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December 11, 2003
Women Sit in Less Than a Seventh of Fortune 500 Board of Director Seats
    by William Baue

According to a new Catalyst report, women will inhabit less than a quarter of Fortune 500 board director seats by 2023, though regulations and shareowner action may change this.

Women’s heads are smarting from hitting the glass ceiling, especially those women who are qualified to serve on the boards of directors at US top companies. A new report says women sit in only 13.6 percent of board of director seats at Fortune 500 (F500) companies. The report was just released by Catalyst, a research organization that promotes women in business. Although this percentage is rising, from 12.4 percent in 2001 and 9.5 percent in 1995, it is doing so at a snail’s pace. According to Catalyst regression analyses of the current rate of change, women will not make up one-quarter of board directors 20 years from now.

“At only 13.6 percent, women’s representation on Fortune 500 boards of directors doesn’t adequately reflect their influence and impact on the U.S. economy as wage earners, managers, professionals, consumers, investors, and business owners,” said Ilene Lang, Catalyst’s president.

The Catalyst report, entitled 2003 Catalyst Census of Women Board Directors of the Fortune 500, illustrates how women’s representation in corporate ranks plummets as statistics climb the corporate ladder by means of a pyramid. At the bottom of the pyramid, women comprise almost half (46.5 percent) of the US workforce and hold over half (50.5 percent) of managerial and professional specialty jobs in the US. However, women represent only 15.7 percent of F500 corporate officers, 7.9 percent of the F500’s highest titles, 5.2 percent of the F500’s top earners, and there are merely 8 female CEOs of F500 companies.

There is some light shining on the glass ceiling. The number of F500 companies with no women on the board has decreased from 96 in 1995 to 54 in 2003. The same number of companies, 54, made the 2003 Catalyst Honor Roll of companies 25 percent or more women directors. The top ten companies on the honor roll include Golden West Financial (ticker: GDW--55.6 percent female directors), Avon (AVP--54.5 percent), Pepsi Bottling Group (PBG--40 percent), and Xerox (XRX--33.3 percent). Coca-Cola (KO), which sponsored the report, did not make it onto the honor roll, with only 14.3 percent of its board seats filled by women.

Ms. Lang waxed optimistic for the future, stressing that the business case for board diversity is strengthened by changes in board regulations in connection with the Sarbanes-Oxley Act of 2002. Proposed changes in New York Stock Exchange (NYSE) and NASDAQ listing rules stipulated by Sarbanes-Oxley will require a majority of independent directors on boards, a development that promises to increase board diversity.

“Board independence and board diversity go hand in hand,” said Ms. Lang.

The Calvert Group, one of the largest socially responsible investment (SRI) firms in the US, agrees.

“[A] growing body of academic research shows that there is a significant positive relationship between the percentage of women or minorities on boards and firm value,” states Calvert on its website.

Calvert is leading a major SRI initiative on board diversity, focusing particularly on women.

“We recently developed model language for boards to incorporate into their nominating committee charters to include diversity objectives,” said Nikki Daruwala, Calvert’s Senior Social Research Analyst and Shareholder Advocacy Coordinator.

Last year, Calvert filed a resolution at nine companies on board diversity.

“We met with great success--Patterson Dental (PDCO) and WebMD (HLTH) adopted Calvert's language, and Molex (MOLX) added its first women director to the Board,” Ms. Daruwala told “This season we have filed or are in the process of filing a resolution on board diversity with eleven companies, and early next year, we plan to file with a half-dozen additional companies.”

Among these companies are American Power Conversion (APCC), Danaher (DHR), and Gateway (GTW).

“These companies were selected because none of them have any women or minorities on their boards and all of them scored poorly on Calvert's governance standards,” added Ms. Daruwala.

Other SRI firms have also been conducting shareowner action promoting board diversity. For example, Vancouver-based Real Assets Investment Management is advancing a shareowner action campaign in the 2004 proxy season focused on chipping the glass ceiling. Earlier this week, Real Assets filed resolutions with Open Text (OTC.TO) and Aastra Technologies (AAH.TO) calling on management to open opportunities for women, combat stereotyping, and improve gender diversity.


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