Companies hoping to attract or retain large institutional investors should pay attention to a growing area of scrutiny: their board’s gender composition.
The third largest pension fund in the country, the $194.2 billion New York State Common Retirement Fund, announced it will vote against board members of corporations that have no female directors. This follows BlackRock’s recent update to its proxy voting guidelines stating that they will vote AGAINST nominating/governance committee chairs for boards that do not have at least two women directors.
Such moves are not simply a sign of the times but are grounded in research showing that companies with more female directors exhibit stronger financial performance.
With just 25 percent of U.S. publicly traded companies having no females on their boards, the financial power behind these bold decisions of large and sophisticated institutional investors have the potential to effect real change in corporate America.
Fund managers, consultants, wholesalers, advisors and all others in the investment community should pay attention and start asking about the diversity structure of the company boards they work with, represent and recommend.
A quick way to check the number of women on a company’s board is to go to the 2020 Women on Boards (2020WOB) website. 2020WOB is a national campaign to increase the percentage of women on U.S. company boards by 20 percent or greater by the year 2020.
The site features a gender diversity directory to search by company name and find the percentage of women on corporate boards listed in the Fortune 1000 and Russell 2000.
This past week, the CEO of 2020WOB, Betsy Berkhemer-Credaire, spoke at a Women in Pensions Network (WiPN) event held in conjunction with the National Association of Professional Advisors (NAPA) 401(k) Summit in Nashville.
With Betsy were Pamela Carter and Terry Rapphun, both of whom sit on several corporate boards. The speakers explained why the gender disparity is so ingrained, and shared their personal stories to encourage every woman in the audience to envision themselves on a board.
Each woman that attended the event received Betsy’s book The Board Game—How Smart Women Become Corporate Directors.
Mary Lou Wattman is an executive coach, speaker and author. She has her own firm 1920 West and is a partner at 3ethos. She is also on the board of Women in Pensions Network and helping 2020WOB in Chicago.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
