Even 'Hispanic' companies don't have Hispanic board members

Brands catering to Hispanic culture or Hispanic consumers are never too quiet about touting their supposed authenticity.

El Pollo Loco boasts Mexican food that's "steeped in tradition," Corona beer-maker Constellation Brands flexes its lead among Hispanic drinkers, while Chipotle labels itself a "Mexican Grill."

And yet, in taking a closer look at who exactly leads these "Hispanic" companies at the highest level, a Yahoo Finance review revealed a shockingly low representation of Hispanics among their respective boards — echoing a larger diversity problem for the entire Fortune 500.

Mexican fast casual chains Del Taco (TACO) and Chipotle (CMG) each only have one Hispanic board member among their ranks. Constellation Brands (STZ) lists two Hispanic board members, while El Pollo Loco (LOCO) continues to lack any Hispanic representation at all.

At an average of just 12% Hispanic board representation, those companies only marginally top the disproportionally low representation among Fortune 500 boards. According to an annual review by Deloitte and The Alliance for Board Diversity, only about 4% of all board seats at Fortune 500 companies are held by Hispanic directors.

Adjusting for U.S. adult population demographics, Hispanics are by far the least represented in the board room for any racial or ethnic group. White Americans, meanwhile are overrepresented in the board room, with 82.5% of all Fortune 500 board seats despite comprising just 64% of the adult U.S. population.

The lack of Hispanic representation in the board room has persisted for years and only recently started to see marginal signs of improvement, according to Esther Aguilera, CEO and president of the Latino Corporate Directors Association. The operative word there is "marginal" since she says there is still such an enormous gap to close. Even in California, where a new law requires at least a minimum level of diversity representation on boards, Latinos still only comprise 2.5% of company board seats despite making up the state's largest demographic cohort with 39.4% of California's population.

"The numbers are awful," she said. "Though there was a four fold increase in [board] appointments, in the first six months of this year, it's still less than what we're seeing with other communities."

Part of the slow change, Aguilera says, has stemmed from slow board turnover, and a misconception that there aren't qualified Hispanic candidates that could be fit to fill board seats. Part of the Latino Corporate Directors Association's push to bring awareness to the lack of representation has been augmented by linking up companies with qualified candidates — a combo that has resulted in dozens of director hirings.

That hiring push may have been made easier in California by a flurry of companies looking to add diversity to their boards in order to avoid fines imposed by the state's new bills. Aside from one bill that requires public companies to have at least one female board member, California's AB 979 requires public companies to have a minimum of one board member from an underrepresented community by the close of 2021. Conservatives have promised a legal challenge to both mandates, as the gender bill appears headed to trial.

A slide from Corona-maker Constellation Brands' investor presentation celebrates the fact that Hispanics love their brands and that its Hispanic mix makes up half its growth. The company, however, has just two Hispanic directors on its 13-member board.

As Aguilera sees it, there are a lot of practical reasons why board diversity isn't just good for those underrepresented communities — but also for the companies themselves.

"Institutional investors want to see boards that reflect their customers and employees and the communities they serve, because it's good governance, good for business and good for shareholder value and return," she said.

Indeed, fund managers BlackRock and Vanguard Group stated earlier this year that they will begin tracking diversity statistics at public companies in which they invest. Both signaled that they would vote against board nominees that do not help increase diversity at companies that have fallen short in that push. In August, the Securities and Exchange Commission (SEC) green-lit a board diversity push by Nasdaq to have companies listed on its exchange include at least one female board member and at least one from an underrepresented minority or explain to investors why they were unable to do so.

It's worth noting that both of the sole Hispanic directors at Chipotle and Del Taco were both appointed earlier this year. For its part, El Pollo Loco told Yahoo Finance it intends to meet California's diversity requirements by the end of the year.

"We currently have nine board members and are in the process of evaluating candidates for addition to our board, including adding Hispanic representation," a company spokeswoman said. "We expect to meet the legal requirements for board diversity by the end of the year, and we will make an official announcement when our search is completed.”

Zack Guzman is an anchor for Yahoo Finance Live as well as a senior writer covering crypto, cannabis, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.

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