The science of getting women on boards

A sign displays the Twitter logo on the front of the New York Stock Exchange ahead of the company's IPO in New York, November 7, 2013. Twitter Inc could face volatile trade in its debut Thursday on the New York Stock Exchange, analysts said, but they remained enthusiastic after the money-losing social media company priced its IPO above the expected range. The microblogging network priced 70 million shares at $26 on Wednesday evening, above the targeted range of $23 to $25, which had been raised once before. The IPO values Twitter at $14.1 billion (8.8 billion pounds), with the potential to reach $14.4 billion if underwriters exercise an over-allotment option. REUTERS/Lucas Jackson (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY TPX IMAGES OF THE DAY)

REUTERS/Lucas Jackson

One of the frequently cited challenges to getting more women onto corporate boards is, in a nutshell, the waiting game for directors to retire. Some companies like Twitter--which on Thursday named its first female board member, Marjorie Scardino--have made attempts to rectify that after being criticized for their lack of diversity. And yet for many others, whose boards have long been composed of men without term limits, there are just not enough vacant seats that can be filled with new female directors.

Figuring out whether that's going to change any time soon is a pretty complex science, judging by two studies on board diversity released in recent weeks.

Ernst & Young just released a report finding that nearly half of all board seats (45 percent) are held by directors with a tenure of 10 years or more, and that 88 percent of these veteran board members are men. Moreover, it reported that 27 percent of current board seats are held by directors aged 68 or older, and that 94 percent of these directors are men. Because the majority of S&P 500 companies have policies that require directors to retire at age 70 or higher, the report states, it’s possible that more than a quarter of board seats could turn over in the next five years, freeing up seats currently held by men to go to more women.

That's encouraging for diversity, the report says: "The slow pace of board turnover — pegged as one of the greatest obstacles to increased board diversity — may be poised to accelerate." The report also states that investors are increasingly concerned that longer tenures can lead to less independent directors (it could be harder for directors to rock the boat and risk losing the board gig, after all, when they've gotten accustomed to that extra $249,000 a year), which only adds to the impression that turnover could be on the rise.

But just a few weeks earlier, executive search firm Spencer Stuart released its 2013 Board Index, which highlighted a long-term decline in turnover among new independent directors and rising mandatory retirement ages. Across the Fortune 500, the study found, boards awarded seats to 339 new independent directors in 2013. While that's a healthy jump from 2012, it's 11 percent lower than the turnover rate in 2008, and 14 percent lower than a decade ago.

Meanwhile, the age at which directors retire is going up. In 2003, Spencer Stuart's study reports, just 3 percent of companies with mandatory retirement policies set the retirement age at 75 or older (the other 97 percent had a younger retirement age). Today, 24 percent of such companies set it at 75 or older. Translation: Don't expect the ranks of old white men to thin drastically anytime soon.

Yet whether the turnover rate on boards is going up or down won't even matter unless women are actually getting enough of the vacant seats to gain ground. And that's not happening, says Deborah Gillis, the chief operating officer for Catalyst, a nonprofit that advocates for advancing women in leadership.

"Even when there is turnover, those seats are going to men," Gillis says, citing a 2012 Catalyst study that found 81 percent of "entrant" board seats were filled by men from 2009 to 2011. "Part of the issue is clearly that they are really stuck in old-school thinking, turning to the usual pool of suspects rather than saying it's a business imperative to add more women."

Jena McGregor is a columnist for On Leadership.

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