The state of board gender diversity

kpmgAs boards seek to improve their effectiveness and consider how best to carry out their oversight role amid rapid change and shifting expectations, diversity—of skills, background, and experience—must be top of mind. Institutional investors and other stakeholders, including employees and customers, continue to focus

on board composition by considering whether the board includes the right mix of skills and experience to support the company’s strategy as well as how the board considers diversity in assessing director candidates.

 While gender is only one of the many facets of diversity, the underrepresentation of women on corporate boards remains a key area of focus for investors, proxy advisors, and regulators. Here, we look at the current state of gender diversity on corporate boards, efforts to accelerate the pace of progress, institutional investor and proxy advisor views, and recommendations for boards to consider.

The slow pace of progress in boardroom diversity in the United States is well documented. Currently, fewer than one in five directors serving on the boards of US public companies are female. The percentage of women on Russell 3000 boards was 19.3 percent at the end of the first quarter of 2019, according to Equilar’s Q1 2019 Gender Diversity Index. That compares with 17.6 percent as of midyear 2018, 15.7 percent in 2017, and 12.9 percent in 2014, based on Equilar’s Board Composition and Recruiting Trends report. Among the large companies in the S&P 500 Index, which tend to have more diverse boards, the percentage of women directors has also increased gradually, to 24 percent in 2018, up from 22 percent in 2017, and 18 percent in 2013, according to Spencer Stuart’s 2018 US Board Index report. July 2019 marked the first time all S&P 500 companies have at least one female director on their boards.

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...we find that banks with more gender diversity on their board perform better once the composition of these boards reaches a critical level of gender diversity, corresponding to a board female share of around 13-17 percent.

 

 @30PercentCo