In addition to heightened focus on director tenure, companies are facing increasing pressure to diversify their boards. The SEC requires companies to disclose whether and how the board or nominating committee considers diversity in identifying candidates. Last year, after public outcry over its all-male board, Facebook added a woman director shortly after its IPO. Twitter is facing similar criticism this year.1 During the 2013 proxy season, shareholders submitted 27 proposals to companies seeking to ensure that women and minorities are considered for board positions, up from only eight such proposals in 2012.2 The vast majority of these proposals were withdrawn after proponents and companies reached a resolution. The three proposals that went to a vote averaged 35.8 percent shareholder support, with one proposal winning majority approval.3 The dramatic increase in the number of diversity proposals submitted in 2013 was largely to the efforts of the Thirty Percent Coalition,4 an organization composed of national women’s organizations, institutional investors, senior business executives, some major accounting firms, statewide elected officials and others, whose goal is 30 percent female representation on U.S. public company boards by the end of 2015.5 In early 2013, the organization also sent letters to 127 companies that did not have any women on their boards, urging them to embrace gender diversity.6
The push towards greater gender diversity on boards is also picking up steam internationally. Several countries in Europe already impose mandatory gender quotas on public company boards, and the EU is considering a European-wide initiative to address gender imbalance in the boardroom. In addition, in recent years many countries, including Australia, Ireland and the United Kingdom, have implemented disclosure requirements regarding gender diversity,7 and the Ontario Securities Commission is currently considering adding disclosure requirements for listed companies. This summer India enacted legislation requiring listed companies to have at least one woman director.8
Several recent studies show a positive correlation between women in the boardroom and company financial performance, particularly during times of economic stress.9 Other recent studies show that diverse groups make better decisions than homogeneous groups,10 and that companies with women in the boardroom have stronger corporate governance practices.11 Consumer products companies may particularly benefit from the input of women in the boardroom since it is estimated that women control about 70 percent of global consumer spending.12
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1 See, e.g., N. Kristoff, “Twitter, Women and Power,” The New York Times (Oct. 23, 2013).
2 ISS, 2013 U.S. Proxy Season Review: E&S Issues (Sept. 2013).
5 ISS, supra; The Thirty Percent Solution – Members.
6 The Thirty Percent Solution “Coalition contacts 127 Russell 100 Companies” (Feb. 5, 2013).
7 Catalyst, “Increasing Gender Diversity on Boards: Current Index of Formal Approaches” (2013).
8 KPMG, “New Companies Act, 2013” Insight Series – Vol. V (Sept. 2013).
9 See, e.g., Thomson Reuters, “Mining the Metrics of Board Diversity” (July 2013); Credit Suisse Research Institute, “Gender Diversity and Corporate Performance” (Aug. 2012); M. Schwartz-Ziv, “Does the Gender of Directors Matter?” (Sept. 7, 2012); Catalyst, “The Bottom Line: Connecting Corporate Performance and Gender Diversity” (2007).
10 See Ernst and Young, Groundbreakers Study, Diversity an Equation for Success (2009); Credit Suisse Research Institute, supra.
11 See studies cited in Credit Suisse Research Institute, supra.
12 Boston Consulting Group, press release (Sept. 8, 2009).