The Data Is in on Board Diversity: Women Still Comprise Less Than 25 Percent of S&P 500 Boards

Looking beyond corporate governance, investors are laser-focused on board refreshment as part of their arsenal to improve independence, oversight and corporate performance. Additionally, board refreshment is considered the perfect opportunity to increase board diversity. In this Farient Brief, we explore macro trends of gender and board diversity, taking a closer look at how specific sectors across regions are embracing it.

“While some progress has been made since 2007 on Board gender diversity, we still need more. Since Board assignments often come from CEO/board networks, it is time to rethink some of the approaches to Board fulfillment and refreshment. Achieving more diversity means forcing other avenues to be used to find directors and possibly disturbing people’s comfort levels.” – Zanvi Patel, Partner

Board Diversity in the S&P 500

Unsurprisingly, larger companies that tend to receive high marks for good corporate governance have, on average, a larger percentage of women directors than their smaller counterparts. For companies in the S&P 500, the percentage of women board members is up from 15.8 percent in 2007 to 21.5 percent at the end of Fiscal Year 2016. The good news is that we’re seeing progress in this area. The growth in women board members accelerated in 2017, with 37 percent of new directors being female.

Following a deep dive of S&P 500 companies, we found gender diversity on boards only varies within a five percentage point range for most industries, and less than 25 percent of directors are women. Only one industry, consumer staples, is higher at 26 percent. At the close of FY 2016, the energy sector had the lowest percentage of women directors, coming in at just 18 percent.  And, within this group, two companies had no woman directors at all: Concho Resources (CXO) and TechnipFMC (FTI). As Q3 of 2017 winds down, both companies have added at least one woman director (CXO through board elections, and FTI through merger/acquisition). The data represents non-executive directors as of the end of FY 2016. Directorships are counted individually, i.e., the same director on two boards will be counted twice.

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