May 09, 2016

Momentum Behind the Obvious

By Michele Coleman Mayes

As reported in Corporate Boards: Strategies to Address Representation of Women Include Federal Disclosure Requirements (U.S. Government Accountability Office [December 2015]), nearly 20 years ago, women comprised around eight percent of board seats in the S&P 1500. In 2014, that percentage was 16 percent. The GAO estimated, however, that “even if equal proportions of women and men joined boards each year beginning in 2015 . . . it could take more than four decades for women’s representation to be on par with that of men’s.”

Not wanting to wait until 2065 for women and men to have equal representation on corporate boards, the Commission on Women in the Profession earlier this year asked that the ABA House of Delegates adopt Resolution 116, which urges public companies in the United States to adopt plans, policies, and practices to diversify their boards and to publicly disclose board composition. The House adopted this resolution on February 8, 2016, during its Midyear Meeting.

According to conventional wisdom, the lack of female board members is due to the lack of a sufficient number of qualified female candidates. There also are those who believe that it makes no difference even if women are board members because what really is needed is “diversity of thought.” Both premises are fatally flawed, as we know only too well that there are a significant number of qualified women and that it is precisely the presence of women that provides the “diversity of thought.”

Why is it important for the ABA to act on this matter?

  • The ABA has been a leader in promoting the diversity of women on corporate boards. For example, in 1997, the ABA Business Law Section founded DirectWomen, whose mission is to increase the representation of women lawyers on corporate boards.
  • Board diversity is good for business, and lawyers are an important part of boards. Research consistently shows that public companies with three or more women on their boards have overall stronger organizational health.
  • Increasing the diversity on corporate boards will help further ABA policy on equal pay. Increasing the number of women on corporate boards will assist in supporting the ABA’s policy supporting equal pay for women (a Commission resolution presented to and passed by the House in 2010). A 2012 study showed that more women on board compensation committees reduced the salary inequalities between senior women executives and their male counterparts.
  • The conversation is already taking place. Besides the above GAO report, members of Congress are urging SEC Chair Mary Jo White to propose new disclosure requirements as quickly as possible.

The passage of Resolution 116 now gives the ABA a voice in this important conversation. With the power of the ABA behind the effort to achieve gender equity on boards, we have increased significantly the momentum going forward.