Maloney's Letter to the Securities and Exchange Commission on Women's Representation on Corporate Boards

January 4, 2016

Mary Jo White

Chair

U.S. Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

Dear Chair White:

I applaud your recent challenge to all Fortune 1000 and S&P 500 companies to set a target of 40 percent women on their corporate boards by 2025. Like you, I believe this goal is ambitious but within reach, and an imperative for American businesses to succeed in the decades to come.

In order to meet this target, I urge the SEC to adopt a proposed amendment to proxy statement disclosures to require the clear indication of each board nominee’s gender, race, and ethnicity. This proposal, submitted by the leaders of several large public pension funds, will allow investors and policymakers to evaluate companies’ progress towards the ambitious 40 percent goal.

As you know, senior leadership and executive boards continue to under-represent women. In 2014, only 19.2 percent of S&P 500 board seats were held by women. In addition, only 12 companies (2.4 percent) had boards comprised of at least 40 percent women. These figures indicate the real barriers still in place between women and these corporate leadership positions, and highlight a need for policies to encourage greater board diversity.

While well-intentioned, the enhanced proxy statement disclosure for board diversity adopted in 2009 has proven inadequate to increase the representation of women on corporate boards. Indeed, researchers have found that among the S&P 100 only about half of these disclosures referenced gender. In fact, most of these companies—the largest and most well-resourced in our country—disclosed that they lack a formal diversity policy for their board.

Even without formal policies in place, there is mounting evidence that board diversity may enhance companies’ performance. A recent report published by MSCI found that companies with “strong female leadership” (either above-average board representation or a female CEO and least one female board member) generated a higher return on equity and valuation than companies lacking female leadership. This finding follows a 2014 Credit Suisse report that found companies with at least one woman on their board outperformed other companies by 5 percent from the start of 2012-June 2014.

Because of these findings, investors are justly interested in more comprehensive information about board composition and policies to ensure a diverse slate of candidates. The proposal submitted by nine leading public fund fiduciaries would make a limited amendment to the disclosure rule but greatly enhance the transparency of boards and the ability of investors to evaluate companies’ efforts to ensure diversity.

For these reasons, I encourage the SEC to adopt this common-sense amendment, and look forward to working with you to increase the representation of women in corporate leadership.

Sincerely,

CAROLYN B. MALONEY

Member of Congress