Parity in the Board Room

March 21, 2022 by

The percentage of women serving as board members has increased by more than a quarter, according to an industry report. But the pace at which boards have brought more women to the table has slowed, and it’s likely to be a decade before boards are evenly split by gender.

The percentage of women on Russell 3000 boards increased from 26.1% to 26.7% during Q4 2021, according to the latest Equilar Gender Diversity Index (GDI). Equilar is a provider of corporate leadership data solutions, recruiting, executive compensation and shareholder engagement for companies of all sizes, including 70% of the Fortune 500.

As a result of the slight growth, the needle on the GDI inched from 0.52 to 0.53 in the last quarter, where 1.0 represents complete gender parity on Russell 3000 boards of directors.

The progress of gender diversity on boards in recent years can be attributed to several factors, Equilar says. “Most notably, the increase is due to the accelerating pace at which women fill open board seats. During 2021, 45.5% of open board seats were filled by women, up from 21.4% in 2016,” Equilar noted.

At the current rate of growth of women on boards, Russell 3000 boards would reach gender parity by 2032. While this pace has remained consistent since 2020, it has slowed, the company said. From 2016 to 2019, the anticipated date of parity fell from 2055 to 2030.

As companies address the gender gap in the boardroom, it has become more evident that boards are looking outside of the traditional pool of candidates.

“Boards are less frequently insisting on recruiting only from the ranks of CEOs and CFOs and instead are building boards with diverse sets of experiences to bring new lenses to the boardroom discussion, such as technology, culture, ESG, talent, crisis leadership, and public policy expertise, among others,” said Susan Angele with KPMG’s Board Leadership Center.

The Q4 2021 GDI also revealed that 103 companies have achieved equal representation of male and female directors. “While this is still a meager figure in the grand scheme of the Russell 3000, it is a vast improvement from the 21 companies to have achieved this feat in Q4 2016,” Equilar wrote with the release of its GDI report. “All-male boards also fell from 96 to 80 during the past quarter.”

A few highlights, according Equilar:

  • Women made up nearly half of all the new directors who joined boards during the last three months of 2021, at 47.7%.
  • Bigger, more valuable companies tend to have more female directors, perhaps because they’re also usually under more scrutiny. Among companies with a market value of greater than $10 billion, 29.7% of directors are women. That compares with 27.2% for companies worth between $2 billion and $10 billion. For the smallest companies, it’s 24.3%.
  • Utility companies tend to be the most likely to have women on their board, with 31.1% of their directors female. Companies that sell products directly to consumers also are more likely to have more women on their boards than others, with roughly 30%.
  • Energy companies tend to have the most male-dominated boards. Only 22.3% of directors at these companies are women.