#FatCatFriday Why it’s time for boards to step up their corporate governance game
Today, The Equality Trust released figures which evidenced the significant difference in remuneration between a female and male executive. The six female CEOs in the FTSE 100 earned an average of £3,163,100 per annum which is only 54% of their male counterparts averaging £5,861,510.
In business today, the number of males in the boardroom, massively outweighs women, with 23% of boardroom positions held by women in the FTSE 100. The figure remains low despite pushes from the government and the new laws regarding fair remuneration in The Corporate Governance Code.
The new edition of the code has a stronger focus on the importance of diversity and fair remuneration based on ability not on gender. Whilst there are clear signifiers here for boards to make significant changes, boards need to be able to action them and not only recruit more women to their boards but ensure that they are all compensated fairly.
The employment of women in senior roles on a more equal basis would allow companies to make use of a wider talent pool. There is also evidence of a positive impact from women’s presence on boards and in senior management on companies’ performance.
Companies employing women and a more diverse work force are in a better position to serve consumer markets where these groups make the purchasing decisions. More gender-diverse boards could enhance corporate governance by offering a broader range of perspectives and experiences.
Whilst the FRC has stepped away from setting any minimum targets for the number of women required on boards, Lord Davies of Abersoch, who has been leading an enquiry into the male dominance of boardrooms across the UK, has recommended boards aim to be made up of 30% women by 2020.
Many organisations are in agreement that promoting more women to the boards of businesses is the right thing to do, but the biggest issue comes from the lack of urgency. It takes time for a business to change their board composition as the average tenure for an executive on a board is 8.7 years. Whilst initiatives are closely watched by activists, it could take several years before a board’s composition looks different with a bigger diaspora of women.
Want to learn more about how the Corporate Governance Code will affect boardroom practices? Click here to read our summarisation of the key points: