Gender Diversity in the Boardroom
A Wall Street Journal article highlighted in Tuesday’s edition of NACD Directors Daily, reported that the European Commission introduced quotas for female employees into new securities trading rules. The Commission’s approach has been criticized as a “back-door route” that avoids a “proper debate.” Meanwhile, on a parallel track, several European nations have successfully encouraged gender diversity through legislation aimed at corporations. (See “Keeping Count” in the April/May 2011 issue of NACD Directorship.)
While the United States has not required gender or diversity quotas for corporations, the Securities and Exchange Commission has highlighted the topic as it relates to the boardroom. In 2009, the SEC finalized a rule requiring proxy statements to disclose the board’s consideration of diversity in the nomination of director candidates. According to the SEC and public comments on the rule, there is “a meaningful relationship between diverse boards and improved corporate financial performance.” In this assertion, the SEC cites Catalyst, a nonprofit organization focused on the advancement of women in business, which found higher measures of financial performance for boards with women directors.
Despite the attention to this topic, gender diversity is still weak among public company boards. According to the 2011 NACD Public Company Governance Survey, one-third of public boards have no female members, another third has one female director, and the final third has two or more directors. Considering that the average public board contains eight or nine members, most companies have very few women represented on their boards, if at all.
NACD has long believed that diverse insights are essential components of exemplary board performance. To this end, NACD, along with PwC’s Center for Board Governance, hosted “Diversity: Opportunities for Women in the Boardroom” yesterday in New York. The event gathered female directors from American corporations to discuss the challenging business environment and the prospect of improving female representation in the boardroom.