Completing the Journey: Women as Directors of Public Companies

mary jo white

The following speech was delivered by Chair Mary Jo White of the U.S. Securities and Exchange Commission at the SAIS Global Conference on Women in the Boardroom. A copy of the speech is also available here.

I. Opening

Good morning and thank you, Susan Ness, for that kind introduction.  The work that SAIS does to increase the presence of women in corporate boardrooms is critically important and it is my honor to address you today.

As a former director of a public company, I know how important it is to have diversity in the boardroom.  And when I speak of boardroom diversity, I mean more than just diversity of professional experience, industry expertise and education.  I mean real gender and minority diversity, which brings with it a richness and variety of experiences and perspectives that benefit companies and shareholders.  Greater boardroom diversity has not, in my view, received sufficient attention, nor has the importance of addressing the underrepresentation been accorded the urgency that I think it deserves.  My remarks today are focused specifically on the goal of greater boardroom representation for women, which is a critical component of the broader challenge.

As you know, women’s membership on boards has been an issue for a very long time.  SAIS and others have worked tirelessly to raise awareness and develop effective strategies.  Your vision in developing and hosting this annual conference, and the work you do every day to promote gender diversity on corporate boards and in executive positions, have been tremendously important. But we still have a long way to go.

Any long journey is marked by milestones that help you to remember where you came from and to stay focused on where you are going.  I like to think of myself as a bit of a runner.  I have participated in – and finished – over 25 half-marathons.  As those of you who run know, throughout a long race, there are mile markers that show you your progress.  There are also markers of personal progress, like running your first 10K, half-marathon, and (for some) a marathon.  It is important to keep in mind these markers of prior success.  But what is more important, particularly in the middle of any race, is knowing your strategy to get to the finish line.  This same strategy applies to seeking fundamental changes in boards and their culture.

I am going to talk about the journey to improve gender diversity in the boardroom in three parts, starting with a brief discussion of some of the markers of our impressive collective progress.  Then, we will turn specifically to what is happening in boardrooms today.  And, finally, I will discuss how we can continue the journey so that as many as possible can make it to the finish line.

II. Historical “Mile Markers” Showing Our Progress

A. Collective Milestones

There is no question that women continue to make impressive progress in achieving high-level positions of all kinds.  When I talk about the progress that professional women have made in this country, I recall the advice for success that was given by Fortune in 1990 to professional women – “Look like a lady; act like a man; work like a dog.”[1] Nearly a quarter of a century later we can now safely say that our formula for success has progressed to something more like “Look however you want, act like yourself, and work like a dog.”  It is hard to shed that last part.

Too frequently, however, the progress of women is still measured in terms of “firsts.”  Some notable firsts include the first woman CEO of a Fortune 500 Company – Katharine Graham of the Washington Post, the first woman Chair of the SEC – Mary Schapiro, the first woman Supreme Court Justice – Sandra Day O’Connor, and the first woman Attorney General – Janet Reno, who was my boss when I was the first woman U.S. Attorney in the Southern District of New York.  We also measure progress by the example of superstars, like Ursula Burns, (also, the first African American woman CEO of a Fortune 500 company), Meg Whitman, Indra Nooyi, and Mary Barra, who, of course, are not only CEOs of Fortune 500 companies, but are also powerful members of their boards.

There is no question that all of these women are inspiring examples of real progress.  They are trailblazers who fundamentally altered the terrain in ways that make the path for other women to positions in the boardroom or the C-suite less arduous and more likely.  But the appointment of a woman CEO or the emergence of a powerful woman public figure is only the beginning of a story that has many more chapters to write before we have reached our goal or think about declaring “mission accomplished.”

The remaining chapters to write are especially apparent in the American boardroom and C-suite where the progress of gender diversity has been frustratingly slow.  A recent study shows that the average U.S. Fortune 250 companies did not elect their first female directors until the mid-eighties.[2]  Katharine Graham did not become the first woman CEO of a Fortune 500 company at the Washington Post until the early seventies.  It is also worth underscoring that just “getting” a high professional position is not the end of the journey.  Once there, we must be treated as a full equal with our male counterparts, so we can be given the chance to succeed and grow.  That picture today is brighter than before, but barriers and resistance remain.

B. Personal Milestones

What do the stories of our personal experiences tell us about the advancement of women?  A great deal.

In her memoir, Katharine Graham recounted extraordinary tales of her experiences in the late sixties and early seventies when she first began to lead the Washington Post.[3]  She served in isolation – there were no female managers at the Post, and few women professionals.  But Katherine did not think of her role in those terms.  She said that “For far too many years I thought my handicaps were entirely due to my being new and untrained, and attributed none of my problems to being a woman.”[4]  She did notice, however, that she was treated differently than her male peers.  For example, she recounted that at a trade association meeting she attended, several speakers started presentations saying “Lady and gentlemen” or “Gentlemen and Ms. Graham,” which was accompanied by snickers.[5]  At one meeting, the facilitator went around the room asking each male individual for his view but did not ask for hers.[6]  She said, “I often observed that at times women were invisible to men, who looked right through you as though you weren’t there.”[7]

Ms. Graham’s experiences reminded me of my own experiences in the early eighties, when I became the second woman partner at Debevoise & Plimpton LLP, a large New York law firm.  One thing that my ascension to partnership accomplished was for the managing partner to stop opening partnership meetings with “Gentlemen and Barbara.”  “Barbara” was Barbara Robinson, a true trailblazer, brilliant lawyer and mentor, who became the first female partner at Debevoise and later became the first female president of the very powerful New York City Bar Association.

I, too, have had the experience of being the first woman in a number of positions.  In the 1990s, I was appointed by President Clinton to be the first woman to serve as U.S. Attorney of the U.S. Attorney’s Office for the Southern District of New York, the oldest and some say the most powerful U.S. Attorney’s Office in the country.  I also served as the Chair of the Attorney General’s Advisory Committee (the “AGAC”) under Attorney General Janet Reno.  The AGAC is group of about 15 U.S. Attorneys from around the country who advise the Attorney General on policy matters at the Department of Justice.  In my role as Chair of the AGAC, I met weekly with the very top Justice Department officials – in addition to the Attorney General, the Solicitor General, the Deputy Attorney General and the Assistant Attorneys General for all of the various divisions – a pretty powerful group.

It was 1993, and for the first time in my career, I was in a high-powered setting where the women outnumbered the men.  This different reality dawned on me slowly.  What was so different?  The women in the room were the ones who spoke freely and advocated their ideas, while it seemed the men were often reticent about expressing their views.  Numbers do matter.

After I completed my term as U.S. Attorney in 2002, and returned to private practice, I was elected to the NASDAQ board.  I was appointed to the Executive and Audit Committees and chaired the Policy Committee.  I was the first and only woman to serve on the board when I started, but, happily, I was joined by another woman during my tenure, Deborah Wince-Smith, the President of the United States Council on Competitiveness. And then there were two.  Not enough, but better than one.

Board experience can also provide critical preparation for other professional positions.  Clearly, the experience helped me when I was advising boards as a lawyer.  And the knowledge I gained from being engaged in the details of complex order types at NASDAQ and the broader knowledge of market structure issues I gained better equipped me some years later to serve as Chair of the SEC.  So, serving on corporate boards is not just an important “finish line milestone” for women, but also an important stop along the road to other important roles.

That observation brings me to the business at hand – the need to increase gender diversity on corporate boards and in senior-level positions in corporations.  The data is stark – it shows that there are still far too few women participating on the boards of public companies.  The numbers are not much better for chief executive representation, and they often go hand-in-hand.  CEO or CFO experience is often used as a qualification for board consideration, so we also need to remain focused on increasing representation of women in senior-level corporate positions if we are to succeed in raising boardroom representation.

III. Current Representation of Women in Boardrooms

So, what are the numbers?  Recent surveys show that, in 2012 and 2013, women occupied just over 16 percent of the board room seats of Fortune 500 companies and that percentage is nearly the same as it was in 2011.[8]  One study showed that in 2013, more than 90 percent of the S&P 500 companies had at least one female director and over a quarter had at least three.[9]  When combined with mid-cap and small-cap companies, however, the proportion of female directors is lower.[10]  And 10 percent of U.S. companies still do not have any women on their boards.[11]  Our position internationally does not demonstrate leadership on this important issue either, where South Africa and a number of European countries have registered more success.[12]

Women also account for a very small percentage of board leadership in the United States.  In 2012 and 2013, surveys found that just over three percent of the board chairs were women and less than 10 percent of the lead directors were women.[13]

We have certainly made progress compared to where we started at the beginning of the 20thcentury, and even to where we were at the beginning of my career. But we know that this progress is not nearly enough.

IV. Completing the Journey and the Terrain that Still Lies Ahead

So the next – and most important – questions are where do we want to go next and how do we get there?  I hope that one day soon it will be completely commonplace for women to hold meaningful positions in the senior ranks of corporate America, including as members – and leaders – of corporate boards.  And I hope our numbers will fairly represent the educational and training levels of equality we have long ago achieved.

Women are receiving more than half of all bachelors’, masters’ and doctorate degrees, and more than a third of MBAs.[14]  Women are approximately half of the total workforce and half of all managers.[15]  We are here, and we are qualified.  There is simply no valid reason for the underrepresentation of women on corporate boards.

A. Further Increasing the Representation of Women on Boards is Important

At the SEC, we are very data driven in the decisions we make in our rulemakings and other initiatives we undertake, whether they be the efforts to enhance the quality of equity market structure or make reforms to address risks of runs in money market funds, or any of the multiple of other complex regulatory challenges we pursue.  In addition to looking at the costs of a new rulemaking, we look at the data to tell us what benefits may flow from the proposed rulemaking.  So what does the data show for the issue we are discussing this morning?

Increasingly, the evidence is that board diversity makes for stronger boards.  Some research has highlighted key strengths that women bring to boards.  For example, it has been found that women tend to better understand the perspectives of stakeholders, including consumers and employees.[16]  Another study shows that women tend to use cooperation, collaboration and consensus-building more frequently, and they are more likely to make consistently fair decisions considering competing interests.[17]

And, more broadly, there is increasing academic evidence indicating that bringing men and women together around the same conference table may enhance stock price and shareholder value.  The Credit Suisse Research Institute, for example, reports that from 2005 to 2011 companies with women on the board had higher average returns on equity and higher net income growth.[18]  Another study published by Reuters found that globally, boards that include women tend to have better returns and to have less volatility compared to a benchmark index.[19]

Studies also show that the presence of at least three women directors changes boardroom dynamics and is associated with even greater positive impacts.  For instance, one report found that between 2004 and 2008, Fortune 500 companies in the top quartile of average percentage of women directors outperformed companies in the bottom quartile by 26 percent based on the return on invested capital.[20]  Companies with three or more women board members outperformed companies with none by 60 percent.[21]  The powerful correlation drawn by these studies is one that boards should not overlook.

B. Efforts to Increase the Representation of Women on Boards

There are many ongoing efforts to encourage companies to increase the representation of women on their boards, including government-driven initiatives, industry efforts, and the invaluable work of organizations like yours at SAIS.

Internationally, several countries have set mandatory quotas and voluntary goals.  For example, a report in the United Kingdom known as the “Davies Report” called for voluntary targets of 25 percent women on FTSE 100 boards by 2015.  In 2014, a study shows the number of women on FTSE 100 boards had increased from 10.5% in 2010 to 20.7 percent.[22]  The Australian government reached a target of 40 percent women on government boards two years early in 2013.[23]  And more than 20 countries have adopted quotas for companies to require them to increase the representation of women on their boards.[24]  I am not convinced that quotas are the answer, but I do applaud efforts that have served to increase representation.

Investor interest and focus on improving, and demanding, board diversity is also on the rise.  Institutional investors and investment funds increasingly consider diversity when evaluating investments and investors are actively engaging with companies to demand diverse boards and a commitment from companies to focus on board diversity.  As reported in a recent study, 26 shareholder proposals in 2013 sought greater diversity on the board and 73% of the companies that received the proposals changed their board recruitment criteria to include diversity.[25]

Since 2009, the SEC has required disclosures designed to assist investors interested in the diversity of company boards.[26]  As most of you know, Item 407(c) of Regulation S-K requires that companies disclose their approach to diversity when considering nominees for directors.  In particular, the rule requires disclosure of:

  • Whether diversity is considered in identifying nominees and, if so, how; and
  • If a company has a policy for considering diversity, then a description of how the policy is implemented and how the company assesses the effectiveness of this policy.[27]

I do recognize, however, that there is also disappointment about the quality of some of the disclosures that companies provide.  This is a shared responsibility.  Shareholders and interested stakeholders have a responsibility to make it known that this is an issue that is important, that they want more information on what is being done to promote diversity, and, if not enough is being done, what actions they expect to be taken.  There are a number of different avenues to make these views known – from direct engagement with public companies to shareholder proposals asking a company to establish more specific policies and commitments – and I encourage you to use all of them.

C. Positioning Women for Board Positions

It is also important for companies to work harder to identify qualified women to serve on boards.  Some defenders of the status quo still say that there are not enough qualified women to fill board vacancies at higher rates.  I disagree.  There is no shortage of highly qualified candidates.  And if that is the view of any company, its nominating and governance committees should broaden their searches.  The challenge is not a lack of suitable candidates.  There is adequate supply, but, the challenge is creating real and committed demand.[28]

In the coming years, there will be more opportunity to nominate more women as corporate directors.[29]  Term and age limits are increasingly in place and operating for boards in companies across the United States.  The vacancies will be there, and legions of qualified women candidates will continue to be there as well.

As you know, several organizations have taken steps to assist companies to identify qualified women board candidates.[30]  One group has over 3,000 members serving on over 5,000 boards worldwide.[31]  Other organizations provide training and support to women – and men – interested in pursuing board positions. [32]  These efforts are very important.

Throughout my career, it has been important to me to consider how to increase the participation of qualified women in organizations – to try to push change that is long overdue.  I saw one transformative example very early on when I served in the U.S. Attorney’s office as a young prosecutor.  The U.S. Attorney who hired me, Robert B. Fiske, made a decision to fill half the openings of the Southern District’s Criminal Division with women.  That policy not only changed the face of federal prosecutors in New York, it also made a huge difference in developing the professional experience and stature of these women. Many eventually formed “an old girls’ network” with critical mass available to mentor the young women who followed us.  And from these ranks, several women became General Counsels of major companies, U.S. Attorneys, and other senior leaders in both the private and public sectors.  I seriously doubt that would have happened without the decision of Bob Fiske to force gender change in the U.S. Attorney’s Office.

To get to the finish line on this journey, however, we will need more transformative change than what can come from the efforts of one person.  We will need shareholders and other stakeholders to seek change from public companies, and those who support this effort need to recognize those companies that are doing things right, and not just those that are not doing enough.

V. Conclusion

Looking at the markers along this century-long journey to gender diversity in the boardrooms of U.S. corporations, it is clear that we have made important, measurable progress.  But it is equally clear that we still have a long way to go.

I applaud your efforts and the efforts of all of the groups that you represent to accomplish this goal.  And I am proud to join you in this journey.

Thank you.


[1] Jaclyn Fierman, “Why Women Still Don’t Hit the Top,” Fortune, 40-48 (July 30, 1990) (available at http://archive.fortune.com/magazines/fortune/fortune_archive/1990/07/30/73852/index.htm).

[2]  David E. Larcker & Brian Tayan, “Pioneering women on Boards: Pathways of the First Female Directors,” Stanford Closer Look Series, 2 (September 3, 2013) (available at http://www.gsb.stanford.edu/sites/default/files/35_Women.pdf).

[3]  Katharine Graham, Personal History (Knopf, 1997).

[4]  Id. at 418.

[5]  Id. at 419.

[6]  Id.

[7]  Id.

[8]  According to surveys of Fortune 500 companies, women occupied 16.1 percent of the boardroom seats of 497 companies in 2011 and 16.6% in 2012, and 16.9% of the board room seats of 492 companies in 2013.  The 2013 survey notes that none of the changes from 2012 to 2013 are statistically significant.  Catalyst, “2013 Catalyst Census: Fortune 500 Women Board Directors” (2013) (available at http://www.catalyst.org/system/files/2013_catalyst_census_fortune_500_women_board_director.pdf) (“2013 Catalyst Census”); Catalyst, “2012 Catalyst Census: Fortune 500 Women Board Directors” (2012) (available at http://www.catalyst.org/system/files/2012_Catalyst_Census_Fortune_500_Women_Board_Directors.pdf).  According to a survey by GMI Ratings, the proportion of female directors in S&P 500 companies is 16.9%.  Kimberly Gladman & Michelle Lamb, “GMI Ratings’ 2013 Women on Boards Survey,” 17 (April 2013).

[9]  Gladman & Lamb, supra note 8, at 17.

[10]  Women held 14 percent of the seats in S&P 1500 companies and 77 percent of these companies have at least one woman director.  Id.

[11]  2013 Catalyst Census, supra note 8.

[12]  The United States lags several European countries.  According to the GMI Women on Boards Survey, in 2013 women have 36.1 percent of the board seats in Norway, 27 percent in Sweden, 26.8 percent in Finland, 18.3 percent in France, 17.2 percent in Denmark, and 17 percent in the  Netherlands.  Gladman & Lamb, supra note 8, at 3.  According to the survey, women hold 17.9 percent of the board seats in South Africa, which is ranked first among emerging markets.  Id.  Contrasting those findings, according to the same study, women in the United States and Australia have approximately 14 percent of the board seats.  In Canada, women hold roughly 13.1 percent of the seats and in the United Kingdom, women hold roughly 12.6 percent of the seats.  Id.

[13]  2013 Catalyst Census, supra note 8 (women board chairs comprised 3.3 percent in 2012 and 3.1 percent in 2013, and women lead directors comprised 8.4 percent in 2012 and 9.9 percent in 2013); Gladman & Lamb, supra note 8, at 17 (3.0 percent of S&P 500 company chairs are women).

[14]  See, e.g., U.S. Department of Education, “Digest of Education Statistics 2011” (June 2012) (available at http://nces.ed.gov/pubs2012/2012001.pdf).

[15]  See, e.g., United States Department of Labor, “Women in the Labor Force in 2010” (2010) (available at http://www.dol.gov/wb/factsheets/Qf-laborforce-10.htm).

[16]  Committee for Economic Development, “Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive,” 13-14, 16 (2012) (available at http://www.fwa.org/pdf/CED_WomenAdvancementonCorporateBoards.pdf).

[17]  Chris Bart & Gregory McQueen, “Why women make better directors,” International Journal of Business Governance and Ethics, 93-99 (March 2013) (available at http://www.boarddiversity.ca/sites/default/files/IJBGE8-Paper5-Why-Women-Make-Better-Directors.pdf).

[18]  Credit Suisse Research Institute, “Gender diversity and corporate performance,” 14 (August 2012) (available at https://www.credit-suisse.com/newsletter/doc/gender_diversity.pdf).

[19]  André Chanavat & Katharine Ramsden, “Mining the Metrics of Board Diversity,” Thomson Reuters (June 2013) (available at http://share.thomsonreuters.com/pr_us/gender_diversity_whitepaper.pdf).

[20]  Catalyst, “The Bottom Line: Corporate Performance and Women’s Representation on Boards (2004-2008)” (March 1, 2011) (showing a difference of 7.2 percent of ROIC for the bottom quartile versus 9.1 percent for the top), available at http://www.catalyst.org/system/files/the_bottom_line_corporate_performance_and_women%27s_representation_on_boards_%282004-2008%29.pdf.

[21]  Id. (showing a difference of 6.5 percent ROIC for companies with zero women on the board and a 10.4 percent ROIC for companies with three or more women on the board).

[22]  Ernst & Young, “Women on boards: global approaches to advancing diversity,” Point of View, 2 (July 2014) (available at http://www.ey.com/Publication/vwLUAssets/ey-women-on-boards-pov-july2014/$FILE/ey-women-on-boards-pov-july2014.pdf).

[23]  Id. at 2.

[24]  Id. at 2.

[25]  Ernst & Young, Diversity drives diversity: From the Boardroom to the C-Suite, 5 (2013) (available at http://www.ey.com/Publication/vwLUAssets/EY-Diversity-drives-diversity/$FILE/EY-Diversity-drives-diversity.pdf).

[26]  “Proxy Disclosure Enhancements,” Securities Act Release No. 9089 (December 16, 2009), 74 FR 68334 (December 23, 2009).

[27]  17 CFR §229.407(c) (Regulation S-K, Item 407(c)).

[28]  See Mike Myatt, “Boards Remain Pale, Male and Stale – Old Boys’ Club Alive and Well,” Forbes (Sept. 19, 2013) (available at http://www.forbes.com/sites/mikemyatt/2013/09/19/boards-remain-pale-male-and-stale-old-boys-club-alive-and-well/).

[29]  One study estimated that twenty percent of the board seats at S&P 1500 companies are held by directors nearing or exceeding 72, the common retirement age.  Ernst & Young, “Diversity drives diversity,” supra note 25, at 1.

[30]  See, e.g., Catalyst (www.catalyst.org); InterOrganization Network (www.ionwomen.org); Watermark Institute Board Access (www.wearewatermark.org); The Executive Leadership Council (www.elcinfo.com); Director Diversity Initiative (https://ddi.law.unc.edu/default.aspx).

[31]  See WomenCorporateDirectors (available at http://www.womencorporatedirectors.com) (discussed in Committee for Economic Development, supra note 16, at 8 and Appendix 2).

[32]  For example, the International Women’s Forum and George Washington University School of Business sponsor “On the Board,” an initiative designed to prepare women leaders to become successful candidates for and directors on corporate boards.  See http://iwforum.org/programs/onboard. The Kellogg School of Management at Northwestern University sponsors the Women’s Director Development Program, a course designed to serve as a training and gateway for women who aspire to serve on corporate boards.  See http://www.kellogg.northwestern.edu/execed/programs/women.aspx.  And the National Association of Corporate Directors hosts learning opportunities (open to men and women), including a course entitled “How to Become a Director.”  See http://www.nacdonline.org/Education/htbad.cfm?ItemNumber=3115.