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More Boards Adopt Rooney Rule Policies


August 18, 2023

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A majority of S&P 500 companies now disclose having diverse board candidate search policies, known as Rooney Rules, for director searches, according to new data from search firm Spencer Stuart. Some 56% of the S&P 500 report having a policy like the Rooney Rule, up from 50% in 2022 and 39% in 2021.

Companies including Devon Energy, Dollar General, Hess Corp., Moody’s Corp., Sealed Air Corp., Southern Company, Tractor Supply Co. and W.W. Grainger Inc., among others, disclosed having Rooney Rule policies in SEC filings this year. The Rooney Rule is a strategy that calls for organizations to interview women and minority candidates for open positions. Experts have debated the most effective number of diverse candidates to include in such policies.

Investors and proxy advisors have continued to screen companies based on whether or not they have a Rooney Rule policy in place and disclosed. Despite the recent political pushback on DEI initiatives, boards are working to not only nominate underrepresented members to the board but elevate those voices once they are in the boardroom. However, the effectiveness of the Rooney Rule varies depending on whom you ask, and sources told Agenda that it should be one tool in the toolkit to hire the most diverse and qualified candidates.

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“Saying ‘Oh, we have a Rooney Rule’ is never enough without meaningful steps to support the intent of the rule,” said Julie Goldsmith Reiser, partner at Cohen Milstein and co-chair of the securities litigation and investor protection practice.

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Strategies to further diversify boardrooms are “tied to economic performance driven by the bottom line, not just the idea to have diversity for diversity’s sake,” Reiser said.

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According to Reiser, boards need to focus on skill sets first and foremost. She also recommends that the panel interviewing board candidates also reflect diversity in terms of backgrounds, race, gender, ethnicity and skill sets.

“It’s great companies are looking to interview a diverse slate of candidates, but there’s a slight concern that maybe [companies and] search firms are focusing on all the same people or putting someone into the mix to interview without the right skill set,” Reiser said. But, she added, “it’s really about the ongoing commitment, not just the interview process,” Reiser said.

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Companies have also expressed concern over the potential impact of the Supreme Court’s recent ruling related to affirmative action policies at educational institutions.

“We have had a great push towards diversity and inclusion that has now hit the high note, and maybe we will start moving back the other way,” Reiser said. “But hopefully not.”

Read More Boards Adopt Rooney Rule Policies.