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Boardrooms: the perpetual gender gap

Corporate leadership has a gender gap. There are very few more obvious statements that could be made about the demographic make-up at the top levels of global corporations, yet the discussion around a lack of diversity in the workplace continues unabated, often seeming to cover similar ground time and again.

In the past few years, corporate stakeholders and observers, including institutional investors, legislators and advocacy groups, have set their sights on board composition and diversity as a top governance issue. They believe that if the individuals responsible for overseeing management and the direction of the company are of the same background and mindset, the board potentially exposes itself to greater risks. There is also a growing volume of research that suggests diverse boards lead to better performing companies.

Pressure from these stakeholders has led to a lot of talk about commitment to dedicated efforts to recruit diverse candidates for board positions. However, there has been very little meaningful change in board composition overall, at least as far as the data shows.

Laying the foundation

It’s worth taking few words to recognise some elephants in the room before continuing. First, most of the statistics below reflect data on executives and board members collected from public filings with the US Securities and Exchange Commission (SEC). In other words, if this article seems US-centric, it is, but where possible it will address parallel data and information from non-US markets.

In addition, because this information is pulled from public filings, the data is limited to what is actively disclosed by these companies. In the US, there are still very few – if any – quotas or requirements to disclose diversity in board composition, despite the best efforts of some legislators and influential investors (more on that later).

As a related point, this article is solely focussed on gender diversity. Diversity is a fluid and wide-ranging concept and it can mean many things – race, ethnicity, gender, age, language, skill set, etc. Gender is by no means the only nor ‘most important’ definition of diversity. It is, however, the most straightforward demographic split to analyse based on data that companies disclose.

Furthermore, gender parity on boards is a prominent representation of the broader diversity issue. In the US, nearly 50 per cent of the workforce is female and a majority of university and post-graduate degrees are being awarded to women.[1] Yet representation of females in executive and board leadership positions is far below their overall contribution to the workplace.

The road to gender parity in the boardroom

The Equilar Gender Diversity Index (GDI) is a quarterly benchmark of US public company boards that measures the relative level of males and females in the Russell 3000, which is commonly identified as a benchmark for the entire US stock market. As of the end of 2016, women accounted for 15.1 per cent of board positions at Russell 3000 companies, approximately one-third of the way toward parity. During 2016, there were 398 females added to boards, representing a net gain of 1.2 percentage points from 13.9 per cent the previous year.[2]  See the GDI graphic, below.

While there has been steady growth over the past several years, at the current rate it would take more than 40 years for there to be gender parity on Russell 3000 boards. Currently, the compound annual growth rate (CAGR) for this group of companies adding women to the board is 3.1 per cent. For boards to reach gender parity by the year 2040, that figure would have to accelerate to 5.1 per cent and increase to an 8.9 per cent CAGR to garner equal representation by 2030 – nearly triple the current rate of growth.


The gap in gender diversity is not limited to overall board positions and in fact is even more stark when it comes to leadership roles. Just 3.5 per cent of individuals serving as CEO and chair of the board at Russell 3000 companies are female, according to Equilar data, compared to a similar percentage of 3.7 per cent who served as non-executive board chairs. The prevalence of women in lead director positions – an independent director that often serves alongside a CEO-chair – was notably higher, with 7.6 per cent of those roles being occupied by women, an increase from 6.9 per cent the previous year.

Legislative (in)action

The trends uncovered in the Equilar GDI are mirror images of several recent studies tracking similar data in boardrooms globally. According to a 2015 study of 3,000 global companies by Credit Suisse, 14.7 per cent of board seats were held by women.[3] A November 2015 study of 4,218 companies worldwide by MSCI revealed that females accounted for 15 per cent of board seats. One element that’s notable in the MSCI study is that the rate of growth was higher for the global sample set than for the Russell 3000, increasing from 12.4 per cent the previous year.[4]

Some of the growth may be due to quotas enacted by several countries to add more women to boards, which penalise companies that are out of compliance. For example, a July 2016 study from the Association for Psychological Science noted that countries with quotas, such as Norway, Iceland, Finland and Sweden, had ‘nearly double the average percentage of women on boards (about 34 per cent) than countries without those measures had (about 18 per cent)’.[5]

In the US, former SEC Chairman Mary Jo White had suggested and advocated for stricter disclosure rules around board diversity for public companies. As recently as September 2016, White wrote an op-ed on this topic, touting board diversity as ‘the right thing to do’.[6] This was just two months before White – a Democrat, the opposing major political party to President Trump – resigned from her post.

The focus on deregulation in the Trump administration may delay or deter a proposal on board diversity disclosure from being passed, but indications do not show any sign of slowing from advocates. For example, US House of Representatives Congresswoman Carolyn Maloney, from the state of New York, proposed a bill in March 2017 called the Gender Diversity in Corporate Leadership Act.According to Maloney’s announcement, ‘the new legislation [is] modelled on policies in Canada and Australia [and] would instruct the SEC to recommend strategies for increasing women’s representation on corporate boards. The bill also requires companies to report their policies to encourage the nomination of women for board seats as well as the proportion of women on their board and in senior executive leadership’.[7]

If this legislation doesn’t pass – and given the other priorities of the President and Congress, it seems unlikely – boards that ignore diversity aren’t off the hook. In fact, the expected lack of legislative action seems to be empowering investors and other stakeholders to push even harder to bring awareness to these issues. Major institutional investors, such as BlackRock, State Street and Vanguard, all have openly stated that their investment decisions are reliant on boards’ commitments to evaluation, refreshment and diversity.[8], [9], [10]

Admitting to board amnesia

Though quotas have become a catalyst for change in many markets, the US and others that are unlikely to enact these types of requirements any time soon, will rely on voluntary adoption of board refreshment initiatives to increase diversity. Many boards have willingly committed to these types of initiatives, but many have also pushed back. The most common objection is that even when they consider adding more diverse directors to their boards, there is a lack of qualified diverse candidates available.

According to the traditional way of looking for new board members – that is, looking around the boardroom table and asking ‘who else do we know?’ – it’s understandable that there would be a limited number of candidates surfacing. However, a recent Equilar study found that the average S&P 500 director has 94 professional connections to other executives and board members. When applied to an entire board, that could represent thousands of first-degree connections and that’s just including individuals who have served in the C-suite or as sitting board members. While a board member with a 40-year career may have worked directly with hundreds if not thousands of qualified candidates, it’s reasonable to believe they simply can’t remember them off the top of their head – a concept Equilar has termed ‘board amnesia’.


With the availability of data resources and social networking tools that can help them tap a much broader pool of candidates, boards have little excuse not to access these extended networks. And of course, board amnesia only applies to directors’ personal networks – it doesn’t include the thousands of other qualified executives out there. For example, Equilar data shows 5,500 females that have been disclosed in SEC filings currently serving as public company executives and nearly 80 per cent of them have never served on a board.

In other words, the good news is that board members have access to a pool of candidates that is much bigger and more diverse than they realise, literally at their fingertips.

Investors’ growing impatience

Investors are not impressed with excuses about the lack of qualified candidates. As their updated voting guidelines and campaigns to increase board diversity clearly display, this is an issue they will focus on for years to come. And they’ve begun to question the overall commitment from their portfolio companies.

One thing boards should also understand is that the diversity discussion does not exist in a vacuum – it’s not about diversity for diversity’s sake. Shareholders are pushing this issue as a by-product and continuation of the larger trend to bring more independent leadership into the boardroom. As they evaluate their investments over a five-, 10-, 20-, 30-year period, they want to ensure that directors now are also thinking about the potential implications of their decisions down the road.

The pace of change in the boardroom has accelerated in the past few years and the importance placed on composition is driving boards to have systems in place to regularly evaluate, assess and refresh their board when new strategic imperatives arise. Ten years ago, very few boards could have predicted the imminent risks posed by cybersecurity or shareholder activism, for example. Now, virtually everyone on the board is expected to have at least a working knowledge of or experience with these issues.

Despite some of the rhetoric out there, the numbers are slow to increase because there is not enough commitment to change at a broad level, and many investors say it will take strong efforts to prove to them they need fresh faces in the boardroom.

According to the PwC Annual Corporate Directors Survey, 35 per cent of board members polled said that at least one director should no longer be on the board. [11] As the statistic implies, some directors may not be carrying their weight in the boardroom. And there’s not always something wrong with that. It could be for a simple reason that the company has changed direction and one director’s skills and experience are needed less than in a new area with a fresh perspective. However, it’s the role of the nominating and governance committee to set expectations on the front end that a directorship is not a permanent retirement hobby and evaluation processes must be in place for directors to honestly assess themselves in the face of change – and make those changes when necessary.


1“Women in the Workforce: United States.” Catalyst, August 2016.

2“Boards Will Reach Gender Parity in 2055 at Current Pace.” Equilar, February 2017.

3“The CS Gender 3000: The Reward for Change.” Credit Suisse Research Institute, September 2016.

4“Women on Boards: Global Trends in Gender Diversity on Corporate Boards.” MSCI, November 2015.

5“Putting Corporate Quotas to Work for Women.” Association for Psychological Science, July 2016.

6“Board Diversity Is the Right Thing to Do: SEC Chair Mary Jo White.” American Banker, September 2016.

7“Rep. Maloney and Women Leaders Call for Fearless Girl Statue to Become Permanent, More Women on Corporate Boards.” Carolyn B. Maloney Media Center, March 2017.

8“BlackRock Calls for Gender Balance in the Boardroom.” The Street, March 2017.

9“State Street to Start Voting Against Companies That Don’t Have Women Directors.” The Wall Street Journal, March 2017.

10“The #1 Investor Issue in 2017: Board Composition.” Equilar, February 2017.

11“Board governance in the age of shareholder empowerment.” PwC, October 2016.


Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.

Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.


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