Representation of Women on Boards Has Increased to About 16 Percent, but a Number of Factors May Hinder Further Progress

		Women’s Representation on Boards Has Increased 8 Percentage Points over the Past 17 Years but Greater Gender Balance May Take Time

Based on our analysis, we found that women’s representation on boards  of companies in the S&P 1500 has increased steadily over the past 17  years, from about 8 percent in 1997 to about 16 percent in 2014. As  figure 2 illustrates, part of what is driving this increase is the rise in  women’s representation among new board directors—directors who  joined the board each year. When we projected the representation of women on boards into  the future assuming that women join boards in equal proportion to men— a proportion more than twice what it currently is—we estimated it could  take about 10 years from 2014 for women to comprise 30 percent of  board directors and more than 40 years for the representation of women  on boards to match that of men (see fig. Various Factors May Hinder Increased Representation of Women among Board Directors

Based on our interviews with stakeholders, analysis of ISS board director  data, and our review of relevant literature, we identified various factors  that may hinder increases in women’s representation on corporate  boards: boards not prioritizing diversity in recruitment efforts; lower  representation of women in the traditional pipeline for board positions;  and low turnover of board seats. Conducting board evaluations. Several Large Investors and Many Stakeholders We Interviewed Supported Improving Federal Disclosure Requirements on Board Diversity

While most stakeholders we interviewed emphasized their preference for  voluntary efforts by business to increase gender diversity on corporate  boards over government mandates such as quotas, several large public  pension fund investors and many stakeholders we interviewed (15 of 19)  supported improving federal disclosure requirements on board diversity. According to SEC’s 2014-2018 Strategic Plan, one of the Commission’s  objectives is to structure disclosure requirements to ensure that investors  have access to useful, high-quality disclosure materials that facilitate  informed investment decision-making. Several large public pension fund investors and many of the stakeholders  we interviewed (12 of 19) called into question the usefulness of  information companies provide in response to SEC’s current disclosure  requirements. Approximately half of the companies reported defining diversity to include  demographic factors such as gender, race, or ethnicity. Without specific information on board diversity  that is concise and easy-to-use, investors may not be fully informed in  making decisions. SEC officials told us they intend to consider the  investor petition requesting changes to board diversity disclosure as part  of its Disclosure Effectiveness Initiative—an ongoing review of all SEC  disclosure requirements to improve them for the benefit of companies and  investors. Agency Comments

We provided a draft copy of this report to the Securities and Exchange  Commission and the Equal Employment Opportunity Commission for  review and comment. SEC staff provided technical comments that we  incorporated, as appropriate. EEOC did not have comments. Appendix I: Analysis of Data for Boards of S&P 1500 Companies

To identify trends in women’s representation on corporate boards and  characteristics of male and female board directors, we analyzed a dataset  from Institutional Shareholder Services, Inc. (ISS) that contained  information about individual board directors at each company in the S&P  Composite 1500 from 1997 through 2014, the years for which they  collected these data.
Why GAO Did This Study

Women make up almost half of the nation's workforce, yet research shows that they continue to hold a lower percentage of corporate board seats compared to men. Research highlights advantages to gender diverse boards, and some countries have taken steps to increase board gender diversity. The SEC requires companies to disclose certain information on board diversity. GAO was asked to review the representation of women on U.S. corporate boards.
This report examines (1) the representation of women on boards of U.S. publicly-traded companies and factors that may affect it and (2) selected stakeholders' views on strategies for increasing representation of women on corporate boards. GAO analyzed a dataset of board directors at companies in the S&P 1500 from 1997 through 2014; and conducted interviews with a nongeneralizable sample of 19 stakeholders including CEOs, board directors, and investors. GAO selected stakeholders to reflect a range of experiences, among various factors. GAO also reviewed existing literature and relevant federal laws and regulations.
GAO is not making recommendations in this report. SEC provided technical comments that were incorporated, as appropriate. The Equal Employment Opportunity Commission had no comments.

What GAO Found

Representation of women on the boards of U.S. publicly-traded companies has been increasing, but greater gender balance could take many years. In 2014, women comprised about 16 percent of board seats in the S&P 1500, up from 8 percent in 1997. This increase was partly driven by a rise in women's representation among new board directors. However, even if equal proportions of women and men joined boards each year beginning in 2015, GAO estimated that it could take more than four decades for women's representation on boards to be on par with that of men's.
Based on an analysis of interviews with stakeholders, board director data, and relevant literature, GAO identified various factors that may hinder women's increased representation among board directors. These include boards not prioritizing recruiting diverse candidates; few women in the traditional pipeline to board service—with Chief Executive Officer (CEO) or board experience; and low turnover of board seats.
Stakeholders GAO interviewed generally preferred voluntary strategies for increasing gender diversity on corporate boards, yet several large investors and most stakeholders interviewed (15 of 19) supported improving Securities and Exchange Commission (SEC) disclosure requirements on board diversity. SEC currently requires companies to disclose information on board diversity to help investors make investment and voting decisions. As stated in its strategic plan, one of SEC's objectives is to ensure that investors have access to high-quality disclosure materials to inform investment decisions. A group of large public pension fund investors and many stakeholders GAO interviewed questioned the usefulness of information companies provide in response to SEC's board diversity disclosure requirements. Consequently, these investors petitioned SEC to require specific disclosure on board directors' gender, race, and ethnicity. Without this information, some investors may not be fully informed in making decisions. SEC officials said they plan to consider the petition as part of an ongoing effort to review all disclosure requirements.