Women Take A Seat On The Board

The executives on our list of the World's 100 Most Powerful Women also make an impressive showing on some of the most prestigious corporate boards.

There’s Meg Whitman(No. 22), who sits on the boards of Procter & Gamble and DreamWorks Animation. Indra Nooyi (No. 5) is a Federal Reserve Bank director. And Shelly Lazarus (No. 96) sits on the boards of General Electric and drug giant Merck.

For diversity advocates lobbying for more female representation on corporate boards, these women are signs of welcome change. Indeed, the numbers look decent at first--97% of the top 200 companies on the S&P 500 have at least one female director, according to a February 2006 report from executive search firm Spencer Stuart. A closer look, though, reveals that women make up only 6% of the five top executive positions in those companies and hold just one out of six board seats.

Where do these female directors come from? Many are recycled among boards. Efforts to recruit female directors and make corporate boards less of an old boys’ club have actually made them into an even more insular girls’ club. The names of the most desirable female directors aren’t hard to guess, since there are only a handful of prominent female chief executives on our list.

“You have a supply-demand problem,” says Julie Hembrock Daum, head of board services at Spencer Stuart. A quarter of the requests she gets are for women, but she says the pool for executive women directors is pretty shallow. “There just aren’t as many women in senior management positions as we thought there would be by now,” Daum says. “The pipeline is not full.”

Headhunters thought the Sarbanes-Oxley Act would fix that problem by forcing boards to look for women outside the executive suite, since the law limits the number of directorships insiders can hold. They were wrong. “Instead what it has done in recent years is create a flight to retired chief executives,” who are almost all men, says Deborah Soon, who heads the board initiative for Catalyst, a research firm that studies women in business.

But companies are looking elsewhere for qualified women. They’re reaching down the corporate ladder past a C-level title. This means a board might choose a vice president with expertise in accounting for the audit committee, for example, or a human resources director for her people skills. “They’re moving from looking only at credentials to looking more at the person--what they can provide, what value they bring,” says Daum. Indeed, 63% of male directors are active or retired CEOs, while just 26% of female directors are, according to the Spencer Stuart report.

Victoria Medvec, executive director of the Center for Executive Women at the Kellogg School of Management, has also seen an increase in opportunities for women who aren’t in chief executive roles. “Many boards are realizing that a president of a very large division often holds enough accountability in terms of their dollar revenue stream,” comparable to a chief executive of a small company, she says.

Still, the growth rate of women on boards is actually slowing, according to Catalyst. At the current rate, the firm estimates, it will be 73 years before there are an equal number of men and women in America’s boardrooms. “We’re the first to say the growth rate, no matter how positive, is still so darn slow it’s glacial,” Soon says.
Five biggest companies with the highest percentage of women directors:

Avon Products (nyse: AVP - news - people )50%
Estée Lauder (nyse: EL - news - people 42%
Pepsi Bottling Group (nyse: PBG - news - people ) 40%
Principal Financial (nyse: PFG - news - people ) 38%
Sysco (nyse: SYY - news - people )40%

Five biggest companies with zero women directors:

Plains All American Pipeline (nyse: PAA - news - people )
Delphi (otcbb: DPHIQ - news - people )
News Corp. (nyse: NWS - news - people )
Tesoro (nyse: TSO - news - people )
Computer Sciences (nyse: CSC - news - people )