Half of new company board members must be women, insist MPs

HALF of all new appointments to company boards should be women to break up the ‘cosy club’ of men running top firms, MPs have demanded.

Under plans put forward by the Commons business committee, all listed companies would be forced to explain to shareholders each year if they had failed to meet the target. Ministers should aim for women to make up half of all new senior and executive management appointments by 2020, MPs said. The committee argued that having more women in executive positions on boards would mean members were more likely to ‘ challenge each other, innovate or think imaginatively’. In a report, they noted that one board in the FTSE 100 still has no female directors, while many companies have simply increased the number of women in nonexecutive roles. Only seven firms in the FTSE 100 currently have female chief executives. These include GlaxoSmithK-line, which has just appointed new boss Emma Walmsley, 46, and Whitbread – owner of Costa Coffee – whose chief executive is 51-year- old Alison Brittain. ‘Companies need to ensure that women are encouraged from early on in their careers, through men- toring, meaningful work experience, and proper flexible working, to ensure they are equipped to progress to executive director posts,’ the MPs said. ‘ We recommend that the Government should set a target that from May 2020 at least half of all new appointments to senior and executive management level positions in the FTSE 350 and all listed companies should be women. Companies should explain in their annual report the reasons why they have failed to meet this target, and what steps they are taking to rectify the gender inequality. ‘The more similar that individual directors think, act, and look, the more likely it is that they are not going to challenge each other, or innovate, or think imaginatively.’ Labour MP Iain Wright, the committee’s chairman, said: ‘Too often in the wake of corporate failures we discover that directors, especially non- executives, have failed to provide sufficient challenge. ‘Too often these individuals seem to be drawn from the same cosy club. We do not recommend tokenism, but we strongly believe a diverse board both better reflects the society in which the firm operates and provides greater challenge to the strategy and decisions taken, which should improve company performance and profitability. ‘ We need greater diversity in our boardrooms, better training for directors, and more measures to ‘Drawn from the same cosy club’ enhance the executive pipeline, ensuring that talented people within an organisation are encouraged and supported at an early stage of their careers, and beyond.’ The MPs also recommended that workers should help set executive pay, and that all firms should be forced to make public the difference in salaries between their best and worst paid staff. Mr Wright said: ‘Executive pay has been ratcheted up so high that it is impossible to see a credible link between remuneration and performance.’ The report comes as around 9,000 organisations will start publishing their gender pay gap figures from today. Voluntary, private and public sector employers with 250 or more staff are required to make their figures public by April 2018.