It Happened in Davos

We had great success with our "It Happened in Norway" issue — in which we devoted a sizable chunk of the Third Quarter 2010 edition to exploring the provocative move toward mandated gender quotas for corporate boards of directors. The movement got rolling in Norway and has begun extending into other European corporate sectors, including France and Spain. That particular edition was widely acclaimed for its thorough and balanced treatment of this hot-potato topic and has almost sold out all overrun copies.

Well, guess who else is hot on the issue of gender quotas? The powers that be that run the World Economic Forum (WEF), underway this week in Davos. The best report on this development comes from the U.K.'s Guardian newspaper, in its article "Davos Imposes Gender Quota." Here are a few key pointers from the article:

• In an attempt to improve the traditionally dismal gender balance at this month's event, the WEF has for the first time imposed a minimum quota of women.

• The forum's "strategic partners" — a group of about 100 companies including Barclays, Goldman Sachs and Deutsche Bank — have been told they must bring along at least one woman in every group of five senior executives sent to the high-profile event. Strategic partners account for 500 of the 2,500 participants expected this year.

• Relatively few women have benefited from this high-level schmoozing. Women made up only 9-15% of those present between 2001 and 2005. Progress has been made — last year 17% were women.

• Critics may argue that one in five is actually a pretty small achievement, and real progress would call for two or three. Just finding one suitably senior candidate this year, however — given the gender balance in the global business elite — may prove enough of a challenge.

A challenge, yes, but surely one that can be met. If a country like Norway has found a sufficient number of women to populate the 40% mandated gender quota of its major corporations' board seats, then so can the comparative handful of pooh-bahs that descend on Davos.

Of course, the big knock on this Swiss schmoozefest (try saying that five times!) is that it is "more talk and partying than action." Which raises the interesting question: Would the right kind and number of women leaders even be inclined to mosey on over to the WEF shindig, mandate or not? But that is a gender-balance — or, should we say, gender-difference — question for another day.

Directors & Boards cover illustration by Dave Gothard

Closing the Gender Gap

I am just back from Washington, D.C., where I took part in a most enlightening conference. Themed "Closing the Gender Gap: Global Perspectives on Women in the Boardroom," the daylong program held on Thursday, Sep. 16, was filled with experts from the corporate, diplomatic and academic sectors from around the world — all of them influential in tracking trends in board diversity and even moving the trendline along for increased presence of women on boards.

As a member of the opening panel in the morning, I had the pleasure of sharing with the audience some of the newsworthy data from the Directors & Boards Directors Roster, our quarterly and annual reviews of new appointments to corporate boards.

Actually, SEC Commissioner Luis Aguilar beat me to the punch. He launched the day with a keynote address in which he cited some of our Roster data in his compelling tribute to the value of board diversity and review of what the SEC is doing to move the needle in making it happen.

The key stat that both the Commissioner and I conveyed was that 39% of board recruits in 2009 were women. That represented a big ramping up from the 25% rate of women as new board recruits in both 2008 and 2007 — and a tripling from the 13% rate of women named to boards that we tracked in the first year of collecting this Roster data, which was 1994.

One reason 39% is a figure worthy of note is that much of the conference centered on analyzing the impressive experience underway in Norway, which legislated a gender balance on boards mandate of 40%. We are not anywhere near that in the U.S., so I did have to temper the enthusiasm over the Roster data by admitting that even a continuing 39% rate of new women directors does not get us anytime soon to a state when women hold 40% of U.S. corporate board seats.

Nonetheless, the Roster holds hope that a progressive trend is in place. We are still maintaining an elevated state of new women directors so far in 2010: In this year's first quarter, the rate was 34%, and in the second quarter (being announced here for the first time), the rate was 36%. (As a representative new woman director elected in Q2, pictured is Christine McCarthy, EVP of corporate finance and real estate and treasurer of Walt Disney Co., who joined the board of FM Global, a commercial and industrial property insurer with $5 billion in revenue.)

Kudos to Susan Ness, senior fellow of the Center for Transatlantic Relations at the School of Advanced International Studies (SAIS), Johns Hopkins University. She brilliantly organized and chaired the "Closing the Gender Gap" conference, which was held at SAIS. If we can keep the Roster (i.e., free market activity) data in an upward trajectory, keep the SEC providing its big-stick backing for board diversity, and keep having impressive consciousness-raising programs like this SAIS conference trumpeting the value that women bring to boards, we are bound to show progress in closing the gender gap in the boardroom.

It Happened in Norway . . . What About Here?

In 2003 women represented 7% of board directors in Norway. Today, that total is 40%.

What happened? In 2003 the Norwegian Parliament introduced legislation that instituted a gender quota for the country's major companies. The formal mandate was that at least 40% of both genders must be represented on the board. Companies were given two years to comply.

The quota achieved its goal. Other countries are exploring similar legislation.

"The use of quotas is simply a tool to display women's competencies," said Auden Lysbakken, Norway's Minister of Children, Equality and Social Inclusion. He reviewed the country's experience with board quotas at the Global Roundtable on Board Diversity, an initiative of the World Bank's International Finance Corporation. The Roundtable was held in March 2010, ably organized and conducted by Irene Natividad, chair of Corporate Women Directors International.

While the news concerning board diversity among U.S. companies is not all bad — see the findings that Directors & Boards came up with for 2009 as per the blog post below — the numbers pulled from most surveys might be summed up in two words: "glacial progress."

How long would it take for women to hold 40% of all U.S. boards seats? Let's face it — we will never see it, not in the lifetimes of anyone now serving on boards or those newly coming into board eligibility. That is, if present practices persist.

So, let's put the hard questions out there. Is a board quota a good thing or a bad thing? Could it work here? Why or why not? Should a quota — or some form of a quota — be tried here? What's to fear? What would stop it from working? What could go right? What could go wrong?

I am going to seek out expert opinion from my network of colleagues, and we will report back. I will make this the cover story in the Third Quarter edition of Directors & Boards. Stay tuned as we crunch down on one of the most provocative issues in board composition and recruiting.

Illustration: "The Scream" by Norwegian artist Edvard Munch, exhibited in the National Gallery of Norway.

Yes! There Is Good News on Women Directors

Most of the surveys on women on boards are pretty punkish — showing incremental, at best, advances by women in securing board seats. Among the key findings in ION's 2010 survey released in March:

• The low number of women directors and executive officers in U.S. public companies has stayed more or less the same, with small variations from year to year.

• In the 14 regions represented by ION's member organizations, women hold between 8% and 18% of the board seats in all the companies included in the research.

• In Fortune 500 companies in ION's 14 regions, women hold between 12% and 19% of all board seats. Nationally, the comparable figures for Fortune 500 companies are 15% (2009 Catalyst Census) and 16% for the S&P 500 (2009 Spencer Stuart Board Index).

The only good news that I ever see are the numbers that we here at Directors & Boards report — and do we have some exceptional numbers that we are just releasing for 2009.

Last year, women represented 39% of all new board appointments! That is up from the previous record high of 25% representation in 2008. And way way up from the more typical 13% when we first started recording board appointments in 1994.

That 39% figure represents 165 women out of 424 board positions filled in 2009 as recorded in the Directors & Boards Directors Roster.

We do an authoritative tracking on a quarterly and annual basis of public company board appointments. I have reviewed the parameters of our Directors Roster reporting here. These are numbers you can take to the bank.

Something big happened in 2009 — women did indeed make a major advance in securing board appointments. We may be the lone voice in the wilderness of board diversity surveys to note that, but it is true and it offers the promise of much stronger advancement by women in the boardroom in the future.

Pictured is Janet Jankura, who was elected to her first corporate board in 2009; she is profiled in the special Governance Year in Review issue of Directors & Boards in a new series called "My First Board," reported by Roster Editor Kelly McCarthy.

A Board Entry for Black History Month

In thinking about February being Black History Month, I submit a governance-related milestone that is worthy of note — the first black director elected to a major company board. His name is Asa Spaulding (pictured). He was the head of the largest black-owned insurance company at the time when, in 1965, he joined the board of retailer W.T. Grant Co., a fact that did not get recorded in this detailed biography of this accomplished businessman.

I nailed down this board "first" while doing research for a history of corporate governance special-themed issue that I published in 1997.

What Black History Month will not be celebrating are the stats on the number of African American directors sitting on corporate boards.

According to the 2009 report from the Executive Leadership Council, African Americans have lost ground on Fortune 500 boards and remain "seriously underrepresented." The number of board seats held by African Americans has declined since the Council's inaugural board report in 2004:

• The percentage of African Americans on corporate boards decreased from 8.1% in 2004 to 7.4% in 2008.

• Four years ago, African Americans held 449 corporate board seats and, as of the report's release last July, hold 413 seats.

With the SEC's new push starting later this month for fuller disclosure of a corporation's board diversity policies, greater attention may be directed at this underrepresentation — and initiatives may get underway to address such stats that are so out of whack with the executive population and the leadership pool available for board service.

Perhaps Black History Month next year will have a bit more to celebrate on the corporate governance front.

Women on Boards — Bigtime

Here is one incredible statistic: In the third quarter of 2009, 43% of newly appointed directors were women.

This is a chart-busting number. Directors & Boards has been tracking new board appointments by quarter since 1994. We publish the quarterly data in each edition of the journal in a section called the Directors Roster. In the early years of our director data tracking, it was not unusual for the percentage of new directors who were women to be in the low teens or single digits even. That was the case in 1996, for example, when women represented only 9% of all new board appointments.

It wasn't until the fourth quarter of 2005 that the percentage of women named to corporate boards broke above 20%. It stayed in the low to mid-20% range for the next several years, occasionally dipping back into the teens for a quarter or two.

Then we broke through to an impressive new high in the first quarter of 2009, when 38% of new directors were women. I honestly thought this might have been an anomalous report, and that we wouldn't see this number surpassed this year — or perhaps ever! The number of women appointees did dip to 32% in the second quarter, but that was still way above trendline.

Now here we are witnessing women being almost one out of two board appointments in the July through September period.

Melissa Payner-Gregor (pictured), Frances D. Fergusson, and Nancy E. Cooper are representative of these new appointments. Payner-Gregor is the CEO of Internet retailer Bluefly Inc. who has joined the board of Destination Maternity Corp., a designer and retailer of maternity clothing; Fergusson is the retired president of Vassar College who is now a director of Pfizer Inc.; and Cooper is EVP and CFO of CA Inc. (formerly Computer Associates) who has been added to the board of Teradata Corp., the $2 billion data warehousing business.

There is something happening. While national surveys still show a shockingly poor representation of women on boards, our Directors Roster data looks to be an early indicator of big changes afoot in the board recruiting market. Stay tuned to this data.