Women on Boards: It's All in the 'Velocity'

Today is International Women's Day — a day to mark the economic, political and social achievements of women. The first IWD apparently was celebrated in 1911, so this special day of recognition is impressively headed toward its centenary.

I can't think of a better way for Directors & Boards to mark this day than to highlight the strong numbers that we are seeing in our Directors Roster of women being named to corporate boards. The Roster is the special feature published in each edition of Directors & Boards that tracks quarterly appointments to corporate boards. It is our mini-database in each issue of new directors compiled by our research pro, Roster editor Kelly McCarthy.

The just-published First Quarter 2010 edition of the journal includes our tracking of new directors added to boards during the final three months of last year, October-December 2009. Here is the number: Of the 111 new directors we recorded, 46 are women. That is 41%, for those counting in percentages. And that is a noteworthy percentage, for sure.

To put this in some perspective, when we first started the Directors Roster quarterly recording of new directors in 1994, it was more the norm for the percentage of new women directors to be in the low teens if not high single digits. Yes, that's right. Take the final quarter of 1996, as a rather inglorious example: Of the 199 new directors in that Roster, 16 were women — 8%, if one has the temerity to count.

Our numbers are very much different from the results reported by the major surveys on board composition, which still show a poor representation of women on boards — solidly anchored for years, it seems, in the teens.

But a business colleague with whom I recently shared our numbers put her finger on the nature of this discrepancy, even better than I have been in framing our results: the Directors Roster, she recognized, measured the "velocity" of new women entrants onto boards. If that quarterly velocity stays strong, the overall representation that is measured by the annual surveys should gradually rise. In other words, the Roster is an early indicator of a "change in the atmosphere."

The Q4 Roster caps the strongest year we have ever seen here at Directors & Boards for women joining corporate boards: In the Q1 2009 period, we recorded 38% representation of women; Q2 came in at 39%; and Q3 totaled 43%. And now for Q4 we only ratcheted back a notch to 41%. These are breakthrough numbers.

So on this International Women's Day let's give a cheer for the velocity with which women are being appointed to boards. By the centenary celebration could I be in position to report that our velocity number has cracked 50%?!

My thanks to Autumn Bayles, SVP of strategic operations for Tasty Baking Co. and an officer of the Forum of Executive Women in Philadelphia, for refining the "velocity" nature of the Directors Roster data.

Pictured is Lisa Caputo, EVP of global marketing and corporate affairs of Citigroup Inc., who was a representative member of the Q4 2009 grouping of new women on boards; she was added to the board of Best Buy Co. Inc. And what a fitting new director she is to single out on this International Women's Day-themed blog posting: Her background includes being founder, chairman and CEO of Citi's Women & Co., an education, resources and networking initiative that helps women build financial knowledge.

Harvey Golub, Onward to AIG

It's good to see Harvey Golub's name among the six nominees announced last week for election to the board of AIG. He and the other nominees are taking on a huge challenge, but the briefest glance at his c.v. gives one confidence that he's got the right stuff for the task at hand. He retired from American Express Co. in 2001 after seven years as chairman and CEO, a tenure during which the company achieved record earnings and the price of its shares increased sixfold. Director experience comes from service on the boards of Campbell Soup Co. (including a period as nonexecutive chair), Dow Jones & Co., Warnaco Inc., and other public and private company involvements.

Confidence also comes from a rereading of the cover story he authored for Directors & Boards in 2004, in which he laid out key principles for CEO-board relations. Here are three that strike me as especially pertinent to the situation ahead at AIG:

• "The CEO should not try to be the board members' best friend. Some believe that by keeping up an extensive schedule of private dinners and special events with directors, a CEO can build an atmosphere of rapport and friendship that will carry over into the boardroom. But the board is not the CEO's friend — it is the CEO's boss. The board of directors is not just a collection of individuals — it is an institution with a responsibility for representing the interests of shareholders. Friendship should never allow a CEO to get concurrence when it otherwise wouldn't be coming."

• "The important challenge for the CEO is to keep the board on track. It is essential  that directors be able to focus on the overall strategic issues and understand the company's strategic goals and how the business processes help advance them. On a good board, there is too much experience and judgment sitting around the table to waste it on anything of secondary importance."

• "The last piece of advice I would give a CEO is to be completely open and honest. Be careful to discuss the failures as well as the successes. Never surprise the board. Never ask it to vote on a complicated issue without explaining its nuances and risks."

AIG got wrecked on the nuances and risks of its businesses — and the seeming lack of understanding of such in the boardroom. Anyone concerned about the soundness of the financial system and the return to health of essential players like AIG can only hope there is a lot more explaining that will be done in future board meetings under the demanding oversight of its new directors like Harvey Golub.