Women on Boards – An Update

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Posted in:Corporate and Commercial, HR and Employment|May 7, 2013 | Join the mailing list

We have previously reported on the UK and global initiative to increase female representation on boards.  In a bid to avoid a compulsory EU wide system, which was viewed as overly onerous on business, the UK instigated a national system to
encourage increased numbers of women on boards.

In 2010 Lord Davies undertook an investigation on the barriers preventing women from reaching boardroom level and being part of the key decision making body within a company. Lord Davies has now published his second annual report.

The report has shown that having a business rather than legislature led strategy has had a positive result.  The statistics have shown general improvements whereby as at March 1 2013 women accounted for 17.3% of FTSE 100 and 13.2% of FTSE
250 board directors. This is up roughly 40% from 12.5% and 7.8% respectively in February 2011.

Further, women have secured 34% of all FTSE 100, and 36% of FTSE 250 board appointments since 1 March 2012, thus indicating the conscious efforts of businesses to improve female representation at senior level.

The report also noted that there are now only 6 all-male boards remaining in the FTSE 100, a fall from 21 in 2010.  Also, for the second year, all-male boards in the FTSE 250 remain a minority at 26.8% (67), this is down from 52.4% in February

Although the report indicates positive statistics across the FTSE 100 and FTSE 250 it also points out future actions to ensure that the target set in the 2011 review, whereby a minimum of 25% female representation on boards by 2015 will not
be missed.

These action points include:

• chairmen should review their targets for 2015 or set targets if they have not already done so;
• FTSE 250 companies should aim towards a target of 25% of women on their boards by 2015;
• by the end of September 2013, FTSE 350 Chief Executives should set out the percentage of women they aim to have on their Executive Committees and in Senior Management levels by 2015;
• executive committee members should be released to serve on the boards of other companies as part of the overall executive development plan; and
• companies should conduct a pilot for advertising director opportunities, to test the benefits and pitfalls of advertising.

Although all of these developments are happening at a national level it is important to remember that Member States of the EU will only be able to rely on their own systems as an alternative to EU legislative measures if they are viewed to
act as efficiently as the proposed Directive in achieving the EU 40% female representation target by 2020.

Any company failing to meet this target would be obliged to take positive action by giving preference to equally qualified woman, unless an objective assessment tilts the balance in favour of a male candidate.  Further, listed companies will
be obliged to have a "flexi-quota" – a self-regulated target for executive representation on boards, also to be met by 2020.

So whilst progress seems to be positive and although at present these obligations are not applicable to smaller private companies; the lessons to be learnt are clear.  Moving forwards equality at all levels of employment is imperative.  Without
a clear demonstration of gender equality, harsher EU wide legislation may be put in place.  If more onerous legislation is in place this in turn may lead to sanctions for those who do not comply.  As a result the composition of senior management may become
dictated by statutory obligations rather than what is commercially astute.  Companies need to aim for organic development to ensure that boards demonstrate the skills a representation most relevant to the operation of their business.

To discuss how we can provide further advice in connection with these issues, please contact Keith Kennedy, a Partner in our Corporate Team, by email to
keithk@berg.co.uk or alternatively you can call Keith on 0161 833 9211.

The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice.  No responsibility for article’s accuracy or correctness is assumed by Berg or any of its partners or employees. 
Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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