Women on Boards

By: Christiane Neumayer

Gender diversity in the boardroom continues to garner attention. But what do the actual numbers look like? For all Fortune 1000, the number of women on boards has increased to 17.9% in 2015 from 14.6% in 2011 – an annual percentage increase of 0.8%. The Fortune 100 increased to 22.3% in 2015 from 19.6% in 2011, and the Fortune 5001-100 to 15.9% from 12.5% (per 2020 Women on Boards Gender Diversity Report 2015).

At the end of this month I will step down as Chair of 2020 Women on Boards’ New York Campaign Committee, having led the Committee for four years since its launch in May 2012. During this time, there is been a definitive shift from research making the business case for gender diversity in the boardroom to initiatives and actions that lead to greater number of women directors. Here are just some of the change agents and initiatives that continue to make an impact:

Advocate Organizations
These organizations are focused on raising awareness of the issue and advocating for change with many of the stakeholders and decision-makers. They include 2020 Women on Boards, the 30% Coalition and the 30% Club.

Legislation
Politicians at the state level and in Washington have begun pursuing innovative legislative alternatives to quotas:
  • Resolutions in California, Illinois and Massachusetts ask companies to disclose the number of women on their boards and suggest that companies have a minimum of three women directors on boards of nine.
  • New York City Comptroller Scott Stringer and the city pension funds launched the Boardroom Accountability Project in November 2014, a campaign to give shareowners the right to nominate directors at U.S. companies via proxy access. As of January 2016, 115 companies have enacted meaningful proxy access (up from 6 companies in November 2014).
  • The New York City council approved a bill last week requiring the Department of Small Business Services to survey the gender, ethnic and racial makeup of executive-level staff and board members of companies that contract with the city. Additionally significant is that this bill leverages public funds to influence change in the private sector.
  • U.S. Rep. Carolyn Maloney has introduced the Gender Diversity in Corporate Leadership Act. A bill that would require public corporations to report the gender composition of their boards and board nominees to the SEC.
Company Sponsorship
Biogen, a biotech giant, headquartered in Boston, launched “Raising the Bar” in 2015. This program prepares select senior female executives to be compelling board candidates and Biogen’s senior leaders tap their network to identify board opportunities for these executives. Seven women of the first cohort of ten have been placed on boards already.

Board Tenure
Another lever for change that has recently been pushed to the forefront by institutional shareholders is the lack of term limits and mandatory retirement ages for boards. While close to 70% of public companies have mandatory retirement ages, that age exceeds 72 years for the majority of those companies (Spencer Stuart Board Index 2015). Strategies include identifying companies with a preponderance of long-tenured directors, discouraging the presence of long-tenured directors on committees where independence is particularly important such as the audit, compensation, and nominating/governance committees, and voting against chairs of these committees.

Socially Responsible Investment Funds (SRI)
In increasing numbers, SRIs make investment decision through the gender lens. Activities range from holding discussions with corporate management, actively voting proxies, initiating shareholder resolutions, establishing funds with investment criteria that include, e.g., a minimum number of three women directors on the board. Some SRIs include: Calvert Investments, Pax Ellevate Global Women’s Index Fund and the Parity Portfolio at Morgan Stanley.
So what may we conclude from all these initiatives? The universe of stakeholders and organizations pursuing the issue is large, has become markedly diverse and tenacious, with even mainstream organizations becoming active. The change process will not stall given the momentum that has been built. The needle is moving and will continue to move. Companies have a choice: they can continue to not pay heed or they can proactively decide to give gender diversity the same attention they give to other business issues. Those that choose not to may be less successful in attracting and recruiting the best talent and thereby weaken their future corporate competitiveness.