Chair Mary Jo White
New York, New York
Nov. 19, 2015
Good afternoon, and thank you Mike [Fucci] for that kind introduction. It is great to be here.
The Women’s Forum of New York remains the critical, groundbreaking organization for successful women that it was when it held its first meeting in 1974. That was, by coincidence, the year I graduated from Columbia Law School. As one benchmark of progress, that year’s graduating class was only 17 percent women. Today that number is 45 percent and, in some years, it is higher.
We all have indeed come a long way since 1974. Today, women receive more than half of all bachelors’, masters’ and doctorate degrees, and more than a third of MBAs.[1] Women are approximately half of the total workforce and half of all managers.[2] But there remain areas stubbornly resistant to the progress that objectively should have already occurred. One in the legal profession is the percentage of women who are equity partners at law firms—18 percent. That number has only increased two percent since 2006,[3] and we had achieved 12.9 percent back in 1994.[4] Another resistant area is the financial arena—we now account for 29 percent of senior officials in finance and insurance, and no woman has, for example, ever been CEO of one of the 22 largest U.S. investment banks or financial firms.[5] A third critical area that has been a particular priority for the Women’s Forum of New York is the focus of today’s event: gender diversity in U.S. boardrooms.
Let us be clear at the outset, this is not a pipeline issue. We are here—in numbers, and we are qualified—in numbers. And yet, there are comparatively very few of us in corporate boardrooms—17.5 percent in Fortune1000 companies[6] and 19.2 percent for the S&P 500.[7]
This event, however, is proof positive that greater diversity in the boardroom is achievable. There are more than twenty U.S. companies being honored today whose boards are at least 40 percent women, and these are companies of all sizes and industries: Alaska Air, Macy’s, Frontier Communications Corporation, Pacific Life Insurance Company, and TIAA-CREF. The percentage of women on Avon’s board exceeds 60 percent and six companies, including Xerox and The Estée Lauder Companies, are over 50 percent.
We should all be extraordinarily impressed by these companies as well as by those exceeding the 20 and 30 percent marks that are also rightly being recognized today. Keep going. As a growing body of research confirms, it is smart business to have your board diversified to reflect the marketplace and benefit from broader perspectives. It is also the right thing to do.
But we do have a significant gap to close and should not minimize the extent or importance of that challenge. Only three percent of Fortune 1000 companies have at least 40 percent women in their boardrooms.[8] While quotas are not the path we follow in the United States, the target goal of a minimum of 40 percent women on the boards of all Fortune1000 and S&P 500 companies by 2025 set by the Women’s Forum of New York is within reach and an imperative. But it will not be easy.
Keeping a laser-like focus on gender parity by 2025 and vocally measuring progress each year, company-by-company, are essential. Reject any notion that there is a shortage of highly qualified candidates. If needed, excellent recommendations are there for a board’s governance or nominating committee from, for example, the Women’s Forum’s database.
For those who may still doubt the wisdom and importance of gender parity on boards and for those who may despair because of the slow pace of progress, we have answers for you and are of no mind to be deterred.
A Bit of History
First, a bit of history to inspire us and to show how truly far we have come. Not all that long ago, women were on corporate boards only by virtue of birth or marriage. Largely in the 1950s, Abbott, IBM, Marriott International, and PepsiCo all had wives of the founder or former CEO become their first female directors.[9]
Lettie Pate Whitehead was one of the first female directors of a major U.S. company. In 1899, Whitehead’s husband Joseph was one of the first bottlers of Coca-Cola. When he died unexpectedly in 1906, Lettie took over both his bottling business and his real estate interests. With her at the helm, both were quite successful. And in 1934, Coca-Cola appointed Lettie Whitehead to its board where she served with distinction for nearly two decades.[10]
Another trailblazer was Catherine Cleary. Cleary, who died in 2010 at the age of 93, became the first woman board member of AT&T, Kraft, and General Motors, and worked her way up through the ranks independent of her family ties. After graduating from law school in 1943, Cleary was hired by a trust company but told she might never be an officer because she was a woman.[11] No was not an acceptable answer. Cleary went on to head that trust company, First Wisconsin Trust Co.[12]
In 1974, President Ford summoned her to the White House to be considered for a position in his administration. According to the President’s briefing memo, Cleary was considered a “big league player” who did “more than is required of the ordinary director.” She was described as alert, inquisitive, articulate and poised, but it was also noted, and confirmed by several sources in the memo, that she could “cuss like a man”[13]—apparently, a useful and important qualification at the time.
Another pioneer I would like to mention may be known to some of you, G.G. Michelson. When G.G. passed away last January at the age of 89, she had shattered more very high glass ceilings than most of us will ever see. She grew up partially in orphanages, graduated from Columbia Law School in 1947—the year I was born—and worked her way up to being a top executive at Macy’s and deputy chairwoman of the New York Federal Reserve. She was also often the first or only woman on boards of major companies, including General Electric, Goodyear Tire & Rubber, and Quaker Oats.[14] In 1989, she became the first woman to ever chair the board of trustees at an Ivy League institution when she was elected to that position at Columbia University. When the New York Times called her a trailblazer, G.G. replied with characteristic humility, “Sometimes it’s better to let others view what you’ve achieved in historical terms while you just do the best you can as an individual.”[15]
I met G.G. in the 1990s when we both served on the Board of Visitors of the Columbia Law School. I was immediately struck by her integrity, clarity of vision, quiet strength, and concern for other people. She was not only one of the most impressive people I have ever known, but also one of the few women (or men) I have ever met whose passion for and knowledge of the New York Yankees rivaled my own. G.G.’s mission was to do her job well; she certainly did that and indeed set the gold standard for all of us who followed.[16]
Where We Are Today
I think that G.G. Michelson, Catherine Cleary, and Lettie Pate Whitehead would be immensely proud of the celebration and discussion here today. This room is full of women and men who want to see gender parity in the boardroom and have had a lot to do with bringing it about at their own companies. At our current pace, however, we would not achieve boardroom gender parity overall until 2090.[17] A more acceptable, albeit still overly delayed, major milestone would be at least 40 percent by 2025. Let’s take a closer look at the numbers to see where we are and where we have to go.
Today, at S&P 500 companies, women are 45 percent of the employees, nearly 37 percent of mid-level managers, a quarter of senior-level managers, 4.4 percent of the CEOs, and 19.2 percent of board members.[18] As a point of reference again, the percentage of board members is only slightly better than the percentage of women in my law school class more than 40 years ago.[19]
Despite the intense focus in recent years, we have not seen nearly enough progress in the boardroom for women or minorities. The number of women on U.S. boards of S&P 500 companies has, for example, increased only four percent over the past five years.[20] To be sure, 19.2 percent represents an impressive increase from 1.8 percent in 1981.[21] But it does not begin to approach parity and the U.S. also lags behind many other developed countries.
For large listed companies in the EU, women board members hit 20.2 percent in 2014 after being at only 11.9 percent in 2010. While much of that impressive, short-term jump is attributable to countries instituting quotas, significant progress has also occurred in countries without mandatory quotas. It can be done. And our slow progress, in the face of highly qualified, diverse candidates, the demands of investors, and the tangible benefits of greater diversity on boards, is not defensible.[22]
Study after study shows that diversity of all kinds among members makes for stronger boards and companies. Recent research has, for example, found that women board members tend to better understand the perspectives of non-management stakeholders, including consumers and employees.[23] One study also shows that women tend to use cooperation, collaboration and consensus-building more frequently, and they are more likely to make consistently fairer decisions among competing interests.[24]
We have also seen a growing body of academic research demonstrating that having men and women together around the same conference table is associated with enhanced stock price and shareholder value. According to the 2012 Credit Suisse Research Institute study, companies with women on the board had higher average returns on equity and higher net income growth from 2005 to 2011.[25] A more recent Reuters study found that globally, boards with female members tend to see better returns and less volatility compared to a benchmark index.[26] And the list goes on. The powerful correlation drawn by these studies cannot be ignored. To borrow a phrase from the law enforcement realm, follow the evidence wherever it leads. And that place is parity in boardrooms.
Probably all of the women here today know from personal experience what it is like to be the only, or nearly only, woman in the room. When I became a partner in my law firm in the early 1980s, I was one of only two women partners, out of 75. You feel that kind of disparity, but do not always appreciate the kind of impact it may have your performance and progress.
It was not until about twenty years into my legal career that I saw firsthand the dramatic difference the numbers make. I call this my “Earth to Mary Jo” moment. It occurred in 1993. I was the newly-appointed U.S. Attorney for the Southern District of New York and had also been elected to chair a committee of other U.S. Attorneys from around the country who advised Attorney General Janet Reno. In that capacity, I attended General Reno’s weekly senior staff meetings, and, for the first time in my career, I was in a high-powered setting where there were more women than men. The impact was palpable.
The folks in the room, all Presidential appointees, were an impressive and powerful group of senior leaders. And it was the women who forcefully advocated their ideas and spoke freely, while the men seemed much more reticent. The lesson I learned there obviously carries over to the C-suite and the boardroom. The numbers do matter.
After completing my nine year tenure as U.S. Attorney in 2002, I was elected to the NASDAQ board. At that time, I was the first and only woman on the board. Happily, not too long after, I was joined by another woman, Deborah Wince-Smith, but I would have liked to have seen the dynamic if there had been at least three or four of us. At the time I was on the NASDAQ board, Adena Friedman, who spoke earlier, was the Executive Vice President of Corporate Strategy and Data Products and an obvious star. Adena is a great example of a woman who worked hard to rise in the ranks from a NASDAQ intern, to its CFO, to today, Co-President.
Board membership for women is itself a major professional achievement; it also leads to other career opportunities. The experience and the knowledge I gained as a NASDAQ board member also served me well both in my private sector life as a lawyer advising boards and in my current position as Chair of the Securities and Exchange Commission. By the way, I am pleased to say that I am the third, not first, woman to serve as SEC Chair. That is progress. And the President recently nominated two more women to the five-member Commission. If they are confirmed by the Senate, the SEC would have four female commissioners for the first time in its history. That too is progress, and frankly sounds like a lot more fun.
I am also very happy, as Chair of the SEC, to have joined the ranks of many other women leaders in financial regulation. This “sorority,” if you will, includes Chair Janet Yellen of the Federal Reserve Board, Chairwoman Edith Ramirez of the Federal Trade Commission, Chairman Debbie Matz of the National Credit Union Administration, and Managing Director Christine LaGarde of the International Monetary Fund. It has also recently included Sheila Bair, the former Chair of the FDIC, and now president of Washington College. And this impressive list does not include agency heads like Attorney General Loretta Lynch, the first African-American woman to serve as the United States Attorney General.
So, women have more than arrived in the ranks of senior leaders in finance and government, but there is still a long way to go. We are, for example, working very hard at the SEC to achieve more diversity in the ranks of our most senior officers. The other financial regulators are doing the same. In both the public and private sectors, we must embrace and maintain a sense of urgency to expand senior-level opportunities for qualified women and minorities, including in the corporate boardroom.
The Path to Parity
Gender diversity—all diversity—deserves much more than lip service. Results are what matter. So, how do we get from A to B, “B” being gender parity on U.S. boards? There are a few direct and then more subtle ways to do this.
First, we should continue to strongly encourage governance and nominating committees to consider diverse candidates and urge CEOs to sponsor women and minorities they believe would make good board members. We can, as we are doing today, recognize and celebrate the leaders of progress. We can also, along with investors, continue to call out those companies and their boards that do and do not proactively reach forward.[27] We also need to continue to use best practices to build supportive work environments.
On a more subtle front, this month’s Harvard Business Review showcased a research finding that companies whose CEOs have daughters may offer different perspectives on a range of issues. Those companies, for example, rank 12 percent higher in terms of social responsibility than those companies whose CEOs have only sons and, more generally, scored higher on diversity, employee relations and eco-friendliness.[28] One of the study’s authors said that those CEOs “with girls may, for example, have seen their daughters discriminated against in the labor market, which could have an impact on their attitudes about equality.”[29]
For fun, I looked at the CEOs (both women and men) on your 50 percent plus honor roll, and guess what? All of them who have children have at least one daughter. In the interest of full disclosure, Sheri McCoy, the CEO of the 60 percent plus Avon, has three sons. She obviously did not need the extra enlightenment of raising daughters. But perhaps we are onto another criteria for executive search firms and boards as they seek out gender progressive CEOs and other corporate executives.
Conclusion
Opportunities for women in the United States have never been greater—thanks to the trailblazers—thanks to those of you in this room—who have paved the way for more equality for women in education, business, the military and government service. The boardroom is a vital, remaining frontier where the playing field has just begun to level. And it is a critical playing field because corporate directors are among the most important gatekeepers in our financial system.
Strong boards are indeed key to the success of the SEC’s mission to protect investors, maintain fair and efficient markets, and facilitate the capital formation that allows for the growth and innovation that sustains America’s economic strength. None of us wants qualified women to be denied their place in such a critical role. Not only do women deserve to be corporate directors in numbers by virtue of our qualifications, but we are also demonstrated adders of value once we get there. Achieving gender parity by 2025 will require deep commitment and concerted efforts by all of us. But make no mistake, however challenging, the goal is attainable. It is also a business and moral imperative.
Thank you for listening.
[1] See, e.g., U.S. Department of Education, “Digest of Education Statistics 2013.” Available at https://nces.ed.gov/programs/digest/d14/tables/dt14_301.10.asp?current=yes
[2] See, e.g., United States Department of Labor, Latest Annual Data (2014). Available at http://www.dol.gov/wb/stats/latest_annual_data.htm); Bureau of Labor Statistics, “Women in the Labor Force” (2014) Available at: http://www.bls.gov/opub/reports/cps/women-in-the-labor-force-a-databook-2014.pdf.; Catalyst. “Women’s Share of MBAs Earned in the US.” Available at: http://www.catalyst.org/knowledge/womens-share-mbas-earned-us
[3] National Association of Women Lawyers. “Report of the Ninth Annual Survery.” 2015. Available at: http://www.nawl.org/p/cm/ld/fid=506
[4] American Bar Association. “Charting our Progress.” http://www.americanbar.org/content/dam/aba/migrated/women/ChartingOurProgress.authcheckdam.pdf
[5] Colby, Laura. “Why Wall Street’s Women Are Stuck in the Middle.” Bloomberg. 26 June 2015. Available at: http://www.bloomberg.com/news/articles/2015-06-26/one-of-these-women-may-win-the-struggle-to-run-wall-street-firm
[6] 2020 Women on Boards. “Steady Gains Made by Women on Fortune 1000 Company Boards.” 19 November 2015. Available at: https://www.2020wob.com/about/press/release/2020-women-boards-releases-2014-gender-diversity-index
[7] Catalyst. “Women in S&P 500 Companies.” 2015. Available at: http://www.catalyst.org/knowledge/women-sp-500-companies
[8] Ellig, Janice. “The Not Sure Herculean Task of Achieving Gender Parity in the Board Room.” Huffington Post. 13 October 2015. Available at: http://www.huffingtonpost.com/janice-reals-ellig/the-not-so-herculean-task_b_8288746.html
[9] Larcker, David and Brian Tayan. “Pioneering Women on Boards: Pathways of the First Female Directors.” Stanford Closer Look Series. 3 September 2013. Available at: http://www.gsb.stanford.edu/sites/default/files/35_Women.pdf
[10] Georgia Women of Achievement. “Evans, Lettie Pate.” Available at: http://georgiawomen.org/2010/10/evans-lettie-pate/; The Letter Pate Whitehead Foundation. “About Us.” Available at: http://lpwhitehead.org/about-the-foundation/
[11] McBride, Marian. “High Finance Is Her Forte.” The Milwaukee Sentinel. 18 October 1969. Available at: https://news.google.com/newspapers?nid=1368&dat=19691018&id=IfsjAAAAIBAJ&sjid=sREEAAAAIBAJ&pg=5049,3788840&hl=en
[12] See Silvers, Amy Rabideau. “Cleary led way for women in business.” Milwaukee-Wisconsin Journal Sentinel. 6 December 2010. http://www.jsonline.com/news/obituaries/111403764.html
[13] Memo from William N. Walker to President Gerald Ford. 3 December 1974. Ford Library. Available at: http://www.fordlibrarymuseum.gov/library/document/0047/phw19741203-04.pdf
[14] Duhigg, Charles. “G.G. Michelson, Macy’s Executive Who Broke Glass Ceilings, Dies at 89.” New York Times. 13 January 2015. Available at: http://www.nytimes.com/2015/01/14/business/gg-michelson-macys-executive-who-broke-glass-ceilings-dies-at-89.html?_r=0
[15] Daniels, Lee. “Columbia Trustee Head: A Low-Key Trailblazer.” New York Times. 21 June 1989. http://www.nytimes.com/1989/06/21/nyregion/education-columbia-trustee-head-a-low-key-trailblazer.html
[16] Mushabac, Jane. “Gertrude Geraldine Michelson.” The Jewish Women’s Archive. Available at: http://jwa.org/encyclopedia/article/michelson-gertrude-geraldine
[17] Ellig, Janice. “The Case for ‘Breaking Into Boardrooms:’ A Call for Gender Parity on S&P 500 Boards by 2025.” Huffington Post. 14 July 2015. Available at: http://www.huffingtonpost.com/janice-reals-ellig/the-case-for-breaking-int_b_7793196.html
[18] Catalyst. Pyramid: Women in S&P 500 Companies. New York: Catalyst, October 13, 2015. http://www.catalyst.org/knowledge/women-sp-500-companies
[19] Catalyst. “2014 Catalyst Census: Women board Directors.” 13 January 2015. Available at: http://www.catalyst.org/knowledge/2014-catalyst-census-women-board-directors
[20] Catalyst. “2009 Catalyst Census: Fortune 500 Women Board Directors.” 9 December 2009. Available at: http://www.catalyst.org/knowledge/2009-catalyst-census-fortune-500-women-board-directors-0
[21] Nemy, Enid. “Women on Boards: A New Perspective.” New York Times. 22 April 1981. Available at: http://www.nytimes.com/1981/04/22/garden/women-on-boards-a-new-perspective.html
[22] Glinski, Nina. “Women on Boards.” Bloomberg. 25 September 2015. Available at: http://www.bloombergview.com/quicktake/women-boards
[23] Committee for Economic Development, “Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive,” 13-14, 16 (2012). Available at: http://www.fwa.org/pdf/CED_WomenAdvancementonCorporateBoards.pdf).
[24] Chris Bart & Gregory McQueen, “Why women make better directors,” International Journal of Business Governance and Ethics, 93-99 (March 2013). Available at: http://www.boarddiversity.ca/sites/default/files/IJBGE8-Paper5-Why-Women-Make-Better-Directors.pdf).
[25] Credit Suisse Research Institute, “Gender diversity and corporate performance,” 14 (August 2012). Available at: https://www.credit-suisse.com/newsletter/doc/gender_diversity.pdf).
[26] André Chanavat & Katharine Ramsden, “Mining the Metrics of Board Diversity,” Thomson Reuters (June 2013). Available at: http://share.thomsonreuters.com/pr_us/gender_diversity_whitepaper.pdf).
[27] The Ontario Securities Commission passed rules that require companies to disclose information about their policies to support women in senior roles; otherwise, companies must explain why they do not have policies in place. The “comply-or-explain” rules took effect on January 1, 2015. See e.g. McFarland, Janet. “OSC rebukes firms for lack of action on gender-diversity rules.” The Globe and Mail. 10 June 2015. Available at: http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/osc-blasts-firms-for-lack-of-action-on-gender-diversity-rules/article24902736/
[28] Beard, Alison. “CEOs with Daughters Run More Socially Responsible Firms: An Interview with Henrik Cronqvist.” Harvard Business Review. November 2015. Available at: https://hbr.org/2015/11/ceos-with-daughters-run-more-socially-responsible-firms; Cronqvist, Henrik and Fang Yu. “Shaped by Their Daughters: Executives, Female
Socialization, and Corporate Social Responsibility.” ResearchGate. June 2015. Available at: http://www.researchgate.net/profile/Fang_Yu9/publication/279840497_Shaped_by_Their_Daughters_Executives_Female_Socialization_and_Corporate_Social_Responsibility/links/559b8d3408ae99aa62ce5799.pdf
[29] Beard, Alison. “CEOs with Daughters Run More Socially Responsible Firms: An Interview with Henrik Cronqvist.” Harvard Business Review. November 2015. Available at: https://hbr.org/2015/11/ceos-with-daughters-run-more-socially-responsible-firms
