Last year, women in corporate America reached a significant milestone: women crossed the 20 percent threshold of total board seats among the Fortune 1000 companies, compared to 14.6 percent in 2011.
That’s a promising development among our largest, publicly traded companies. But when it comes to unicorns, the situation is pretty bleak.
Of the 107 private growth firms in the United States worth at least $1 billion, women held only 8.5 percent of board seats, according to a SharesPost analysis of data from Pitchbook. Even more distressing: nearly two-thirds of the unicorns do not have any female board members.
“We have a long way to go,” said Johanne Bouchard, a Bay Area corporate governance expert who serves as a consultant to several boards.
The size of unicorns and the enormous valuations they command require a board with a broad range of perspectives, especially as they prepare to go public.
But among “IPO boards,” directors that lead a company into stock offering, women are nearly invisible. Of the 75 largest IPOs from 2014 to 2016, nearly half, or 37 companies, went public with no women on their boards. Another 25 percent, or 19 companies, had only one woman, according to a report by Women on Boards 2020.
In other words, three fourths of companies with the largest IPOs went public with one or no women on their boards. And this period represents perhaps the most crucial stage in a company’s history when it needs competent director oversight and guidance to ensure a successful transition to the public markets.
“We hoped that at the point of going public, companies would recognize that board diversity is essential to success,” the Women on Boards 2020 report said. “Not so.”
In many ways, the lack of women on unicorn boards is not surprising. White men dominate Silicon Valley, especially among venture capitalists who fund startups and therefore sit on the boards.
The need for better board oversight at unicorns presents a significant opportunity for women as companies need to recruit more independent directors to strengthen corporate governance, Bouchard, the consultant, said.
Although the ranks of women among venture capitalists and startup founders is rather thin, there’s plenty of female board candidates with leadership and management experience, she said.
“If they have been a great executive, they have the ability to serve,” Bouchard said.
Interestingly enough, the nearly 60 women who hold unicorn board seats almost equally fall into three groups: VC and investment professionals (Mary Meeker of Kleiner Perkins Caulfeld Byers, Maria Cirinio of .406 Ventures), current and former CEOs (Ursula Burns of Xerox, Maggie Wilderotter of Frontier Communications, Michele Burns of Mercer), and top managers (Facebook chief operating officer Sheryl Sandberg, Square chief financial officer Sarah Friar, Leslie Kligore, former chief marketing officer at Netflix).
Unfortunately, they are overwhelmingly white with black and Asian women accounting for only 22 percent of board seats. There are no Hispanic/Latino female board directors.
The vast majority of female directors only sit on one board. Women who serve on multiple boards include Heidi Roizen, a partner at Draper Fisher Jurvetson (16), Maggie Wilderotter (9), former DuPont CEO Ellen Kullman (7), and Catherine Friedman of Morgan Stanley (4).
Studies and experts have said a diverse board, whether by race or gender, can boost corporate governance and ultimately shareholder value by offering a broader range of perspectives, skills, and experiences.
However, companies today still don’t quite grasp that connection. A recent survey of 300 executives and board directors by Wakefield Research found that while 95 percent said they need to seek candidates with a diverse set of skills and experiences, they don’t think board diversity is a big problem.
“It would be unfortunate if a focus on diversity of skills and perspectives were to undermine or cloud the focus on gender and racial diversity,” the report said. “In fact, typical definitions of board diversity include a demographic component.”
Now that corporate boards are finally recruiting more women, private firms should follow suit.
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