TOO WHITE, TOO MALE

Shopify told to diversify

It wasn’t the question most of Shopify’s board of directors had been expecting.

The six individuals — all white, five of them male — had just concluded the business portion of the annual shareholders’ meeting Wednesday morning and had opened the proceedings to queries from ordinary shareholders.

Given what a spectacular year Shopify had just concluded — revenue in 2017 had jumped 73 per cent, pushing the share price to record levels — the directors, the stewards of the company, were anticipating a gentle time of it.

Meriel Bradford, a shareholder and retiree, was the first to grasp the microphone. She had warned Shopify’s CEO and co-founder Tobias Lütke privately what was coming, but didn’t know if he had shared this with his fellow directors.

Bradford, a former vice-president of Teleglobe and senior bureaucrat at Global Affairs and other federal departments, spoke with authority. She told the directors diversity was important for any company aspiring to be global.

“This board doesn’t have it,” she said.

Bradford had their attention. “What’s the problem and how can we help you fix it?”

Responsibility for the answer fell to John Phillips, head of the board committee responsible for finding candidates to serve as director. Phillips acknowledged the preponderance of white males on Shopify’s board before adding, “We’re constantly searching for great talent.”

It was a weak response. Bradford pressed the point. “I suggest your search technique is poor,” she said before taking her seat.

It’s difficult to deny the boardrooms of many high-tech firms lack diversity, whether it involves gender, colour or sexual orientation. But was Bradford’s assertion fair?

The Citizen examined the makeup of the boards that guide 15 companies that Shopify considers its peers, at least when it comes to the important matter of compensation for executives and directors. (These included firms such as HubSpot, Zendesk, Cornerstone OnDemand, Atlassian and Etsy, which were listed in the circular distributed in advance of Wednesday’s meeting of shareholders.)

Most of the peer firms have eight or nine directors, more than Shopify’s six, and do exhibit more diversity, especially when it comes to gender. Half of Zendesk’s eight directors are women, for instance, as is the case at Etsy.

Given that high-tech firms tend to draw heavily from the maledominated worlds of engineering and finance for their board talent, this is all the more notable.

Just two of Atlassian’s nine board members are women, but one, Shona Brown, runs the show as chair.

As for colour, well, let’s just say visible minorities in this group are generally the exception. Nevertheless, the companies do appear to be making some strides diversifying in general.

For instance, Cornerstone OnDemand, a California software firm, has nominated former Jiva Software CEO Elisa Steele to serve as chair of the board. Steele is expected to be confirmed in this role June 14.

Boston-based Wayfair, another software firm that Shopify counts among its peers, last month named Andrea Jung to its board. Jung, the former CEO of Avon Products, is a well-known pioneer for businesswomen and also serves on the board of Apple.

Five weeks ago, another Boston-based software peer, HubSpot, revealed that Indianborn, Brazilian-raised entrepreneur Avanish Sahai had joined the firm’s directors.

At the conclusion of Shopify’s shareholders meeting at the firm’s Elgin Street headquarters, Bradford chatted amiably with fellow shareholders. A couple of Shopify employees came by to introduce themselves, but none from management or the board. “It surprises me that no one is reaching out,” she said referring to the top guns.

It’s perhaps less puzzling if you examine the detail of the management circular distributed in advance of the meeting. In it, there’s a section that deals with the company’s policy on diversity. It notes the board of directors “values diversity of abilities, experience, perspective, education, gender, background, race and national origin.”

When considering nominees for the board, the policy says, “diversity is taken into consideration. Currently, one of our six directors (Gail Goodman) is a woman.”

Bradford’s point was simply that Shopify can do better than that.