Highlighting Data Connecting Diverse Corporate Boards of Directors to Positive Results

e.l.f. Beauty (NYSE: ELF), in collaboration with North Carolina Agricultural and Technical State University (N.C. A&T), today released the “Not-So-White Paper,” a report underscoring the impactful role that board diversity plays in the success of U.S. publicly traded companies. This partnership is part of e.l.f. Beauty’s Change the Board Game initiative, which is e.l.f.'s long-term commitment to increasing diverse representation in the boardroom by providing research, advocacy and tools to corporate leaders.

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e.l.f. Beauty and N.C. A&T release “Not-So-White Paper” highlighting data connecting diverse corporate Boards of Directors to positive results (Graphic: Business Wire)

This ambition is based on the belief that e.l.f. Beauty’s own success in delivering 22 consecutive quarters of net sales growth* is in part drawn from its diverse board.

e.l.f. Beauty is the only publicly traded company in the U.S. out of approximately 4,100 with a Board of Directors that is 78% women and 44% diverse, reflecting the communities it serves.**

Making the best of beauty accessible to every eye, lip and face has been the heart of e.l.f. Beauty’s mission since its founding 20 years ago. The company champions democratizing access across all pillars of business, including the highest seats of power. e.l.f. Beauty aims to close the gap between the board, C-suite and the community.

Recognizing that expanding leadership voices requires the partnership of other companies, e.l.f. Beauty’s goal is to help double the rate at which women and people of color are added to the boards of directors of U.S.-based, publicly traded companies by 2027, enabling businesses to benefit from a wide range of perspectives and experiences.

N.C. A&T is the nation’s largest historically Black college or university (HBCU). With an annual economic impact of $2.4 billion and external research funding of more than $102 million in fiscal year 2024, the university continues to be a driving force for social justice, economic growth and educational excellence. Its Hairston College of Health and Human Sciences and Deese College of Business and Economics contributed to this report.

“Over a decade of research from the commercial sector and academia shows convincingly that diversity in the boardroom can have several positive benefits for a company, including higher return on equity, reduced financial risk, better returns for shareholders and fewer lawsuits,” according to the report. “However, these benefits are not automatic, and they are most likely to occur when there are at least three members of underrepresented communities on a Board of Directors. This should make sense to board members from their lived experience, as one voice can put an issue on the radar and a second voice can validate it, but it often takes at least three to make a quorum that can change policy.”

Key learnings include:

• Above average gender diversity on corporate boards of S&P 500 companies saw 15% return on equity and a 50% reduction in earnings risk measured by EPS over one year.***
• Women on boards correlate to better price-to-earnings ratios. ****
• Boards with three or more women and/or minorities have a lower likelihood of large-scale discrimination lawsuits.*****

“Today, more than ever, diversity is essential for strong corporate governance,” said Tarang Amin, Chairman and CEO, e.l.f. Beauty. “The research draws real-world correlations that diverse boards are better equipped to navigate complex business environments, foster innovation and deliver value to shareholders. Our own intentional and ongoing journey led us to a Board of Directors that is 78% women and 44% diverse. This stewardship gives us the opportunity to be an agent of positive change.”

e.l.f. Beauty’s effort to “Change the Board Game” started earlier this year with its purpose partner, OBERLAND, with an informative campaign about the inequity that still exists on corporate boards, which is misaligned with the U.S. population data in the 2020 Census.

The findings of the “Not-So-White Paper” are being presented at the National Association of Corporate Directors (NACD) meeting, where ~1,500 executives and board members representing the largest nationwide network of directors will be in attendance.

As part of this work, e.l.f. Beauty is sponsoring board preparation training for 20 corporate director candidates through the NACD Accelerate^™ program and will be sponsoring a second cohort with 20 director candidates in early 2025. e.l.f. Beauty is also a sponsor of the NACD Center for Inclusive Governance (CFIG), which is focused on creating diverse and inclusive boards that are ready for today and the future through education and peer-to-peer dialogue.

The “Not-So-White Paper” includes three unique sections:

1. A review of existing studies yielding evidence that board diversity – on both gender and racial/ethnic lines – positively impacts performance and helps reduce financial and legal risk for companies across sectors, and of varying sizes.
2. The Change the Board Game Database was created and includes the racial and gender representation of more than 4,000 U.S.-based, publicly traded companies listed on the NYSE and NASDAQ.
3. An initial analysis of the new data set was conducted, which ranked boards by gender and racial/ethnic diversity, identified the makeup of the “average board” in terms of representation, and correlated increased diversity to improved performance.

“The findings underscore that a Board of Directors reflecting a wide range of perspectives, experiences and backgrounds is a critical factor for achieving competitive advantage and sustainable growth,” said Elimelda Moige Ongeri, Ph.D., Hairston College Dean. “More importantly, the goals of the Change the Board Game project align well with N.C. A&T’s legacy of being at the forefront of advancing social justice and equity. N.C. A&T is proud to engage multidisciplinary researchers on this project, as this provides a more comprehensive analysis and contextualizes the data.”

The “Not-So-White Paper” is available to view at www.elfbeauty.com/not-so-white-paper.

* As of June 30, 2024.

** Statistics based on e.l.f. board members and available data as of 08/22/24 from FACTSET, includes publicly traded companies in the XRT and XLP indices.

*** Bank of America Securities (March 4, 2021) Everybody Counts! Diversity & Inclusion Primer

****Simionescu, L.N., Gherghina, S.C., Tawil, H. et al. (2021) Does Board Gender Diversity Affect Firm Performance? Empirical evidence from Standard & Poor’s 500 Information Technology Sector

***** Abebe, M., & Dadanlar, H. (2021) From tokens to key players: The influence of board gender and ethnic diversity on corporate discrimination lawsuits. Human Relations, 74(4), 527-555.

About e.l.f. Beauty

e.l.f. Beauty (NYSE: ELF) is fueled by a belief that anything is e.l.f.ing possible. e.l.f. is a different kind of company that disrupts norms, shapes culture and connects communities, through positivity, inclusivity and accessibility. The mission is clear: to make the best of beauty accessible to every eye, lip and face. e.l.f. Beauty and its brands, e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and NATURIUM, are led by purpose, driven by results and elevated by superpowers. e.l.f. Beauty is cruelty free, with double certifications from both Leaping Bunny and PETA, offers clean and vegan products and proudly stands as the first beauty company with Fair Trade Certified™ facilities. With a kind heart at the center of e.l.f.’s ethos, the company donates 2% of net profits to organizations that make positive impacts. Learn more at www.elfbeauty.com

About North Carolina Agricultural and Technical State University

North Carolina Agricultural and Technical State University is the nation’s largest historically Black university, as well one of the top 25 “Most Innovative” universities in America (U.S. News & World Report, Best Colleges 2024). North Carolina A&T is a land-grant, doctoral research university and a constituent member of the University of North Carolina System. A research intensive doctoral institution, NC A&T is widely recognized for its leadership in producing graduates in critical workforce areas.

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e.l.f. Beauty and N.C. A&T release “Not-So-White Paper,” highlighting data connecting diverse corporate Boards of Directors to positive results