Percentage of New Female Nominees Nearly Doubled in Past Seven Years at Larger U.S. Companies, ISS Research Finds
Rockville, MD (September 25, 2014) – The proportion of women nominees for boards of U.S. large capital companies reached an all-time high in 2014, according to a new report released today by Institutional Shareholder Services Inc. (ISS), a leading provider of proxy advisory and corporate governance solutions to financial market participants.
The report, titled “Gender Diversity on Boards: a Review of Global Trends,” shows that board diversity is steadily increasing year-on-year. Nearly 30 percent of new board nominees at S&P 500 companies were women, up from 15 percent in 2008. New nominees to Russell 3000 companies were 22 percent female in 2014, up from 11 percent in 2008. In terms of sitting directors, women comprise on average 18.7 percent of S&P 500 boards thus far in 2014, up from 16.3 percent in 2011.
The report draws on ISS QuickScore data, which tracks gender, tenure, and other director characteristics across 4,100 companies in 25 markets.
“While women still make up less than 20 percent of U.S. boards on average, movement toward greater gender parity is evident with the proportion of new nominees that are women nearly doubling over the past seven years at larger firms,” said Edward Kamonjoh, report author and ISS’ head of ESG Research. “Investors’ calls for greater gender diversity appear to be nudging nominating committees to find more women to serve on boards at U.S. firms.”
The report analyses 24 industries in the Global Industry Classification Standard (GICS). The Household Goods and Personal Products industry consistently had the highest proportion of women on boards of S&P 500 companies, a position it has held since 2008. The percentage of women on these boards averaged 33 percent during this period. Other industries that topped the list for female representation on boards include Food Beverage & Tobacco (21.2 percent), Media (19.6 percent), Health Care Equipment & Services (19.5 percent), Food & Staples Retailing (19.5 percent), Retailing (18.6 percent), Insurance (18.5 percent), Banking (18.4 percent), and Telecom Services (16.3 percent).
Globally, boardroom diversity is increasing as well. In looking at countries without quotas to increase women on boards, female representation has increased measurably. Female representation on boards of the London Stock Exchange FTSE 350 firms grew to 18.5 percent in 2014 (up roughly 8 percentage points from 2008), while that for Canada’s TSX Composite index increased by roughly 4 percentage points to 14.6 percent. Moreover, an ISS analysis of a subset of Australian ASX 300 companies reporting thus far in 2014 finds women comprise on average 14.7 percent of corporate boards.
Meanwhile, companies in markets where gender diversity quotas have existed for several years reach as high as roughly 40 percent female representation in the boardroom, though the report notes some markets have significant gaps to fill if quotas are to be met on time.
“The global uptick in female board representation is not surprising when measured alongside the growing emphasis by investors on board diversity,” said Chris Caras, ISS head of data solution sales. “More and more investors are using ISS Governance QuickScore to screen portfolio companies based on board gender representation together with additional QuickScore factors such as director tenure. This is resulting in greater engagement between institutions and investee firms on the issue of board diversity.”