Sur­vey: More women on bank boards

Northwest Arkansas Democrat-Gazette - - MUTUAL FUNDS - EL­IZ­A­BETH OL­SON

Bank­ing and cap­i­tal mar­kets, of­ten viewed as dom­i­nated by men, achieved high scores in a newly re­leased sur­vey mea­sur­ing the di­ver­sity in their di­rec­tor ranks.

In 2016, women made up 26 per­cent of the boards in the bank­ing and cap­i­tal mar­kets in­dus­try, which tied with the re­tail in­dus­try, ac­cord­ing to a sur­vey con­ducted by Price­wa­ter house Coop­ers. The av­er­age rate of women on boards of com­pa­nies in the Stan­dard & Poor’s 500 in­dex was 21 per­cent.

In ad­di­tion, the 21 com­pa­nies that the sur­vey de­fined as its bank­ing and cap­i­tal mar­kets sec­tor have shored up their po­si­tion by adding more women to their boards. About 13 per­cent of new di­rec­tors in 2016 were women.

The en­ter­tain­ment and me­dia in­dus­try also scored well, with 22 per­cent women di­rec­tors. De­spite a neg­a­tive spot­light on the lack of women in moviemak­ing, the 17 en­ter­tain­ment and me­dia com­pa­nies that were in­cluded in the sur­vey in­creased the di­ver­sity of their boards last year: Twothirds of their new di­rec­tors were women.

Even so, there were some sour find­ings in the sur­vey, which for the first time looked at the board de­mo­graph­ics of com­pa­nies in nine in­dus­tries. The in­sur­ance in­dus­try, for ex­am­ple, scored poorly, with women mak­ing up only 21 per­cent of its di­rec­tors and only 7 per­cent of its new di­rec­tors last year, the low­est per­cent­age of any of the in­dus­tries ex­am­ined in the re­port.

“Com­pa­nies in ev­ery in­dus­try are feel­ing in­vestor pres­sure to re­fresh their boards, and many are fo­cus­ing on di­ver­sity and adding more women di­rec­tors,” said Paula Loop, who heads Price­wa­ter­house­Coop­ers’s gov­er­nance in­sights cen­ter, which was set up sev­eral years ago to re­view cor­po­rate gov­er­nance is­sues and fi­nan­cial ac­count­ing stan­dards.

How­ever, she noted that gen­der di­ver­sity was only one in­di­ca­tor of the ef­forts boards were mak­ing to in­clude peo­ple with var­ied back­grounds and skills. “Di­ver­sity is more than a gen­der is­sue — it’s about race, eth­nic­ity, skills, ex­pe­ri­ence, age and even ge­og­ra­phy, in ad­di­tion to di­ver­sity of thought and per­spec­tive,” she said.

The sur­vey looked at two mea­sures that com­pa­nies can use to ac­cel­er­ate board change: manda­tory re­tire­ment age, and term lim­its for di­rec­tors. For ex­am­ple, fewer than two-thirds of the bank­ing and cap­i­tal mar­kets com­pa­nies sur­veyed had a manda­tory re­tire­ment age for di­rec­tors, a sit­u­a­tion that leads to many di­rec­tors serv­ing well into their 70s. By con­trast, 73 per­cent of S&P 500 com­pa­nies have set such an age limit, ac­cord­ing to Price­wa­ter­house­Coop­ers.

The re­tail in­dus­try had the low­est av­er­age di­rec­tor age, at 60. And 91 per­cent of the re­tail in­dus­try com­pa­nies im­pose a manda­tory re­tire­ment age.

The lack of term lim­its left the tech­nol­ogy in­dus­try with one of the high­est av­er­age tenures, at 10 years. Bank­ing and cap­i­tal mar­kets edged up, too, with an av­er­age di­rec­tor ten­ure of eight years, which is the S&P 500 com­pany av­er­age.

Only about 4 per­cent of the S&P 500 com­pa­nies im­pose term lim­its. No bank­ing, in­sur­ance or tech­nol­ogy com­pa­nies in­cluded in the study had adopted term lim­its. Gen­eral Elec­tric is among the com­pa­nies that does have a pol­icy, cap­ping board ser­vice at 15 years.

Tra­di­tional qual­i­fi­ca­tions for di­rec­tors such as fi­nan­cial and op­er­a­tional skills and in­dus­try ex­pe­ri­ence are fad­ing as pre­req­ui­sites for a seat in the board­room, Loop said. Tech­nol­ogy skills are be­com­ing in­creas­ingly im­por­tant in qual­i­fy­ing for the po­si­tion, she added, as well as in­ter­na­tional ex­pe­ri­ence and cy­ber­se­cu­rity skills.

Even so, she noted, fac­tors high­lighted in the sur­vey such as long ten­ure and the ab­sence of a manda­tory re­tire­ment age leave the pace of change slow and “the sit­u­a­tion gloomy for di­ver­si­fy­ing boards.”

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