Maloney unveils new GAO report showing rampant disparities against women in corporate boardrooms, demands SEC take action
NEW YORK – Congresswoman Carolyn B. Maloney (D-NY-12) today unveiled a new report from the Government Accountability Office, which shows women are severely underrepresented on corporate boards, taking up just 16 percent of seats in the boardroom. The study, which Maloney requested in May 2014, shows that even if the rate of women joining corporate boards were doubled, so they were hired at the same rate as men, it would still take at least 40 years (2056) for women to reach parity. In response, Maloney is crafting legislation and urging the Securities and Exchange Commission to update existing diversity disclosure requirements, which do not even require the number of women serving on corporate boards to be reported.
“Even if we doubled the rate at which women are hired to corporate boards, we still wouldn’t reach equality until 2056,” said Maloney. “That means a girl born today will still face the same disparities in the boardroom that her mother and grandmother faced. At a minimum the SEC should update its deeply flawed diversity disclosure requirements, so that corporations have to report gender diversity. The World Economic Forum Global Gender Gap Report for 2015 shows the United States dropped eight places from 20th to 28th, and today’s GAO report provides yet another example of just how large the gap has grown. We lag far behind many other industrialized countries that have taken proactive steps to improve diversity.”
In the coming weeks, Maloney will introduce new legislation modeled on policies in Canada and Australia which would instruct the SEC to recommend strategies for increasing women’s representation on corporate boards, and require companies to report their policies to encourage the nomination of women for board seats as well as the proportion of women on their board and in senior executive leadership.
Key Findings of the report:
- In 2014, women comprised about 16 percent of board seats in the S&P 1500, up from 8 percent in 1997
- Even if equal proportions of women and men joined boards each year beginning in 2015, it could take more than four decades for women’s representation on boards to be on par with that of men’s.
- Even if every future board vacancy were filled by a woman, we estimated that it would take until 2024 for women to approach parity with men in the boardroom.
- GAO identified various factors that may hinder women’s increased representation among board directors. These include boards not prioritizing recruiting diverse candidates; few women in the traditional pipeline to board service—with Chief Executive Officer (CEO) or board experience; and low turnover of board seats
- Most stakeholders interviewed (15 of 19) supported improving Securities and Exchange Commission (SEC) disclosure requirements on board diversity.
- The United States lags behind other industrialized nations, including Australia, Canada, The United Kingdom, Germany and Norway, where serious, concerted efforts have been made to address discrimination against women in the board room.
In the coming weeks, Maloney will propose new legislation modeled on policies in Canada and Australia, which would instruct the SEC to recommend strategies for increasing women’s representation on corporate boards, and require companies to comply with those recommendations or explain why they have not.
Maloney’s letter to the Securities and Exchange Commission Follows:
January 4, 2016
Mary Jo White
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.
CAROLYN B. MALONEY
Member of Congress