Women Lose Out on U.S. Boards as Europeans Get Quota Help

At a time when European companies are filling board seats with women, U.S. female directors are losing out.

Representation of women on boards of Standard & Poor’s 500 companies declined to 16 percent in 2011 from 16.6 percent in 2010, according to the Bloomberg Rankings annual analysis, which gathered data from public company information.

Discovery Communications Inc., co-owner of Oprah Winfrey’s OWN cable channel, and retailer Urban Outfitters Inc. were among 47 companies, or 9.4 percent of the S&P 500, with no female directors, the data showed. U.S. companies are lagging gains in European countries such as Norway and Spain, where female membership is expanding to meet regulatory mandates and corporate governance codes.

“Diversity in the boardroom is becoming an increasingly important trend, globally, and it’s growing elsewhere while it’s flat here,” said George Davis, who heads the director-placement practice at search company Egon Zehnder International in Boston. “We’re standing still and there’s a freight train coming at us.”

U.S. companies are under pressure from shareholders such as the California Public Employees’ Retirement System and executive women’s groups to increase diversity of corporate boards voluntarily. While Norway, Spain and France are imposing legal quotas at the largest companies, there is no such regulation planned in the U.S.

Consumer Companies

Non-cyclical consumer companies in the S&P 500 have the highest penetration of women directors, at 19.3 percent, and the oil and gas sector has the lowest, with 9.6 percent, the Bloomberg Rankings data show. A similar study by Rockville, Maryland-based Institutional Shareholder Services, a proxy advisory firm, found penetration was 15 percent from 2006 to 2009.

Among S&P 500 with no woman on the board is also Nvidia Corp. Hector Marinez, a spokesman at the Santa Clara-based maker of graphic chips, declined to comment. Michelle Russo, a spokeswoman at Silver Spring, Maryland-based Discovery, also had no comment. Oona McCullough, director of investor relations at Philadelphia-based Urban Outfitters, didn’t return a phone call seeking comment.

Norway led European nations in 2003 in legislating that at least 40 percent of corporate board seats be filled by women. Spain followed in 2007 with a law requiring 40 percent of female representation on large company boards by 2015, and France plans to impose a 20 percent quota by 2014 and 40 percent by 2017 for companies with at least 500 employees and annual sales of 50 million euros ($71 million). Six other countries have corporate governance codes, according to the European Professional Women’s Network.

Norway Example

In Norway, 37.9 percent of directors at the country’s largest companies are women. They represent 11.7 percent of directors among 4,875 board seats at 334 of the biggest European companies, an increase of 21 percent since 2008, according to an October 2010 study from the European Professional Women’s Network conducted with Russell Reynolds Associates, a headhunting company.

Having women on boards, particularly three or more, adds a diversity of opinion that isn’t found in an all-male board, said Susan Stautberg, co-founder of Women Corporate Directors in New York, which promotes women membership on boards.

The demographics of U.S. board members should work in favor of more women directors, she said. About 10 percent of directors are more than 70 years old and 17 percent have served 15 years or more, suggesting they soon may need to be replaced.

“Last year, half of the women going onto a new board were also going on the audit committee,” Stautberg said. “The momentum is there, I think by the end of the year you’ll start to see the numbers improving again.”

Replacing Directors

Companies replaced fewer board members during the recession as they “hunkered down” to deal with the business crisis, according to Stautberg. From 2009 through 2011, 55 percent of companies replaced none of their board members, compared with 47 percent in the previous three years, according to data collected by the National Association of Corporate Directors.

As boards begin to return to pre-recession replacement rates, the percentage of women will probably rise faster, Stautberg said.

Avon Products Inc., Estee Lauder Cos. and Macy’s Inc. were the only three companies in the S&P 500 with more than 40 percent of women directors, Bloomberg Rankings said. They were among 21 companies where at least one third of the directors were women.

Women make up 7.6 percent of the highest-paid executives at the S&P 500 companies, compared with 7.1 percent in 2010, and they are chief executive officers at 3 percent of the index members, Bloomberg Rankings found. There were 29 companies where women weren’t on the board, among the highest paid or in top executive positions, Bloomberg rankings said.

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