Investing in Women & Inalienable Rights: Part I

UCDstudyCAWomenBusinessLeadersSince starting this blog in 1995, I’ve pushed for greater diversity on boards and in named executive officers (NEOs). Progress has proceeded at a glacial pace, at least in the United States. For the ninth year, the UC Davis Graduate School of Management, in partnership with Watermark, published the annual UC Davis Study of California Women Business Leaders: A Census of Women Directors and Executive Officers. The study found the average Top 25 firms (which have 25+% women at upper levels) makes three times as much revenue and almost 50% more net income than the average company in the study (which has 10.9% women).

After reading the study, I took the plunge, investing in seven of the top 25 California companies with the highest percentage of women leaders. Hopefully, investing in women will reap additional rewards and will help me carry on with my efforts to make corporate governance more democratic. Women obviously bring a different perspective that pays financial dividends. Will women in positions of power also result in a more salubrious environment, recognition of human rights and a more equitable distribution of wealth?

I invested in the following: Annie’s (BNNY), Medivation (MDVN), Genomic Health (GHDX), Bio-Rad Laboratories (BIO), NETGEAR (NTGR), Symantec (SYMC), and Visa (V). I’ve been trying to invest in Yahoo! (YHOO) and SciClone Pharmaceuticals (SCLN) but haven’t been successful at the prices I’ve bid. I already had investments in Walt Disney (DIS). See all my investments under Disclosures.

Highlights of UCD Study

While women hold only one in eight of the executive and board positions in California’s top 400 public companies, an annual University of California, Davis, study shows incremental progress — the percentage of women in these top decision-making posts has increased, and the number of companies with no women executives and board directors at all is dropping. Overall, women hold 10.9 percent of the highest-paid executive positions and board seats in the state’s 400 largest public companies — a 1 percent increase over last year.

Together, the 400 companies represent more than $3.4 trillion in shareholder value. Two companies, organic food company Annie’s Inc. of Berkeley and clothing retailer The Wet Seal Inc. of Orange County, have more women than men in top executive positions and board seats — a first since the study began in 2005. Said Steven C. Currall, dean of the management school,

Having more women involved at the highest levels of California’s large public companies may improve their performance. Much more needs to be done to diversify the top management of public corporations, so let’s take this bit of momentum — this incremental progress — and build on it.

The study is the only one of its kind to focus on gender diversity in the boardrooms and executive suites of corporate California. It was cited in September in a state resolution passed by both houses of the California Legislature calling for more women leaders in public companies, the first such resolution of its kind in the United States. Senate Concurrent Resolution 62, authored by Sen. Hannah-Beth Jackson, is not binding, but sends a powerful message encouraging public companies to add more women to their corporate boards over the next three years. The UC Davis study shows that 351 (87.8 percent) of the 400 largest public companies in California do not yet meet the resolution’s goals for the number of women on their boards of directors.

Among the encouraging findings in this year’s UC Davis study:

  • Fewer companies are without women — the number of companies that have no women executives and no women board members has dropped to 107, or a little more than one-fourth. This figure is a new low, showing more women are being appointed to existing or new board seats and executive positions.
  • More companies than ever before have at least one woman leader. All 12 of the public Fortune 100 companies in California have at least one woman director on their board. Two of the top 25 companies in the study, SciClone Pharmaceuticals Inc. and Williams-Sonoma Inc., have a majority of highest-paid executive positions, 3 of 5, held by women.
  • Although a majority of the 400 largest public companies in the state still have no women among their highest-paid executives, more women than ever before are filling these ranks, from 8.9 percent last year to 10.5 percent this year. Women chief financial officers are increasing, while the number of women serving as chief executive officers is holding steady at 13, or 3.3 percent.

Among counties with at least 20 companies, San Francisco County has the most women board directors (17.3 percent), and Alameda County has the fewest (9 percent). San Mateo County has the most highest-paid women executives (15.4 percent), and Orange County has the fewest (8.1 percent). The study tracks the members of the boards of directors and the five highest-paid executives, NEOs, for each company as reported to the  SEC.

The study examined filing data available as of Aug. 31, 2013. The 400 companies were selected based on market capitalization. They also looked at the race and ethnicity of women and men corporate directors at the 94 public companies that also appeared on the 2013 Fortune 1000 list. Ethnic representation is poor among directors of both genders, with about nine out of 10 directors being Caucasian — even though California is more diverse than the country as a whole. (Only 39 percent of Californians identify as Caucasian alone.) Companies that appear in the study’s Top 25 list for the sixth consecutive year are AMN Healthcare Services Inc., bebe stores Inc., BRE Properties, Deckers Outdoor Corp., and McKesson Corp. Annie’s Inc. and The Wet Seal Inc. tied for No. 1 with 54.5 percent women in these top positions. Both firms are led by male CEOs. Said John M. Foraker, chief executive officer of Annie’s,

Annie’s is honored to be at the top of this prestigious list of public companies. Annie’s aims to support, promote, and develop highly capable leaders who can forward Annie’s culture of equality and excellence. From Molly Ashby, chairman of our board, to Annie, our inspirational president, to key employees throughout our company, women play an integral role in the success and growth of our brand. This external recognition reflects our commitment to our values including our dedication to expanding the role of women in business.

John D. Goodman, chief executive officer of The Wet Seal Inc. said the company is proud to be recognized for the number of women in its top executive ranks and its board of directors.

As a retailer of women’s apparel, Wet Seal is committed to empowering, developing, and recognizing women whether they are our customers, employees, or members of the communities in which we operate. Our people are our lifeblood and it’s the rich diversity of our employees and customers that sets us apart — at Wet Seal we are passionate about creating opportunities for people at every level.

To publish the study, UC Davis partners with Watermark, a Bay Area-based nonprofit that offers programs for executive women. According to Marilyn Nagel, CEO of Watermark,

There has been significant discussion recently about women ‘leaning in’ and an outpouring of executive leadership support for greater equality. A new women’s movement is emerging in which women advocate for one another and have the ability to influence at the highest levels.

To download a full copy of the study, including industry-by-industry and county-by-county statistics, visit the new “Women in Business Leadership” website. Hats off to Amanda Kimball, who has been authoring these annual reports.

Europe Pulls Ahead

While the proportion of women directors in the United States is growing at a glacial pace, Europe is moving ahead. Korn Ferry reports (Could board diversity actually be decreasing?),

Ninety percent of new directors are white compared with 77 percent of this group in 2011. Moreover, diversity has dropped in virtually every category year-over-year: The percentage of new women directors dropped from 27 to 23; African-Americans from 11 percent to 6 percent; Asians from 7 percent to 1 percent; and Hispanics from 4 percent to 3 percent. Only international diversity has increased, with new, non-American directors representing 20 percent of recruits, up from 16 percent in 2011.

Companies listed on stock exchanges in the EU will need to bring the proportion of women on boards up to at least 40% by 2020 under a draft EU directive. In 2013, only 17.6% of non-executive board members of the EU’s largest companies were women. The rules would not apply to small and medium-sized enterprises employing fewer than 250 persons. (40% of seats on company boards for women)

The firm Russell Reynolds Associates released a comparison of its two studies done in 2009 and in 2012 on Board composition in Europe. As Europe moves towards 40% women directors, those new appointments are also likely to be younger and more international, making them more competitive against American counterparts. (How are Boards composed in Europe?)

Just how are women different than men and what kind of changes can we expect or hope for? Read Part II tomorrow.

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