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20 May. 2011 | Comments (0)

Maybe for change to take place on U.S. corporate boards, it may have to take the support of an influential person such as the President. But for now it seems a sitting SEC commissioner will do. Earlier this month, SEC Commissioner Luis A. Aguilar had some strong words for corporate boardrooms about the lack of women and minority members on their boards. “Even though our nation has grown more diverse, the corporate boardroom is proving resistant to change. I find this status quo unacceptable and question why at a time when there are more qualified diverse board candidates, we have less diverse board members.” Aguilar was responding to some dismal numbers that came out on May 2 from the Alliance for Board Diversity in its report, Missing Pieces: Women and Minorities on Fortune 500 Boards — 2010 Alliance for Board Diversity Census. That report found that in the Fortune 100, between 2004 and 2010, white men increased their share of board seats in corporate America from 71.2 percent to 72.9 percent. In fact, that report, which was done by Catalyst, also found that of the Fortune 500, in 2010 only 15 companies had members of each of the U.S. Census Bureau ethnicity and origin groups. Back in March, another Catalyst report told a story about how companies with women board directors outperform companies with fewer or no women directors. That report, The Bottom Line: Corporate Performance and Women’s Representation on Boards [2004-2008], found that companies with the most women board directors financially outperform those companies with the least women board directors in return on sales (16 percent) and return on investment capital (26 percent). There was no significant difference in return on equity. Such figures drove Susan Stautberg, co-founder and co-chair of WomenCorporateDirectors, to say the following at the inaugural WCD Visionary Awards Dinner Tuesday: “Placing qualified women on boards is a win-win for the boards of directors, the companies they serve, and ultimately the shareholders.” The organization held its first Women Corporate Directors Global Institute in New York City earlier this week as a way to bring to light many of the corporate governance and human capital issues facing not only women directors but companies worldwide. One of the most substantial takeaways from the conference, which I attended, is a call to action for all corporate boards. That call to action “challenges every leader to actively help bring more women onto corporate boards, and to build diverse boards that are multi-gender, multi-skilled, multi-national, multi-ethnic, and multi-generational.” Among the 10 specific calls to action are:
  • Assure every director slate includes at least one woman.
  • Declare board diversity a necessary component of good governance.
  • Expand the pool of director candidates.
  • Refer women to board seats.
To read the full call to action, click here. The WCD call to action also makes the following statement: “The future of diverse corporate boards can no longer be some place we are going, but one we create together now. If each of us takes action, there will not only be more qualified women on corporate and large privately held boards, but they will make a difference around the table, in the world and for the world.” In addition to the WCD’s work to increase the number of women corporate directors, there is an organization called 2020 Women on Boards. That group’s mission is to reach a 20 percent threshold of women directors on boards by 2020. Some of the points it makes in its literature is that companies with women directors earn 42 percent more, that women make up 50 percent of manager positions while only 11 percent sit on boards. The organization’s web site is www.2020wob.com. In a series of speeches and statements [See May 18 Financial Executives International blog post], Aguilar has been reminding corporate boards of the enhanced SEC disclosure rules that require companies to disclose more about their policies to nominate diverse boards and the companies’ evaluation of those policies. “It is past time to see the diversity of our nation reflected in the corporate boardrooms, in the financial industry, and in the government,” Aguilar told the Hispanic Association of Corporate Responsibility-Corporate Directors Summit on April 30.
  • About the Author:Gary Larkin

    Gary Larkin

    Gary Larkin is a research associate in the corporate leadership department at The Conference Board in New York. His research focuses on corporate governance, including succession planning, board compo…

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