AIC Members Join Diligent’s Modern Leadership Initiative To Improve Board Diversity At Private Equity-Backed Businesses

Recently, Diligent Corporation, a leading board governance company, expanded the membership of its Modern Leadership initiative to increase opportunities for, and the pipeline of, diverse candidates on boards of directors at businesses across America. 21 private equity firms, including several AIC members (TPG, New Mountain Capital, The Jordan Company, The Riverside Company, Clearlake Capital, Genstar Capital, Hellman & Friedman, and TA Associates), have partnered directly with Diligent and pledged to deepen diversity and inclusion across their portfolio company boards.

AIC President and CEO Drew Maloney released the following statement praising the new initiative:

“The private equity industry is committed to improving our record on diversity and ensuring that more people of color and women have seats at leadership tables across America. Diligent’s Modern Leadership initiative, with their extensive network of 700,000 board directors and leaders, is the perfect partner for private equity-backed businesses looking to find diverse, board ready candidates.” 

Every private equity firm that pledges to join the initiative will commit to posting five open board roles in the Diligent Director Network application with the intention of hiring diverse candidates. Diligent has also activated its network of nearly 700,000 board directors and leaders across 19,000 organizations globally to nominate diverse, board-ready executives for public and private equity backed-businesses to bring onto their boards of directors.

Representative Gregory Meeks (D-NY), a member of the Congressional Black Caucus, issued the following statement in support of Diligent and the American Investment Council’s efforts:

“I applaud Diligent, the American Investment Council, and all signatory firms for their announcement pledging to open up more boards spots for diverse candidates, and I will carefully follow up with them over the coming months to ensure that real action has been taken. Upon bringing talented minorities to the board room, these firms will find that black and brown hires are good for a company’s bottom line because of the unique perspectives and experiences they bring to the table. This announcement is not just a step towards equity, but also an important move in the direction of improving corporate governance through diversity.”

Representative Vicente Gonzalez (D-TX), a member of the Congressional Hispanic Caucus, also issued a statement in support of Diligent and the American Investment Council’s efforts:

This recent announcement by the American Investment Council, and all signatory firms is historic.  This important commitment to open more board spots for diverse candidates makes all the sense in the world. This is an important step toward progress, and while it cannot be minimized that we need to take this step, we also must follow through. The sooner that organizations take steps like this the sooner we can produce better results for all involved,”

Click here to read more about Diligent’s Modern Leadership initiative.

Read the full text of stories from Bloomberg Government, Forbes, Mergers & Acquisitions, and the Wall Street Journal PE Pro Newsletter about the new initiative below:

Lawmakers Hail Private Equity Diversity Efforts
Bloomberg Government – Finance Newsletter
By Brianna Jackson, Jack Fitzpatrick and Megan Wilson
October 2, 2020

As private equity firms grapple with a lack of diversity on their leadership teams, Rep. Vicente Gonzalez(D-Texas), a member of the Congressional Hispanic Caucus who sits on the House Financial Services Committee, called an industry-led diversity and inclusion effort “historic.”

The American Investment Council, a private equity industry group, touted 21 private equity firms have joined the Modern Leadership initiative being spearheaded by Diligent Corporation, a board governance company, to increase the number of people of color on corporate boards and within executive leadership in different sectors. Each of the firms taking part in the initiative — including Clearlake Capital, Insight Partners and New Mountain Capital — commits to posting five open board roles to be filled by diverse candidates.

Drew Maloney, the CEO the American Investment Council, told Bloomberg Government that he and his team have been working with the financial services panel for roughly a year, talking about how to address the need for more people of color in the industry, Megan Wilson reports.

“These firms will find that black and brown hires are good for a company’s bottom line because of the unique perspectives and experiences they bring to the table,” Rep. Gregory Meeks (D-N.Y.), the chairman of the House Financial Services Consumer Protection and Financial Institutions subcommittee and member of the Congressional Black Caucus, said in a statement. He plans to follow up to “ensure that real action has been taken,” he said.

Click here to read the story from Bloomberg Government.

Inside the Massive Effort to Get Minorities on Corporate Boards
By Antoine Gara
September 17, 2020

“In the days after the death of George Floyd in Minnesota, the nationwide protests of the killing quickly spurred a call to action on Wall Street and in corporate boardrooms to address the wide racial wealth gap in America. For too long, the top rungs of finance and corporate America have been dominated by Caucasian males. Organizations have struggled to build leadership representative of the country’s demographics, or even their own workers and customers.

As Brian Stafford, 43, the CEO of a New York-based software company watched prominent black executives such as Merck CEO Ken Frazier reflect on the lack of diversity atop business, he began to hatch a plan that may reshape corporate boardrooms forever. Stafford, using his company’s powerful software platform, is quickly building a social network used by some of the most influential investment firms and corporate insiders on the planet to recruit black and Latino board members. The plan aspires to help groom a giant new generation of diverse business leaders. From the top down, Stafford is hoping these leaders will use their influence to guide organizations and broaden the aperture of opportunity for minority communities.

Stafford is chief executive of Diligent Corporation, a privately held software provider used by 19,000 companies to host board meetings and convey important information like financial projections securely. While Diligent is far from a household name in business, some 700,000 corporate leaders use the software to handle their most sensitive documents and communications. This spring, Stafford decided that with the help of its customers, Diligent could also use its platform to create a massive directory of qualified minority board candidates across all sectors, which will help companies fill open board seats with diverse candidates for years to come.

“Even though we have moved gender diversity a bit within boards and c-suites, if you look at racial diversity it’s just really bad,” Stafford tells Forbes, “There’s a lack of transparency into the pipeline of qualified diverse candidates… Our goal is to make it as easy as possible for companies to do the right thing.”

From May through July, Stafford began to build an initiative called Modern Leadership, which has powerful partnerships on Wall Street and in corporate America and a large directly of diverse board candidates he expects will eventually fill important board roles. To get Modern Leadership off the ground, Stafford had Diligent reach out to the chief human resource officers of its 19,000 corporate customers, asking them to begin nominating talented diverse executives within their companies to its directory of board candidates. Those nominees, Stafford expects, eventually will be placed into open board roles, helping to propel their careers.

Stafford then turned his attention to the private equity industry, where heavyweight firms are among Diligent’s biggest customers. Diligent asked ten of America’s most successful PE firms including Clearlake Capital, Insight Partners, Hellman & Friedman, TA Associates and Vista Equity Partners to create five new board roles apiece among their dozens of portfolio companies for diverse candidates, opening fifty new board roles. Between these PE firms, they own hundreds of companies that employ hundreds of thousands of workers nationwide. Stafford expects private equity firms to become avid users of Diligent’s director nominee portal and for them to make change the fastest as turn around their portfolio companies.

“We are proud to partner alongside Diligent in what we hope will become a long list of our peers, as we collectively advocate and take the necessary steps to ensure a major change at the board level,” said billionaire Jose Feliciano, co-founder of Clearlake Capital, of the initiative in June. Added Robert F. Smith, the billionaire founder of VistaEquity Partners, “In order to address social and economic justice, we need scalable solutions that speak to both Main Street and the boardroom… This is the right way to empower corporations to make strides towards equality of opportunity.”

“Diligent’s Director Network will enhance our board recruitment and executive search process in pursuit of better outcomes for our portfolio companies and our community,” said Deven Parekh, managing director of Insight Partners, one of Diligent’s owners alongside investors such as Clearlake Capital and Blackstone.

With private equity onboard, Stafford started to partner with influential executive search firms such as Spencer Stuart to post new board searches on Diligent’s application, making these often opaque efforts more transparent for diverse candidates. To sharpen ties with diverse communities, Diligent made inroads with about a dozen organizations such as the Latino Corporate Directors Association and the Executive Leadership Council, which have worked for years to promote diversity in the business and investing world.

Since launching in June, Diligent’s Modern Leadership effort has expanded to twenty private equity firms including recent additions such as TPG, New Mountain Capital, Francisco Partners and Sumeru Equity Partners. Other executive search firms including Heidrick & Struggles and Egon Zehnder have joined the effort, in addition to influential organizations like the National Association of Investment Companies, the American Investment Council.

With only about 11% of open board seats currently getting filled by black candidates, Stafford predicts Modern Leadership can double or triple that ratio in short order by working with its growing network of influential partners. Over the long term, he tells Forbes he believes corporate boards can reach racial and gender diversity levels of 40%-to-50%.

“I fundamentally believe that your board should be composed of individuals who look like your customers and your employee base,” says Stafford, “The opportunities we can create for talented diverse individuals is huge.”

Click here to read the full story from Forbes.

Industry News
The WSJ PE Pro Newsletter
By Laura Kreutzer
September 18, 2020

Private-equity backed governance software provider Diligent Corporation said it has expanded its Modern Leadership initiative to include 11 more private-equity firms and four executive recruiters. The initiative is aimed at promoting racial and gender diversity on corporate boards. TPG, Francisco Partners, ICV Partners, GI Partners, New Mountain Capital, The Jordan Company, The Riverside Company, Palladium Equity Partners, Argand Partners, Sumeru Equity Partners and Blue Point Capital Partners join 10 other private-equity firms that have already signed onto the initiative.”

Click here to read the story from The WSJ PE Pro Newsletter.

How is renewed attention to equality and inclusion playing out?
Mergers & Acquisitions
By Mary Kathleen Flynn
September 29, 2020

Members of the American Investment Council agree that we have to increase diversity at our firms and across the entire industry – and we are taking steps to do so immediately. Recently, several members of the AIC and other private equity firms announced a new partnership with Diligent Corporation, a leading modern governance company, to join their Modern Leadership initiative. This partnership requires firms to commit to posting open board opportunities specifically for diverse candidates within the Diligent Director Network. This is just one of the steps we are taking to improve our record on diversity. We will be engaging on this issue in the years to come so that our policymakers and limited partners understand our strong commitment to increasing diversity throughout our industry.

Click here to read the story from Mergers & Acquisitions.