Lord Davies asks institutional investors to play a part in pushing for increased board representation
The timing and content of the Davies report is still under wraps, but rumour has it that CEO’s and Chairman will be forced by the government to disclose a target for female representation on their Board. Not only will every CEO and Chairman will have to record a 5 year aspiration for the makeup of their board, they are also likely to have to disclose more details of their process. At a dinner last night, Mervyn Davies implored institutional investors, as well as CEOs, Chairmen and headhunters to think about the make-up of Boards in a more strategic way.
Davies may rule out quotas at the publication of the report, but if Boards don’t change then quotas are likely to be imposed. The investment sense of having more female board representation has been proven by McKinsey (McKinsey & Co – Women Matter, 2007) which concluded, unequivocally, that companies with a higher proportion of women on their management teams not only had the best overall performance but also a significantly higher return on equity and stock price growth compared to their male only counterparts.
Let’s hope the initiatives in the report, when it is revealed, prevent the imposition of quotas of females on board’s from becoming a medium term outcome.