A group of women wearing fake beards stormed the podium at Veolia Environnement's crowded shareholders' meeting in Paris last month, challenging Chairman Henri Proglio over the gender makeup of his overwhelmingly male board. "Is it really wise to allow women to define the strategy of a company, a task requiring intelligence, an ability to react, and coolheadedness?" asked a disguised member of the feminist advocacy group La Barbe, or "The Beard." She taunted the French water utility for having only one woman on its 17-member board.
That kind of stunt is becoming common during this season of French annual meetings. The activists, who decline to reveal their identities for fear of retribution, are demanding that companies, including Veolia and insurer Axa (AXAHY), deal with the "boy's club" reputation of their corporate suites. Today, management has to take such pranks seriously. French lawmakers are considering legislation that would require at least 40 percent of companies' boards to be made up of women within six years or risk not being able to add new male directors.
The legislation, passed in January by the lower house of Parliament, is being considered by the Senate. If it becomes law, France would join Norway in adopting legally binding quotas to boost the number of female directors. "The quota thing is fine," French Finance Minister Christine Lagarde says in an interview. "I used to be against quotas. You stand on your own merits and you should be recognized as such. But things are moving too slowly. There will be a lot expected of women simply because there will be resentment on the part of those who will have to make space."
Women make up 9.5 percent of 103 French boards tracked by GovernanceMetrics International, a corporate governance research firm in New York. That is far short of the 40 percent that will be required. Among 405 companies in the U.K. tracked by GovernanceMetrics, females account for 8.5 percent. In the U.S., it's 12.2 percent among 1,754 companies studied. In Norway, where the proportion was 6.8 percent when quotas were proposed in 2002, the number is 34 percent among 23 companies.
French companies are scrambling to outline plans to raise the percentage of female directors on their boards. Gas utility GDF Suez may shrink the size of its board, CEO Gérard Mestrallet told shareholders last month. Total (TOT), France's largest company, named two men to its board in May but pledged to raise female representation to 18 percent next year by adding a third woman to its 17-member board. PPR's board named three women directors last month, bringing their number to 29 percent. CEO François-Henri Pinault says the luxury goods company will seek to reach gender parity.
The threat of penalties has already brought some unlikely women to French boardrooms: the wives of prominent French men. In recent months, Florence Woerth, wife of Labor Minister Eric Woerth, became a director at luxury goods maker Hermès; Nicole Dassault, wife of industrialist Serge Dassault, joined the Dassault Aviation board; Amélie Oudéa-Castera, wife of Société Générale CEO Frédéric Oudéa took a seat on the board of Lagardère; and Brigitte Longuet, wife of French Senator Gerard Longuet, went to Canal+.
In April, LVMH Moët Hennessy Louis Vuitton (LVMUY) CEO Bernard Arnault surprised shareholders by naming Bernadette Chirac, the 77-year-old-wife of former President Jacques Chirac, to a seat on the LVMH board, after 80-year-old Russian historian Hélène Carrère d'Encausse backed out. In response to a question at a shareholders' meeting, Arnault said the maker of Veuve Clicquot champagne and Fendi purses needed a nominee who brought a "feminine eye" to products and understood countries where LVMH operates. Until Chirac took her seat, Arnault's daughter Delphine was the only woman on LVMH's 17-member board.
"The choice was astonishing," says Viviane Neiter, a corporate governance consultant who queried Arnault at the meeting. "There have been recent nominations at French companies that don't seem altogether helpful." Neiter, who along with Miriam Garnier of the European Professional Women's Network lobbies to get women into boardrooms, says boosting the number of women directors should be used as a way to improve governance in France, rather than trying to meet the quota with unthreatening, politically connected women.
"It would be a huge mistake if boards made quantitative changes to their composition without improving quality," Garnier said. "There is the potential to make cosmetic changes by adding women with political considerations in mind. This would be a terrible distortion of the law."
About 170 female directors would have to be found within six years to meet the quota requirement for France's benchmark CAC 40 Index companies and 1,200 for the larger SBF 120 Index, according to Marc G. Lamy, who heads executive search company Boyden France. "This is not mission impossible for headhunters," he said. "There's no dearth of candidates."
Corporate boards have long been criticized for being cozy clubs made up of men from France's elite administrative, business, and engineering schools, known as the grandes écoles, who often are CEOs of other big companies. Adding more women to even a fraction of French boardrooms could have a big impact on the nation's highly concentrated power structure. For instance, at CAC 40 companies, where boards are about 12 percent female, 98 directors, or 22 percent of the total, hold 43 percent of the voting rights, according to a study published in October by Ernst & Young and France Proxy, which call the group "the biggest network of influence in French capitalism."
The bottom line: French boardrooms have long been a male domain. A proposal requiring that at least 40 percent of directors be women could change that.