Are There Really Boards with No Women?
The following article was written by Calvert’s Senior Sustainability Analyst, Aditi Mohapatra, and featured on the WomensMedia channel on Forbes.com
Three college degrees for every two earned by a man. 85% of purchasing decisions. Nearly 50% of the workforce. And yet, the tiniest of chips in the glass ceilings of boardrooms across corporate America with women holding just 18% of corporate board posts at S&P 100 companies. What's wrong with this math?
A peek behind the oak-paneled doors of just a few of those boardrooms reveals a stunning lack of diversity in those rarified cocoons where for the "pale, male and stale" board member it is business as usual: On the boards of Urban Outfitters, the Cheesecake Factory, Expedia, Steve Madden, Panera Bread, American Apparel, and Discovery Communications, how many women? None. What's so striking here is the disconnect between who these companies identify as their target customers and their governance. And the absence of women on these and other boards becomes even more striking—and increasingly awkward to explain—when you consider that other Western countries such as Belgium, the Netherlands, Norway, Iceland, Spain and France all have moved to require female representation on corporate boards.
Impact on the Bottom Line
Even putting aside social justice, the lack of women on these boards simply does not make business sense. Shouldn't these companies include women in their strategic business planning at the boardroom level, especially when they rely on them so heavily for revenues and as employees? This lack of gender diversity should be of critical concern to investors. At Calvert Investments, we come to this issue of board diversity from an investment and business case perspective. We know all too well the research that supports a strong bottom-line argument for diversity and we are frustrated that more companies refuse to see what study after study confirms: women contribute heavily to the bottom line.
McKinsey's Women Matter study found that companies with the highest share of women on executive committees outperformed those with all-male executive committees by 41% in terms of return on equity and 56% in operating results. As investors, we want to ensure that companies benefit from strong boards of directors that reflect a full range of available talent and the diversity that exists within their target markets. Unfortunately there are still many companies that are not placing a sufficient emphasis on the value of diversity at the board level, despite the unarguable business case.
The Importance of Company Engagement
All too often qualified women are overlooked, while the same tired pool of candidates is scoured again and again for these high-powered positions. That is why our engagement process focuses on changing the director selection process. Every year, we file shareholder proposals with companies that we believe lack sufficient diversity. Our proposals ask companies to expand their director selection process and include women as part of the slate of director nominees. To be clear, our objectives are not quotas or mandates, rather what we see as a gentle, but firm, push in the right direction. To date, we have filed such proposals with 55 companies and 46 have agreed to change their process.
Wait Until 2070 Or Use NFL's Rooney Rule?
As men still make up 92% of the highest paid positions within major corporations, we encourage companies to also look to non-traditional arenas where qualified female candidates are more likely to be found such as executive positions beyond the C-suite, as well as in government, academia, and non-profit organizations. Until companies expand director searches, it is unlikely women will make significant advances in boardroom representation. In fact, if women are added to boards at the current pace, it will take until 2070 for women to reach parity with men—and that is simply unacceptable.
Beyond casting a wider net for candidates, we encourage companies to include women as part of every slate of potential director nominees. The process is analogous to the Rooney rule in the National Football League where teams must interview minority candidates for head positions. We do not recommend that companies limit their interviews or nominations solely to women candidates, but rather that the Board regularly evaluate applications for director positions from diverse candidates. We believe that the more often women are interviewed for these positions, the sooner they will play a significant role in the ranks of corporate boards.
Leading the Charge for Diversity
During many of our engagements with companies, we hear that they "agree with the merits of achieving diversity" but they just can't find any qualified diverse director nominees. That myth is quickly being dispelled. Last year, Agenda Magazine published a list of the Top 100 Diverse Board Candidates You've Never Heard Of. Major institutional investors, led by the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement Fund (CalSTRS), are building a database of diverse director candidates known as the 3D Initiative. Both of these efforts showcase what many of us already know: there are plenty of qualified women candidates for boards, but companies are neglecting to look for them.
Be An Engaged Shareholder
As an investment manager, Calvert directly engages with companies on board diversity and a range of environmental and social issues on behalf of our shareholders. What can you as a shareholder do? Take a close look at the companies you own in your investment portfolio, whether you hold them directly or through a mutual fund. Make sure you are voting the shares you own directly and find out if your mutual fund is voting your proxies the way you want and engaging these companies on your behalf.
Also, you can help right now by signing up to support 2020 Women on Boards, a grassroots campaign aimed at increasing the percentage of women on U.S. corporate boards to 20% by the year 2020. The numbers are not going to change overnight, but we can close the gap by staying engaged.
Male-Only Corporate Boards
|NDN||99 Cents Only Stores||MHGC||Morgans Hotel Group Co.|
|APP||American Apparel, Inc.||PNRA||Panera Bread Company|
|BAMM||Books-A-Million, Inc.||PERY||Perry Ellis International, Inc.|
|CHTR||Charter Communications, Inc.||PETS||PetMed Express, Inc.|
|CAKE||Cheesecake Factory Incorporated (The)||PPC||Pilgrim's Pride Corporation|
|DISCA||Discovery Communications, Inc.||ZQK||Quiksilver, Inc.|
|DG||Dollar General Corporation||RUE||rue21, inc.|
|EXPE||Expedia, Inc.||SCVL||Shoe Carnival, Inc.|
|GRMN||Garmin Ltd.||SKX||Skechers U.S.A., Inc.|
|HANS||Hansen Natural Corporation||SHOO||Steven Madden, Ltd.|
|JJSF||J & J Snack Foods Corp.||TRLG||True Religion Apparel, Inc.|
|JOEZ||Joe's Jeans Inc.||UA||Under Armour, Inc.|
|KID||Kid Brands, Inc.||URBN||Urban Outfitters, Inc.|
|KIRK||Kirkland's, Inc.||VCLK||ValueClick, Inc.|
|KSWS||K-Swiss Inc.||VG||Vonage Holdings Corp.|
|LYV||Live Nation Entertainment, Inc.||WBMD||WebMD Health Corp.|
|PCS||MetroPCS Communications, Inc.||ZLC||Zale Corporation|
Calvert Investment Management, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814.
Aditi Vora Mohapatra, Senior Sustainability Analyst
As a Corporate Governance and Business Ethics Analyst, Ms. Mohapatra focuses on the semiconductor, telecommunications and computers industries. She also works closely on corporate diversity issues including the Calvert Women's Principles ® and diversity-related advocacy efforts. Prior to joining Calvert in 2007, her professional experience included international aid work in the non-profit sector. She earned an MBA in Finance from George Washington University and a BS in International Economics from the University of Florida.