Make Way For Madame Director

Corporate reform is creating unexpected openings for women in the boardroom

For all the gains women have made in Corporate America, there's one place where progress has nearly stalled: the boardroom. Only 13.6% of board members at the largest 500 companies are women, up from 11.2% in 1999, according to Catalyst Inc., an advocacy group for women in business. But in one unintended consequence of corporate reform, that may be about to change.

By requiring a majority of independent directors, the reforms encourage recruiters to look farther afield for candidates, increasing the likelihood of women landing seats. The overwhelmingly male ranks of current board members are largely a recruiting dead end, since the Sarbanes-Oxley Act makes it harder for members to juggle multiple board assignments. What's more, by putting a premium on financial expertise, the reforms force boards to recruit directors from finance and auditing. High-level women are represented in larger numbers in those fields than they are among big company chief executives -- the candidates of choice for years. The result: The proportion of women directors is about to increase in a hurry. "We could get to 25% in five years," says Julie H. Daum, head of U.S. board searches at Spencer Stuart. "That would be an enormous increase."

It's already starting to happen. Catalyst, which also refers women for boards, says search requests have doubled, to about 20 per year, in the 16 months since Sarbanes-Oxley was signed. In a world still dominated by the old boy network, the Directors' Council, a search firm specializing in finding women directors, was launched in November by eight high-level female executives with board experience. It now counts as clients Time Warner Inc. (TWX ) and AT&T Wireless Services Inc. (AWE ). Says managing director Kay Koplovitz, the founder and former CEO of USA Network and herself in high demand for board service these days: "We're getting a very strong interest." According to Spencer Stuart, about 20% of new independent directors are women, far in excess of their representation on boards today.

SLOW TURNOVER

While the preferred board member remains a sitting CEO, recruiters are increasingly targeting executives with financial expertise. Sarbanes-Oxley requires that one member of the audit committee be a financial expert, usually someone with CFO or audit-partner experience, but boards are looking to bulk up with other financially savvy directors, too. "If you look at career tracks that have been more favorable for women, you see a lot of women come up through finance, and a fair number in auditing," says Charles H. King, head of global board services at Korn/Ferry International (KFY ). Indeed, Catalyst says 7.1% of the CFOs at the 500 largest companies are women, vs. only 1.6% of the CEOs. At Big Four audit firms, women have made even more significant inroads in what was once an all-male bastion. At Deloitte & Touche LLP, 16% of audit partners are women.

Already, boards are changing. When Chairman Robert I. Lipp needed to rebuild the Travelers Property Casualty Corp. (TAPA ) board last year after its spin-off from Citigroup (C ), he recruited seven directors, including three women. One was Laurie J. Thomsen, a semi-retired venture capitalist with a finance background who was named to the audit committee. "I've been involved in building lots of companies," says Thomsen. "Bob knew I could ask the right questions."

Of course, masses of women won't be sweeping into boardrooms overnight. Board turnover remains slow, and board size is shrinking. Still, there's no doubt that doors, once closed, are finally opening, and women are taking a seat at the table.

By Kimberly Weisul in New York

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