By Eleanor Bloxham
January 25, 2011

Despite new SEC requirements that companies disclose efforts to diversify their boards, there are very few women with board seats today. And it looks like it will be a long, hard road for the cause.

By Eleanor Bloxham, contributor

The World Economic Forum made news last week with the announcement that it would require its “strategic partner” members, a cohort of some of the largest companies in the world, to include at least one woman among their five-person delegations to the organization’s flagship conference in Davos, Switzerland. The quota put into clear focus the sad state of gender diversity within the ranks of corporate leadership.

It has been 90 years since women in the U.S. received the right to vote. Yet today, over 40% of the 100 largest public companies in Massachusetts still don’t have even one woman director, according to a December report released by the Boston Club. And of those companies with no women directors, over 25% don’t seem to have plans to add one.

Rather than adding women, “they added more men to their boards during the past year,” says Toni Wolfman, who is executive in residence at Bentley University, a member of The Boston Club’s corporate board committee, and a director of the Inter Organization Network (ION). “Data such as these suggest why so many companies opt for the most expansive possible definition of diversity in their proxy statements and resist disclosing the gender and racial makeup of their boards, either in words or in photos.”

And Massachusetts is far from alone. A report to be released by ION in March 2011 will provide a new snapshot of gender diversity from around the U.S. Among the 400 companies reporting from California, for example, the report will show that a whopping 90% of all directors are men. In locations like Florida, Georgia, Kansas, Maryland and Tennessee, the ION results for women directors will be even more dismal.

This year, for the first time, the SEC required companies to disclose how they took diversity into consideration in choosing board members — but they allowed companies to define the term diversity.

Some U.S. corporate directors, in private, will reveal that they find the consideration of board diversity repugnant. This anecdotal evidence is supported by a recent survey of U.S. directors, by PricewaterhouseCoopers, which found that the majority of directors did not believe that the diversity disclosure requirements were valuable, rating the diversity disclosures as the least valuable of the newly required disclosures.

Although board diversity in the U.S. has remained relatively unchanged over the years, this has not been the case in other countries.

“As in so many other areas, the U.S industry began with a better track record than its peers in other countries, but is rapidly losing ground as other nations are tackling the economic imperative of gender balance throughout the business community,” says Susan Ness, senior fellow at the SAIS Center for Transatlantic Relations.

A recently published study by Corporate Women Directors International showed that the U.S. lags countries such as Bulgaria, Latvia and South Africa in board representation by women.

Of particular importance, says Irene Natividad, chair of CDWI, are the efforts under way in the EU:  “The EU Commission is considering board gender quotas as part of its efforts to improve the competitiveness of EU firms. They have written to the CEOs of the largest corporations to say that if the number of women on boards do not increase, they will impose quotas within the next 5 years,” Says Natividad.

Separate from the EU Commission efforts, individual countries are passing quota requirements. Italy, for example, says Natividad, is on its way to passing a quota requirement which they call “Quote Rosa” (i.e. Pink Quota).

Norway requires that men occupy no more than 60% of board seats and has seen impressive results, according to Natividad. Follow-up research found that “meetings now start on time, board directors are better prepared, and the women on the boards are younger and better educated” than their colleagues.

Stephanie Sonnabend and Malli Gero founded 2020 Women on Boards, a grass roots organization, in December with the idea of using social media tools to change board representation. Their goal:  an 80/20 split between men and women on corporate boards by the year 2020. (Their website includes a directory of companies that currently meet the goal.)

What chance is there of significant improvement on the 100th anniversary of women’s right to vote? Given the unimpressive progress in the U.S. within the last decade and the lack of women in highly paid executive positions, the goal may seem like a stretch.

But Tim Smith, senior vice president and director of ESG Shareowner Engagement at Walden Asset Management thinks that achieving an 80/20 split is not as outrageous as it sounds.

“The business case is clear, there are strong pools of qualified women and there is more willingness to look at different levels within companies for board candidates,” says Smith.

Up until now, Smith says, progress has been company by company. “Once a company gets a shareholder resolution on board diversity,” they tend to care. “It’s not something companies want to debate at the annual meeting. A social media focus at consumer companies could have traction,” Smith says.

CalPERS and CalSTRS plan to launch a 12-month joint effort in the next few weeks called the Diverse Director Datasource with the goal of giving shareowners and companies a resource for finding diverse board candidates, according to Anne Simpson, a senior portfolio manager at CalPERS.

Joe Keefe, president and CEO of Pax World Investments, believes that real change is possible despite the fact that, up until now, it “has been abysmally slow.”

If investors band together, both individual and institutional, we could see real change, Keefe says.  For its part, Pax World votes no on the slates of all male boards.

“That’s something any investor can do,” says Keefe.

Moving forward, Pax World is working with other investment advisors to scale the proxy voting initiatives they’ve had for some time. Keefe believes this will be a breakthrough strategy and predicts if investors work together, 50% female boards could become commonplace by 2020.

“We can reach 50% and that should be our goal,” says Keefe. “Companies will benefit. There is a strong economic case.”

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (, a board advisory firm.

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