Women on Boards

By | Updated March 8, 2016 9:22 PM UTC

Women are well established in professions like medicine, law and banking. They’ve advanced to the top of prominent companies, including General Motors, Pepsico, EasyJet and Yahoo. Yet a gap remains: corporate boards. Men hold over 80 percent of all S&P 500 board seats and growth in female representation has slowed. European countries and companies have instituted formal mandates, sometimes backed by fines, to narrow a similar corporate-board gender gap. Then there’s the Asia-Pacific region, where women are virtually absent from boards, holding fewer than 10 percent of seats in a 2015 study of 100 companies.

The Situation

Legal directives raised female representation on corporate boards in large listed companies in the EU, to 21.2 percent in 2015 from 11.9 percent in 2010. In the U.S., the pace at which women were added to Fortune 500 boards slowed to about 2 percent yearly after a decade of 5 percent annual growth ended in 2005. In the U.K. and Finland, public shaming by advocacy groups has stirred some shareholders to urge change. Elsewhere, in the absence of legal or activist pressure, the makeup of boards has hardly changed. The U.S. tech sector, notable for the rise of Sheryl Sandberg and Marissa Mayer, is lagging: One-third of Silicon Valley companies had no female directors when surveyed in 2015.

The Background

The first female directors were elected in the U.S. as early as 1900, while the average year companies in the Fortune 250 put a woman on a board was 1985, according to a Stanford University survey. In 2003, Norway became the first country to legislate gender balance on corporate boards. By 2008, no board there with more than nine members could have fewer than 40 percent of its seats filled by either sex. Norway reached the 40 percent threshold in 2007, yet this had little impact on the gap in pay between men and women, or on the number of women in key leadership positions. Countries with some form of quotas include Germany, Belgium, Finland, France, Italy, the Netherlands, Spain, India, Malaysia and Israel. Where legal mandates haven’t been enacted, researchers note that shareholders generally have been indifferent to the gender composition of their companies’ boards. In the U.K., the 30% Club, a group of CEOs and chairmen opposed to gender-equality laws, is pressing companies to add women to their boards. Since the club’s founding in 2010, the proportion of women on FTSE-100 boards has risen to 26 percent from 12.5 percent. In June 2014, the club cheered the end of all-male boards among the FTSE 100.

The Argument

Some organizations, including the EU, make an economic argument for the integration of women in leadership. They say gender diversity reflects a world where females make 70 percent of the economic choices and results in better decision making. A Credit Suisse study showed that companies with at least one woman board member saw an average return on equity of 14.1 percent from 2005 to 2015; all-male boards’ average returns were 11.2 percent. Other research found that company performance isn’t closely correlated with directors’ gender, and that awarding “golden skirts” for the sake of parity may compromise a board’s quality. (One academic analysis found that Norway experienced a drop in the value of its companies’ shares after its gender-equality mandate was enacted.) Advocates say women shouldn’t have to prove their impact to the bottom line to justify a seat at the table. In this view, it’s just the right thing to do.

The Reference Shelf

  • The advocacy group Catalyst makes a case for gender diversity on boards.
  • An NPR interview with Facebook Chief Operating Officer Sheryl Sandberg about her book, “Lean In.”
  • A 2014 report by Fenwick and West LLP on gender diversity in Silicon Valley.
  • The 2015 European Commission’s women on boards fact sheet.
  • The International Finance Corporation interviewed top male directors in 2011 on the issue as part of a global corporate governance forum.
  • A Credit Suisse report from 2015 on gender diversity and corporate performance.
(This QuickTake includes a corrected spelling of Marissa Mayer’s name.)

First published Aug. 11, 2014

To contact the writer of this QuickTake:
Nina Glinski in Washington at nglinski@bloomberg.net

To contact the editors responsible for this QuickTake:
Jonathan Landman at jlandman4@bloomberg.net
Anne Cronin at acronin14@bloomberg.net