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DEI Rollbacks in Full Effect this Proxy Season

Update: Our full proxy season analysis is now available for download here.

With the Nasdaq Board Diversity Rule no longer in effect and heightened legal and regulatory uncertainty around what constitutes “illegal DEI,” a decline in board demographic disclosures was anticipated. However, the extent of this shift has been remarkable.

We are roughly one-third into proxy season, with over 900 Russell 3000 companies having filed proxy statements. By this time last year, 95.2% of Russell 3000 companies and 100% of S&P 500 firms reported at least one quantitative measure of board diversity (including gender, race/ethnicity, LGBTQ+, and veteran). This year, those figures have dropped to 78.9% of the S&P 500 and 72.2% of the Russell 3000.

Our transparency score, which measures the percentage of quantitative measures of director diversity (out of 100) that companies disclose, has taken a dive as well.  In the S&P 500, the average score declined from 48.7 to 32.4 and in the Russell 3000 it dropped from 40.6 to 26.1. Firms listed on the New York Stock Exchange, which never had any requirements around disclosure, now have a higher average score (27.8) than Nasdaq-listed firms (23.2). All sectors saw at least a 28% decline in their average score, with Communication Services firms plunging by 141.5%.

Only 30 companies increased their level of transparency, while 448 reported the same level of detail and 430 reduced transparency. Some were unexpected—large federal contractors not surprisingly are mitigating the risk of losing $$, such as RTX (score went from 60 to 0) and Lockheed Martin (80->40).  Others were quite surprising, including Gilead (80 to 0) and CMS Energy (80 to 0).

Across all Nasdaq-listed companies, 87.2% used the standard reporting matrix last year:

This year, of Nasdaq-listed companies that disclosed only 38.2% used the Nasdaq matrix. Across all companies, disclosing information in graphs and charts (37.3%) was most prevalent, followed by a skills matrix (35.6%), text (26.9%), and the Nasdaq grid (14.9%).

Here is a comparison of select disclosures of S&P 500 companies this year vs. last year:

Gender

  • aggregate: 76.9% vs. 99.6%
  • individual identified: 37.7% vs. 53.9%

Race/ethnicity

  • aggregate: 72.9% vs. 98.4%
  • individual identified: 36.0% vs. 53.9%

LGBTQ+

  • aggregate: 10.1% vs. 29.4%%
  • individual identified: 5.7% vs. 11.0%

Perhaps more telling is the removal of diversity terminology. S&P 100 company Danaher, for instance, went from disclosing gender, race/ethnicity, nationality, and veteran status to disclosing none of these—and removed references to “women,” “female,” “gender,” and “ethnicity” entirely.

2024 Proxy:

The Board does not have a formal or informal policy with respect to diversity but believes that the Board, taken as a whole, should embody a diverse set of skills, knowledge, experiences and backgrounds appropriate in light of the Company’s needs, and in this regard also subjectively takes into consideration the diversity (including with respect to age, race, gender, national origin and U.S. military veteran status) of the Board when considering director nominees.

2025 Proxy:

The Board does not have a formal or informal policy with respect to diversity but believes that the Board, taken as a whole, should embody a diverse set of skills, knowledge, experiences and backgrounds appropriate in light of the Company’s needs.

Clients can track these developments in real time. If you’d like a free, detailed report with charts and granular disclosure data by index, exchange, and sector over the last five years, please contact us.

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