As we celebrate International Women’s Day today, it’s good to realise that diversity has made significant strides in the investing mainstream, notably with women now constituting 33% of directors on S&P 500 boards, nearly double the figure from a decade ago. However, Morningstar’s Lindsey Stewart’s latest research has unveiled the differential support for women in key board roles compared to their male counterparts.
It became clear from Morningstar’s research that women are notably underrepresented in crucial board roles such as lead directors at the largest US companies, with over 75% of these roles held by men. When it comes to key board roles, women receive less support than men, exposing a potential conflict between advocating for diversity and demanding accountability.
Looking at all director election votes, women, with 97.6% median adjusted support, appear to have slightly higher support than men (96.9%). As nine-tenths of director election resolutions exceed 88% support, small apparent differences like this are actually meaningful.
However, this pattern reverses if we only look at key board roles. Average support for directors in key board roles is lower, as these positions are often targets for investor dissatisfaction over various risk-management issues. Overall, for these key board roles, median adjusted support is slightly higher for men (95.8%) than for women (95.3%). The gap is considerably wider for lead directors—among these, median adjusted support for men stood at 95.4% compared with 93.8% for women.
Ann Mather at Alphabet, Edith Cooper at Amazon, Charlotte Guyma at Berkshire Hathaway, Safra Catz at Oracle, and Robyn Denholm at Tesla are all examples of women in senior board positions who gained less than 80% support from independent shareholders in the 2023 proxy year. Several shareholders attributed their votes against these directors to concerns over independence, long tenure, and oversight of management compensation.
Only one-third of the 1,128 director election resolutions in the last proxy year were to elect or re-elect women to the board. Morningstar also examined the proxy-voting results for S&P 100 companies in the 2023 proxy year, revealing that one-third of director elections involved women.
Lindsey Stewart, director of investment stewardship research, Morningstar said:
“While institutional investors often see diversity as a corporate governance imperative and a source of competitive advantage, nuances emerge in proxy-voting decisions, specifically how to vote in a way that preserves gender balance on boards while also ensuring accountability. Investors face a delicate balance between advocating for diversity and holding boards accountable. As proxy-voting choices expand, there is a need for calibration to avoid unintentional outcomes that may undermine the push for gender equality.”
