Only 19: The Lack of Black CEOs In the History of the Fortune 500
In the history of the Fortune 500 list, there have been only 19 Black CEOs out of 1,800 chiefs. Why, after so many years of awareness of this problem, is that number still so stubbornly low?
The announcement last week that Starbucks chief operating officer Roz Brewer would become CEO of Walgreens Boots Alliance in mid-March was met with enthusiasm on Wall Street because a massive company was getting a widely admired executive as its CEO. But there was also widespread elation that a new Black CEO would be joining the ranks of those on the Fortune 500, and a woman no less, an all too rare occurrence.
But at the end of March, the meager ranks of Black leaders atop America’s largest corporations will thin again after Roger Ferguson Jr., steps down as chief executive of pension fund TIAA after almost 13 years.
That will leave only four Black CEOs on the Fortune 500: Brewer, Ken Frazier at Merck, Marvin Ellison at Lowe’s, and René Jones at M&T Bank. The all-time high was six in 2012. Which prompts the question: Why, after so many years of awareness of this problem, is that number still so stubbornly low?
In the history of the Fortune 500 list, first published in 1955, there have been only 19 Black CEOs out of 1,800 chiefs. Clifton Wharton became the first Black CEO ever of a major U.S. corporation when he took the reins of TIAA in 1987, but at the time, the company was included on a service companies list, separate from the main Fortune 500 list despite its large size.
The picture gets grimmer if you take out interim CEOs or any chief who spent less than a year in the corner office: only 15 chief executives, a paltry figure when you consider Black people make up one-eighth of the U.S. population.
More worrisome, observers and executives agree, is that there is no quick fix, given the years it takes to groom someone for the C-suite. A major source of the problem is that too few Black businesspeople are put on a management track early in their career, in which a promising executive is given oversight of a business with its own profit and loss (P&L) benchmarks, the measures by which superiors and the board assess whether someone is CEO material.
“The tracks that lead to the CEO jobs are primarily P&Ls,” says Michael Hyter, chief diversity officer at consulting firm Korn Ferry. “There are a lot of people of color in support roles [accounting, marketing]—lots. That’s not what gets you into the CEO job.”
Take an executive like Lowe’s CEO Marvin Ellison, who previously led J.C. Penney, making him the only Black CEO to lead two different Fortune 500 companies. He started his retail career in loss prevention at Target. But at Home Depot, where he spent many years, he jumped to store management, giving him a P&L by which to measure him as he rose up. He was passed over in 2014 when Home Depot changed CEOs, and he went to Penney.
There are plenty of other factors at play, such as the schools from which big corporations recruit, which too often include primarily traditionally elite schools. M&T Bank, under René Jones, has made a greater effort to recruit from a broader range of schools to remedy that.
Yet Jones says helping people make their way up large established companies is only part of the solution. As much as leading a Fortune 500 is the holy grail for countless business school students, young Black entrepreneurs could be the ones building the Fortune 500 companies of tomorrow and beefing up the tally that way.
“We too often look to the Fortune 500 largest companies when, in fact, it’s logical that the next leaders today sit outside the Fortune 500,” says Jones, who’s headed M&T, a Buffalo-based bank, for three years. “It’s our job to seek them out and help mentor them to the next phase.”
In the meantime, there are lessons such entrepreneurs and strivers can learn from the only 19 Black CEOs in the history of the Fortune 500.
Despite the small sample size, their experiences mirror those of the broader chief executive population: Three were interim CEOs (Mary Winston at Bed Bath & Beyond; Derica Rice at Eli Lilly, James Bell at Boeing); three clashed with boards and top shareholders over strategy (Sears’ Aylwin Lewis, Maytag’s Lloyd Ward, and McDonald’s Donald Thompson); one was ousted by activist investors (Darden Restaurants’ Clarence Otis Jr.); one left amid allegations of accounting irregularities (Fannie Mae’s Franklin Raines); one was pushed out as his firm began to implode (Merrill Lynch’s Stan O’Neal); and one amid a personal conduct scandal (Tapestry’s Jide Zeitlin).
On the brighter side, American Express’s Ken Chenault, Delphi Automotive’s Rodney O’Neal, TIAA’s Ferguson, Xerox’s Ursula Burns, Merck’s Ken Frazier, Aetna’s Ronald Williams, and Time Warner’s Richard Parsons have had storied careers, celebrated beyond their industries. And under Jones, M&T Bank has grown, while Ellison’s tenure at Lowe’s has proved far more successful than his time at J.C. Penney.
Whatever awaits future Black CEOs, additions to the Fortune 500 could be few and far between if corporate America doesn’t move to fill its pipeline of Black talent. On the encouraging side, that is becoming much more of a priority since last summer’s social unrest over racial inequality, says Korn Ferry’s Hyter.
“Let’s look inward at the infrastructure of how talent is developed within our organizations as opposed to being perpetually frustrated that awesome people aren’t readily available,” he says.