The best perspective on what lies ahead in corporate governance might just be from the pilot’s seat of the Duke of Cambridge’s air-sea rescue helicopter. Why? We’ll get to that in a moment. First it is time for that dread exercise, accountability. Each year we try to predict trends emerging in corporate governance over the next 12 months. But we also hold ourselves to account for how well we guided readers with last year’s prognostications.
What did we forecast last January? We made two prophecies. We wrote that 2011 “will be remembered as an inflection point in the effort to lift the percentage of women on U.S. corporate boards.” Well, we turned out to be only half right. The year was without doubt a turning point in board diversity—but in Europe, not the United States. More E.U. states adopted laws or embraced authoritative voluntary targets that promise sweeping boardroom reform. As a result, the typical E.U. corporate board will look very different by 2015 than it did in 2011. Here in the United States, though, progress proved glacial rather than viral. Spencer Stuart’s 2011 Board Index found that more boards than ever say they want diverse directors, but when it comes to actual numbers, “representation among women has inched up,” Spencer Stuart concluded, while “the share of minority directors has scarcely budged in many years.” The reason that the talk on diversity is greater than the action is largely because the SEC now requires boards to disclose their approach to diversity in respect to board composition, but it makes no requirements about the actual numbers. In 2011 nearly one of every 10 S&P 500 boards still had no women members at all. Overall, some 16 percent of the S&P 500 independent directors are women, compared to 15 percent five years earlier. We expect the pace to quicken thanks to initiatives such as CalPERS’s and CalSTRS’s Diverse Director Datasource (3D) project. But pressure for swift action from investors, the public, and government has not yet grown as strong here as it has across the pond. We grade ourselves a C.
