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By Yin Wilczek
Sept. 25 — Days after Securities and Exchange Commission Chairman Mary Jo White called for more women on corporate boards, Institutional Shareholder Services Inc. Sept. 25 released a report finding that the proportion of women board nominees for large U.S. companies reached a record high in 2014.
According to the report, the percentage of new women nominees almost doubled in the past seven years at large public issuers. Thus far in 2014, almost 30 percent of new board nominees at S&P 500 companies were women, compared to 15 percent in 2008. Meanwhile, women represented 22 percent of new board nominees at Russell 3000 companies, compared to 11 percent in 2008.
In terms of sitting directors, women comprised an average of 18.7 percent of S&P 500 boards so far in 2014, compared to 16.3 percent in 2011, the report found.
“While women still make up less than 20 percent of U.S. boards on average, movement toward greater gender parity is evident with the proportion of new nominees that are women nearly doubling over the past seven years at larger firms,” Edward Kamonjoh, report author and ISS's head of ESG Research, said in a release.
If the growth continues at a one-percentage-point-per-year pace, the percentage of women directors should reach 25 percent before the end of the decade, according to the report. “Notably, small cap companies, which have long been laggards on gender diversity, also appear to be responding to the call for greater diversity and are nominating women to their boards at the fastest pace on record.”
The report ascribed the increase in women director nominees to work by “a growing number of pension funds and other activist groups.”
Jeff Mahoney, general counsel of the Council of Institutional Investors, confirmed that there is a drive by some large investors for more diverse boards, including in terms of gender. “We believe a diverse board has benefits that can enhance corporate financial performance, particularly in today's global market place,” he told Bloomberg BNA.
In a Sept. 16 speech, White said companies and shareholders should do more to increase the number of women directors. The SEC chairman pointed to increasing academic evidence showing that women board members confer benefits, such as higher shareholder returns.
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The ISS report, “Gender Diversity on Boards,” is available at http://www.issgovernance.com/library/gender-diversity-boards-review-global-trends/.
The related press release is available at http://www.issgovernance.com/proportion-women-board-nominees-reaches-time-high/.
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