Women are gaining more seats in U.S. boardrooms, though not necessarily those with the most power.
In the first five months of 2018, women accounted for 248, or 31%, of new board directors at the country’s 3,000 biggest publicly traded companies, according to an analysis of corporate filings by ISS Analytics, the data arm of Institutional Shareholder Services. That is the highest percentage in at least a decade, and puts 2018 on track to be a record year for new female board members.
Shareholder pressure, along with the #MeToo movement, is fueling some of the momentum, board recruiters say. “Some [companies] are being dragged forward on this issue, and others are embracing it,” said Julie Hembrock Daum, head of executive-recruitment firm Spencer Stuart’s North American board practice.
Big investors such as State Street Global Advisors and BlackRock Inc. are urging companies to diversify their boards and, in some cases, voting against certain board members at firms with all-male boards. Many investors point to correlations that several studies by McKinsey & Co. and other consulting firms and business schools have drawn between greater diversity and enhanced financial returns as reasons for demanding greater female representation on boards. Other firms are bringing more women into the boardroom in the wake of sexual-harassment scandals, or to help prevent them, recruiters say.
Wynn Resorts Ltd. added three women to its board in April after its founder, Steve Wynn, stepped down as chief executive earlier this year amid sexual-misconduct allegations. Matt Maddox, who succeeded Mr. Wynn as CEO, said at the time that the appointments signified a “turning point” for the company and were part of an effort to bolster its corporate governance.
Despite the uptick in women directors, companies haven’t propelled them at the same rate into leadership roles in the boardroom. Though women occupy 18% of board seats at the 3,000 biggest companies, 10% of lead independent directors are women and 4% of boards are led by a chairwoman, not a chairman, according to the ISS data.
The women who are gaining entry into corporate boardrooms often come with a greater set of skills and qualifications on their resumes than their male counterparts, the ISS analysis found—a reflection, in part, of the specific expertise boards are increasingly looking for in new directors. A greater proportion of today’s women directors have direct experience in finance, technology, sales and legal and government affairs than their male counterparts, though few of them have held the role of CEO.
“It shows there are plenty of qualified women out there,” said John Roe, head of ISS Analytics.
Women directors with experience in new technologies, e-commerce and cybersecurity are in high demand, board recruiters and business leaders said. Typical of the new class of female board members is Susan Li, vice president of finance at Facebook Inc., who was appointed to Alaska Air Group ’s board of directors last month.
“With more than a decade of experience in Silicon Valley, Susan Li brings valuable perspective on the digital economy,” Alaska Air CEO Brad Tilden said.