Conference Takes On Challenging Topics of Board Diversity, Pay Equity
About 175 attorneys, CEOs, and other business leaders came to Washington University School of Law recently for a two-panel conference, “Resetting Performance Expectations: The Role of Directors and General Counsel in Developing Diversity and Gender Equity.”
Organized by Hillary Sale, the Walter D. Coles Professor of Law and professor of management, the conference took place on Equal Pay Day, the date that marks how far into the new year the average American woman would have to work to earn what the average American man did in the previous year. Sale is an expert in securities and corporate governance, and she is a member of the Executive Committee of DirectWomen and chair of the DirectWomen Institute, an organization dedicated to educating women attorneys about public company boards.
In the capstone session, “Becoming an Effective Public Company Director,” seven company CEOs, corporate board members, and attorneys discussed gender equity on company boards of directors. Panelists were: Arnold Donald, CEO and president, Carnival Corp., and director, Bank of America and Crown Holdings; Ann Harlan, director, the Gorman-Rupp Company, and retired vice president and general counsel, the J.M. Smucker Company; Mary Ann Hynes, director, GHD Group Pty, Ltd., and senior counsel, Dentons; Diane Sullivan, CEO and president, Brown Shoe Co.; James Turley, director, Emerson Electric Co. and Citigroup, Inc., and retired chairman and CEO, Ernst & Young; and Washington University Chancellor Mark Wrighton, director, Cabot Corp., Brooks Automation, and Corning, Inc.
Sale set the stage with some provocative facts. Higher corporate performance in Fortune 500 companies correlates with three or more women sitting on the board of directors. The same is true of return on equity. It rises as the number of women on the board rises, and company returns are less volatile when women are on the board. Finally, while the percentage of women on company boards increased by about 24 percent between 2003 and 2013, the number of women of color on corporate boards has remained flat. “These statistics show what business people know. Diversity of thinking and business results go hand in hand. Businesses have a significant opportunity to improve performance through increasing the diversity—in many forms—of their boards,” Sale said.
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Donald then began the panel discussion by describing how the board selection process “really works.” Though nominating committees, policies, and procedures for recruiting new board members are in place, membership ultimately comes down to networking and “not so much who you know, but who knows you,” Donald said. As a result, diversity of race and gender on boards can be difficult to attain, despite its benefits.
“Diversity has to be proactively engineered,” Donald said. “It’s not a natural thing.” He went on to say that diversity is the key to success in innovation of people, products, and services. “You need diversity of thinking, and increasing board diversity increases diversity of thinking.”
Turley agreed, saying that diversity is about competing, not just “feeling good.” However, to succeed, the company needs to be open to diverse viewpoints. “The larger number of women and minorities on a company’s board is great, but having a culture that makes the numbers work is just as important,” he said.
Wrighton concurred, adding that while “every board member should have his or her own area of expertise and knowledge, it’s not the case that to be on the board of a tech company that you need to be a tech person.” For example, a merger or acquisition of a tech company requires financial, human resources, and corporate governance expertise as well as technical knowledge.
Sullivan provided yet another perspective on board diversity. “At Brown Shoe, diversity comes through strategy and through the consumers that we’re serving. The board needs to understand how to make those connections and put them in the right kind of context,” she said.
Sale noted that more opportunities for board membership exist in the international space because other countries are mandating board diversity and looking to the United States to meet the need. Hynes, for example, was tapped by an Australian-based engineering company on five continents to serve on its board. “The company was looking for the first American to sit on its board of directors,” Hynes recalled. “Because of my mergers and acquisitions experience, I’ve been in the five different industries GHD Group is in, and I have a strong math and physics background as well as an MBA,” she said.
One reason often cited for the lack of women and minorities on corporate boards is that not enough of them are “in the pipeline.” The panelists challenged this claim, saying that there are many well qualified women and minority potential board members. For example, many female attorneys have merger and acquisition experience, like Hynes, but they may be overlooked for board positions because they may not picture themselves in that role and may not actively seek it out. “It’s about thinking about who you are and how you package yourself,” Sale said.
Harlan added that once on boards, women face different challenges than men. Turley said that when a woman is alone on a board, it can be more difficult for her to ask questions, while both Sale and Donald mentioned “the power of three”—the idea that it takes three women on a board to steer the conversation in their direction. “You need powerful people on a board who can find a way to lead where the board will go,” Donald said.
Before the capstone session, another esteemed panel discussed “Power of the Purse: How General Counsel Can Impact Pay Equity for Women Lawyers.” Panelists were: Patricia Gillette, partner, Orrick, Herrington & Sutcliffe LLP; Roberta Liebenberg, partner, Fine, Kaplan and Black; Sheri Mossbeck, vice president and treasurer, Leggett & Platt, Inc.; Meredith Perkins, JD ’96, vice president, corporate counsel, and assistant secretary, Enterprise Holdings, Inc.; and Reuben Shelton, senior counsel for litigation, Monsanto. As moderator, Gillette began by telling the audience, “We are here to talk about power—the power you have to change the status of women in the legal profession.”
Panelists then discussed practical ways of increasing pay equity for female attorneys, from making sure that diversity is included in a company’s request for proposal when it hires attorneys, to asking firms to identify women in leadership positions on their staffs.
Perkins said general counsels should care about gender diversity for various reasons. “For one thing, it’s a fairness issue: people doing the same job should get paid the same amount of money,” she said. “But it’s also about having diverse viewpoints. Women bring that to the table.”
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- "Becoming an Effective Public Company Director" video [view]
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Timothy J. Fox, Spring 2014