Tag Archives: board gender diversity

BlackRock sets its priorities for board engagement

by Cydney Posner

Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in light of shifting assumptions, executive pay linked to long-term strategy, climate risk disclosure and human capital management.  According to BlackRock, its engagement process is designed to be constructive, and its goal is “to build mutual understanding and ask probing questions, not to tell companies what to do. Where we believe a company’s business or governance practices fall short, we explain our concerns and expectations, and then allow time for a considered response.” However, Blackrock’s approach is not limited to engagement; although, as a long-term investor, the firm will be “patient” as companies work to address concerns, in the absence of progress, BlackRock “will not hesitate to exercise our right to vote against management recommendations.” Continue reading

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State Street Global Advisors talks the talk on board gender diversity, but will it walk the walk?

by Cydney Posner

Happy International Women’s Day!

In this press release, State Street Global Advisors, which manages $2.47 trillion in assets, announced, on the eve of International Women’s Day, that it is “calling on the more than 3,500 companies [in which] State Street invests on behalf of clients, representing more than $30 trillion in market capitalization to take intentional steps to increase the number of women on their corporate boards.” According to State Street’s president and CEO, diversity is important to good governance:  “A key contributor to effective independent board leadership is diversity of thought, which requires directors with different skills, backgrounds and expertise.” Although State Street’s preferred approach is to encourage change through active engagement, it may well use stronger measures, including voting against directors. According to the WSJ, State Street plans to “send letters about gender diversity this week to the heads of the more than 700 Russell 3000, FTSE 350 and S&P/ASX 300 companies with no women on their boards.” Continue reading

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Some successful approaches to increasing board gender diversity

by Cydney Posner

A lot has been written about the benefits of gender diversity on boards. As discussed in Bloomberg, while “[e]quality is a worthy goal on its own terms, of course….for the corporate world, the better rationale for gender diversity is financial…. Companies with at least one female director had better returns for six straight years.” According to this Bloomberg Quicktake, a Credit Suisse study showed that companies with at least one woman board member saw an average return on equity of 14.1% from 2005 to 2015; all-male boards’ average returns were only 11.2%. (See this PubCo post.) Nevertheless, in the U.S., there is no getting around the continuing underrepresentation of women on boards. Bloomberg reports that  women make up less than 20% of directors of S&P 500 companies, and growth in female representation has actually slowed. (See this PubCo post.) This article in the WSJ suggests some companies are trying new approaches in an effort to reverse that slide. Continue reading

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Board gender diversity? Hedge fund activists fail miserably but women-led businesses fare better

by Cydney Posner

As reported earlier this year on Bloomberg, when activists seek to replace directors at target companies, they rarely look to women.  Bloomberg analyzed data regarding five of the biggest U.S. activist hedge funds, each managing at least $18 billion in assets. The data showed that, since the beginning of 2011,  these funds have together sought at least 174 board positions, winning 108, but have nominated female candidates only seven times, with five succeeding.  That represents only 5% of the total. At that rate, the data makes the boards of companies in the S&P 500 look like they were selected by the National Organization for Women: over the same period, women were nominated to fill about 26% of open seats at S&P 500 companies, according to Spencer Stuart Inc., and about 19% of directors at S&P 500 companies are women. Continue reading

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Do women directors promote higher CEO pay?

by Cydney Posner

As reported on Sunday in this NYT column by Gretchen Morgenson, recent data shows that boards with more gender diversity pay higher compensation to their CEOs.  An Equilar analysis of CEO pay at 100 large companies “found that companies with greater gender diversity on their boards paid their chief executives about 15 percent more than the compensation dispensed by companies with less diverse boards. In dollars, this translated to approximately $2 million more in median pay last year among these companies.” While that doesn’t prove causation of course, as Morgenson explains, “[f]or some reason, I had expected women directors to stand tougher on pay issues.”  Continue reading

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