Investing
Old White Men Keep Grip On Corporate Board Room
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Ninety percent of S&P 500 companies have a female board member, but few hold chairman’s positions or the top jobs on key committees. The situation is much worse at smaller firms. Only 50% of the Russell 2000 companies have a single woman on their boards, according to a survey of 30,000 director positions done by the Corporate Library. This means that the presence of women on the boards of medium and large-sized companies is negligible.
There are is no comparable research done about black or Hispanic board members, but it is likely that the results would parallel those of the survey about women. Old, white men control boards. This has not changed much in the last decade and is not likely to change much in the next.
Misogyny and racism flourish at large companies because no rules have ever been set up to prevent them. Board membership composition is not controlled by any affirmative action regulations, and public company board members’ names appear rarely, usually only in proxies and annual reports. Board nomination committees work in private and their deliberations are not released.
Organizations like the Corporate Library and Catalyst, which track women’s governance participation at Fortune 500 companies, are too circumspect to say anything direct about the reason there are so few women on boards, but there is only one plausible explanation. When white men have to compete with women or people of color, the odds that they will hold the great majority of board positions begins to decrease. This is true for jobs in senior management of large firms where women and people of color are also notably absent.
Fifty years ago, white male board members could make a plausible argument that few women, blacks, or Hispanics had the educational background or experience to serve as members of the boards of large companies. Today, the number of women with the education and job experience to serve as board members is almost certainly equal to that of men.
Eight of the 22 faculty members who teach general management at The Harvard Business School are women. The presidents of Harvard, The University of Pennsylvania, Princeton, and MIT are women and each of these institutions is one of the top 10 universities in America according to US News. Sixteen of the one hundred members of the Senate, the Speaker of the House, and the Secretary of State are women. These observations about women in power are not statistically relevant because they cover many professions and have not been chosen scientifically to make the case that women should be better represented among American public company board members. But, the figures certainly provide evidence that women hold positions of high authority in which they have to be well-educated, remarkably experienced, and capable of making make important and even monumental decisions.
Change that affects race and gender come slowly, even in America. But, this change almost never comes without some outside pressure, law, or regulation. Women and people of color will not be appropriately represented in public company board rooms unless the federal government does something about it. The Congress has passed legislation before to correct imbalances in the opportunities of groups which have been treated unequally. And, the rights of blacks and women to vote were both brought about by amendments to the Constitution. But, then again, so was prohibting the manufacture, sale, and transportation of liquor. The legal process has been used to right profound wrongs and, unfortunately, to advance partisan goals.
There is no evidence that women will be better represented on public company boards at any time in the foreseeable future. That means public shareholders will be deprived of their ability to be represented by people from the largest pool of qualified candidates, not just the group of old white men. That changes the issue from one of women’s rights and racial right to whether shareholders should have access to the best board members
Douglas A. McIntyre
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