Monday, February 1, 2016

GAO Publishes Report on Gender Diversity of Corporate Boards

Morrison & Foerster LLP, Lexology

On December 3, 2015, the United States Government Accountability Office (GAO) published its report analyzing the history of gender diversity of U.S. corporate boards and provided recommendations for improving female board representation. The report indicates that, following current trends, it could take 10 years for women to comprise 30% of board positions and more than 40 years for representation of women to be equal to men. In 2014, when the data was collected for the report, women comprised approximately half of the U.S. workforce, but only held approximately 16% of board seats of S&P 1500 companies, which represented an 8% increase from 1997. The report identifies three key factors that help to explain why female representation on boards has only grown incrementally in recent years. First, rather than prioritizing diversity, boards tend to rely on personal networks to identify potential new candidates for election. Second, boards often choose candidates from a “traditional pipeline,” which includes former members of boards or those with CEO experience. To increase female candidacies for board positions, the report suggests that boards expand searches beyond the traditional pipeline, and perhaps set voluntary targets for diversity. Third, the report cites the relatively small number of vacant board seats that are open each year (only approximately 4% of board positions are filled by new directors each year).

Read the story here.

No comments: