For the second consecutive year, the number of new female REIT directors elected during the 2019 proxy season surpassed that of new male directors—outpacing trends seen in the broader market—according to FPL Associates/Ferguson Partners’ recently released 2019 REIT Board Composition and Diversity Report.
Of the 119 new REIT directors elected during the 2019 proxy season, 50.4% were female compared with 36.5% across the Russell 3000, the report showed. While REIT boards continue to be mostly male, at a level of 80.4%, the gap between male and female representation across the industry narrowed by 560 basis points between 2017 and 2019.
In 2018, approximately 17% of REIT boards had exclusively male directors, whereas in 2019 that level fell to just below 10%, the report showed. At the same time, REIT boards are also getting slightly younger. In 2015, the average age of newly-elected directors was 60. That level dropped to 58 in 2018 and 2019.
Athough REITs are performing well on gender diversity terms, more work needs to be done on ethnic diversity, the report found. According to ISS Analytics, only 7.7% of new REIT director hires were minorities compared with 15.6% for the Russell 3000.
Jeremy Banoff, vice chairman at FPL Associates, noted that as it relates to board composition, the definition of diversity has largely focused on gender.
“That is of course a great starting point. However, equally important are broader forms of diversity, be it ethnicity [or] race,” Banoff said. "While REITs have done quite well in addressing gender diversity over the past couple of years and are ahead of the broader public marketplace in terms of the pace of such [change] for consecutive years, at the same time REITs have lagged that [pace] on these broader definitions of diversity," he added.