (NYSE:OCN); Independence Realty Trust (NYSE:IRT). Soaries is a tireless advocate for board diversity and activism, tired of seeing a surfeit of privileged white executives making $200,000 a year on boards while “black geniuses have no idea how to get there.” As such, Soaries is unveiling an online “master class” that will offer expert insight on gaining a top position as a paid corporate director.
In his own words, Soaries shares how he gained entry to corporate boards, uses his position to impact change and the importance of diversity in corporate governance today. We have also included a video that shares information on his board education program.
Deforest Soaries on How to Become a Corporate Board Member
I was invited to serve on the board of directors of a small, community bank 25 years ago. The bank was located around the corner from my church. Although I had no experience in banking, I felt this opportunity would put me in a position to help my church members and community residents develop a strong working relationship with the institution. It was a relationship I wanted to bring together because the bank had the resources we needed to increase access to home mortgages, business loans, educational financing and convenient savings. I didn’t go into this work to accomplish my personal goals. My first impulse was to treat this board appointment as a goal for community accomplishment. In fact, when I officially became a director, I asked the bank to host a reception for my members and community residents to attend. They did just that. More than 200 people jammed in the lobby of this small bank to celebrate the first African-American bank director they had ever had, and the first African-American bank director they had ever known.
Being a director at the bank did put me in a good position to build stronger ties between the community and the bank. We started a micro business loan program for small businesses that needed working capital; we offered mortgages for first time home buyers, and we provided other financial products to the local neighborhood. Not only did my relationship with the bank help a lot of people build banking relationships, but it also helped the bank improve its Community Reinvestment Act (CRA) rating with the Federal Deposit Insurance Corporation (FDIC). My serving on this bank’s board of directors was a win/win situation.
The success stories don’t end there. At one of my first meetings, the vice president of the bank asked me to complete paperwork that included the same form a working employee would complete. When I asked why they needed me to complete those forms, she informed me that they were necessary in order to process my director fees.
I had no idea that the bank was going to pay me to attend meetings and to help the bank help my community.
Besides, I had served on boards of directors previously, and all of them were non-profit organizations that expected me to donate money to them in order to secure a seat on their board. I had no idea there were boards that paid their directors to serve. This made my bank directorship a win/win/win situation!
This new insight prompted me to study the world of corporate governance and paid directorships. I quickly learned that many people I knew were serving on boards of major corporations and being paid more money as part-time directors than I was getting paid as a full-time pastor. That was the year I decided to learn everything there was to know about being a paid corporate director, and then pursue corporate directorship opportunities for the rest of my life. Since that time, I have served as a paid director on five corporate boards. The experience and expertise I have gained caused me to commit myself to helping others accomplish the goal of becoming paid corporate directors.
The free enterprise system is the most successful economic model in the world. The strength of that system depends on strong, integral corporate governance that protects investors, owners, lenders and customers by holding executives and managers accountable to sound business practices.
When corporations have such governance, investors, employees and consumers enjoy prosperity that yields benefits for current and future generations.
Diversity, mobility and technology have combined impact on markets today like never before. We live in the fastest changing time in human history. Corporate leadership is facing the pressure of having to expand the types of individuals that oversee corporate planning, innovation and execution. Increasingly, companies need directors with backgrounds in technology, cultural diversity, international business and cyber security. The days when company leaders can sit on each other’s boards and function as rubber stamps for their management decisions are long gone. New legal requirements have opened the door to more directors who are independent of all company executives and businesses, and major corporate disruptions have forced corporate leaders to be more adaptable and flexible than ever before.
Now is the time to create a new pipeline of talented people who will be available for corporate director service. I intend to play a role in developing that pipeline.