California recently passed a law requiring public firms headquartered in the state to include at least one woman on their boards by the end of 2019. The proposal has led to criticism that board quotas have unintended consequences. Others have claimed that a quota might be necessary to combat the glacial pace of voluntary change in boardrooms.
Which Types of Companies Are Adding Women to Their Boards, and Which Aren’t
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Since April 1, 2018 till date, 228 women have been appointed to boards relative to 433 men. That data points to the well-known gender disparity in the board room. However, 57 women have been appointed to boards of such large companies relative to only 19 men. Pressure from the media and large institutional investors appears to have largely worked in such companies at addressing the gender imbalance. However, when looking at the board composition of firms just going public, things do not look all that good for gender balance. Only 51 women have been appointed to the boards of firms that went public relative to 455 men. That is, only around 10% of board members of firms that IPO’d since April 1, 2018 are women. The director market for very large corporations may converge to gender parity in the next few years even without legislation — provided pressure from media and institutional investors keeps up. VCs and start-ups deserve more focus, among institutional investors, proxy advisors and the media, as battle grounds for gender disparity in the board rooms.