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March 10, 2011
Underrepresentation of Women on Boards Persists
    by Robert Kropp

A report by GovernanceMetrics International finds that despite new legislation in several countries mandating board diversity, the percentage of women on boards has barely increased since 2009.

On the 100th anniversary of the first International Women's Day, GovernanceMetrics International (GMI) has published a report indicating not only that women are underrepresented on corporate boards of directors, but that the increase since 2009 of such representation has been incremental at best.

Between 2009 and 2011, the report found, the percentage of women on the boards of 4,200 large global companies analyzed by GMI increased from 9.2% to 9.8%.

2011 Women on Boards Report also found that only "one in fifty companies covered had a female chair in 2011; the same low proportion as in 2009."

A 2010
report by The Corporate Library (which has since merged with GMI) concluded that "diversity increases the conscientiousness of board oversight, and leads to more accurate value assessments." Because "diversity is likely to promote greater value creation in the economy," both governments and institutional investors have a financial interest in board diversity.

Analyzing industry supersectors, GMI found that those with the highest aggregate percentage of women directors were Retail, Media, and Insurance, while those with the largest percentage of companies with at least three women directors were Utilities, Media, and Retail. Supersectors with the lowest percentage of companies with at least one woman director were Basic Resources, Automobiles & Parts, and Technology.

The three countries with the highest aggregate percentage of female directors were Norway, Sweden, and Finland. The worst performing countries were Japan and South Korea.

Against the backdrop of GMI's findings, a number of national legislatures and regulatory bodies have implemented mandatory diversity quotas in recent years. In France, according to the report, "Legislation will impose a 20% quota within 3 years and 40% within 6 years." In Italy, a bill passed in 2010 by one house of Italy's Parliament "would require the boards at public and state-owned companies to be at least 1/3 female," the report continued. Legislation establishing quotas have been passed in Spain and the Netherlands as well.

In the US, "The aggregate percentage of female directors has barely budged from 12.1% to 12.3% in the last three years," according to the report. Furthermore, "it is highly unlikely that gender quotas would be enacted."

According to the
Proxy Preview 2011, published last month by As You Sow, seven shareowner resolutions have been filed addressing board diversity in 2011. In 2010, the Proxy Preview reported, "all but one of the 16 resolutions on the subject were withdrawn…after agreements with the recipient firms."


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