Female representation on the boards of directors of publicly traded Louisville-based companies is on par with the rest of the nation. Some companies like Brown-Forman Corp. have championed diversity in director and leadership ranks, while others, such as Sypris Solutions, remain a men’s only club.
Looking at nine Louisville companies that have existed for at least a decade, 17 of 82 board seats, or about 21 percent, are held by women, up from 14 percent a decade ago, according to an Insider Louisville analysis of SEC filings. If companies that issued their IPOs in the last decade are included, the share of women on boards drops to 18 percent.
Nationally, 20.2 percent of the 5,440 total board seats at Fortune 500 companies were held by women in 2016, up from 15.7 percent in 2010, according to an analysis conducted by Deloitte on behalf of the Alliance for Board Diversity. The alliance promotes the inclusion of women and minorities on corporate boards.
The rise in women on corporate boards comes as governments and activists push for more gender equity, and investors are increasing their pressure on companies to make sure that their boards more closely reflect their customer base, which for some companies is increasingly global. The dynamics also are shifting as movements such as Me Too are raising public awareness of sexual harassment, especially in the workplace.
Sypris Solutions is the only one of the nine Louisville-based companies that have existed for a decade or more that doesn’t have any women on its board currently; five of its peer companies have multiple female board members. A decade ago, two companies had no women on their boards, and four companies had at least two female board members.
Almost all publicly traded Louisville-based companies reference diversity in their proxy statements, though many also say that they have no formal policy regarding diversity. Sypris Solutions could not be reached for comment, but the company said in its most recent proxy filing that it looks for directors with “a diversity of viewpoints and backgrounds … including diversity of religions, races, genders, nationalities, educational backgrounds, work experiences and extracurricular interests.”
Brown-Forman has four female board members — more than any other publicly traded Louisville-based company. The liquor company wrote in a proxy statement that it looks for director candidates with “good judgment, candor, civility, business courage, experience with businesses” and asks that company and board leaders “consider diversity in evaluating candidates … to maintain a well-balanced composition that combines a variety of experiences, backgrounds, skills and perspectives.”
Research on financial impact a mixed bag
Research on the financial impact of gender diversity on corporate boards is mixed: Some reports suggest a positive correlation between the number of women on the board and corporate culture and profit. Other analyses indicate that having women on boards has little to no impact — positive or negative — at least on a company’s bottom line.
Nonetheless, Brown-Forman officials and a University of Louisville assistant dean said that greater diversity on corporate boards and in the executive leadership ranks helps with at least one business aspect that is crucial to long-term success: the attraction and retention of talented employees.
For Brown-Forman, gender diversity on its board and in its leadership ranks is nothing new. The distiller had four women on its board a decade ago, more than twice as many as any other locally based publicly traded company.
Garvin Brown IV, the company’s board chairman, told Insider recently that diversity was a topic in the boardroom when he moved here in the early part of the millennium.
A diverse set of people on the board and among leaders “inevitably leads to rigorous debates,” which are needed to tackle complex challenges, he said.
“This just isn’t a conundrum. It isn’t a tough decision,” Brown said. “You grab hold of diversity as part of your culture and enjoy all the benefits.”
Kirsten Hawley, the company’s HR director — one of four women in the company’s executive leadership team — told Insider that diversity on boards and in leadership positions provides a company with access to different experiences and perspectives.
For example, she said, having women involved in discussions at the highest levels has informed the company’s policies surrounding parental leave. And, Hawley said, having both men and women as mentors have shown female employees like her that the company values their input.
Hawley, who has been with Brown-Forman for more than two decades, said that the company invests money, time and leadership expertise into mentoring programs that help women and employees of color, as well as unconscious bias training to make sure that all employees understand where their biases lie so that it doesn’t get in the way of well-qualified people joining the company.
Brown-Forman recruits globally, and attracting the best and brightest young workers in the U.S., China, India and Mexico is significantly easier if the company’s executive leadership ranks and board of directors resemble the people the company is trying to hire.
Talented people want to operate in a system where they can be heard and seen so that they can develop to their fullest potential, Hawley said. If talented women, African-Americans, Asian-Americans, Cuban-Americans or other minorities feel marginalized, they can take their talents elsewhere — to the detriment of the company that loses them, possibly to a competitor, she said.
That’s especially the case with millennials and members of Generation Z, who expect leaders to look more broadly like their communities, said Kristen Lucas, associate professor of management and assistant dean of Program Innovation and Strategic Initiatives at UofL.
All other things being equal, young talented women or African-Americans likely will be more attracted to work for a company if its board and leadership ranks display some diversity.
Brown-Forman in recent years has been recognized as one of the best-managed companies in the country, thanks in part to high employee engagement, and has received accolades for LGBTQ workplace equality and disability inclusion.
According to its most recent Corporate Responsibility Report, employees remain with the distiller for an average of about a decade, “more than double the national average.”
“In fact,” the company said, “many spend their entire careers here, which tells us we are doing something right.”
Money and cost
Adding women and minorities to the board can “help cultivate diverse perspectives and hold company insiders accountable when sexual harassment occurs,” according to the Council of Institutional Investors.
The council wrote in March that U.S. employers between 2010 and 2016 paid nearly $300 million to employees who alleged sex-based harassment through the Equal Employment Opportunity Commission.
“Allegations of sexual harassment and mishandling those allegations can clearly affect the value of a company,” the council said.
It cited the bankruptcy of Weinstein Co. after reports of sexual harassment by then-Co-Chairman Harvey Weinstein. The company’s five-member board now includes one woman — though it consisted of only men when the story broke.
The council also mentioned Wynn Resorts’ $3 billion drop in market value after sexual misconduct allegations against CEO Steve Wynn. That company’s nine-member board included one woman before the allegations came to light, but Wynn since then has expanded its board to 11 members, four of whom are women.
A higher share of women and minorities on boards provides them with a real voice and eliminates the perils of tokenism, experts said.
“Many institutional investors believe a ‘critical mass’ of board diversity means at least 30 percent women and minorities, as the Thirty Percent Coalition advocates,” the council wrote.
Lucas, the UofL professor, said that when boards include just one woman or one African-American on a board, they make be forced into a token role and typically lack any influence over decisions. A single woman or African-American board member typically is “highly visible” because they are carefully watched, Lucas said, but they also are “in some ways invisible” because they may lack influence.
While gender diversity touches aspects including discrimination, fairness and opportunity, it’s also a matter of money and lots of it. Directors can earn hundreds of thousands of dollars per year for their board membership. For example, directors on Humana’s board get an annual retainer of $115,000 plus common stock worth $165,000. At Brown-Forman, directors get at least $225,000 annually, including a $185,000 retainer.
In the company of men
Lucas said that when she worked for Shell Oil in the 1990s, the marketing staff had a sales rep day where they all took the day off to have a bonding experience at a golf course. When the group, which included one woman, showed up at the course, they realized it was a men-only day.
All of the men looked at the sole woman who said go ahead without me, which they did, Lucas said, recounting the story her male marketing manager told her to see if he had handled the situation correctly.
Lucas, not surprisingly, told the manager that he had most definitely not handled the situation correctly. The female staffer, Lucas explained, had nine men looking at her hoping she wouldn’t ruin their fun, so of course, she said that it was all right to go on without her.
Instead, the manager should have suggested the group get together at a different place, whether at a restaurant or laser tag, Lucas added.
Another challenge, she said, is that when people get older and become mentors they subconsciously seek out mentees who look like them and remind them of themselves. With lots of white men in leadership roles, that often leaves women and minorities without mentors.
Those may be little things, Lucas said, but they can add up, and before you know it, women or minorities find themselves in a company that does not seem to welcome them.
The golfing anecdote also illustrates that the lack of diversity on boards can be blamed on homophily — the tendency of people to associate with people who are similar — and propinquity — the tendency of people to form relationships with those whom they encounter often — rather than overt sexism or racism.
“It’s not malicious,” Lucas said. “It’s just kind of human nature.”
Companies can try to address the lack of diversity in their board and among managers, Lucas said, by conducting both unconscious bias training to make sure that employees are aware of their biases and explicit unbiased training, which teaches people to reach out to others who are different from them.
At UofL, Lucas serves on the executive committee of the Commission on the Status of Women, the university president’s chief policy advisory group for faculty and staff gender equity.
Some of the commission’s accomplishments include championing longer parental leave, establishing an on-campus children’s learning and child development center and advocating for designated lactation spaces in each UofL school.
Lucas said the work has been important to her, and she feels supported by university leadership, which, she said, she appreciates in part because she has worked at places where such support was lacking.
Providing support for women so that they can move up in the ranks and gain experience in executive positions also provides a path for them to gain more opportunities to serve on boards, said Kelley Bright, president of Women Influencing Louisville, which among other things, helps “nurture women for leadership positions.”
Bright, a business development leader with Ernst & Young, told Insider that executive experience and board representation go hand in hand. As women are underrepresented in executive leadership positions, they also tend to be underrepresented on boards.
Those dynamics won’t change until leaders of local organizations commit to furthering the advancement of women in their businesses and nonprofits, Bright said. That commitment can include mentorship programs for women and policies that can help mothers work from home if they need to.
Not a silver bullet
Of course, gender diversity on a board does not necessarily protect a company from problems, even those related to a “bro culture.”
Papa John’s International, which includes three women on its six-member board, has been embroiled in controversy since last year when company founder and then-CEO and Chairman John Schnatter blamed NFL players who knelt during the national anthem for declining pizza sales.
Schnatter stepped down as CEO in December but remained chairman until last month when he was ousted following a Forbes report that he had used a racial slur during public relations training. The magazine also wrote an in-depth piece about the company’s toxic “bro culture.”
In the last year, the company’s shares have fallen by 41 percent, robbing shareholders of nearly $1 billion.
The Papa John’s fiasco illustrates, perhaps, that an oversized personality as board chairman can overpower the rest of the board regardless of that board’s composition.
The board is now led by Olivia F. Kirtley, a CPA and former CFO at Ernst & Young. Kirtley and Papa John’s could not be reached for comment, but when Kirtley was president of the International Federation of Accountants, she said, “Diverse and inclusive boards, comprising women and people from different cultures and backgrounds are found to be better at solving complex tasks.”
In addition, she said, a Harvard study found gender diversity on boards correlated with corporate philanthropy and reputation.
The company’s board last month also adopted a so-called poison pill to prevent its embattled founder from taking control of the company.
‘More to do’
While companies and society as a whole have taken some steps toward gender equity, Lucas said, the progress has not been in a straight line.
For example, she said, among Fortune 500 companies this year, only 24 are led by female CEOs, and that’s down from 32 last year.
At a recent presentation, Lucas said that the list of Fortune 500 CEOs includes more “Tom, Dick and Harrys” than women. She meant it quite literally. Thirty-one of the CEOs are named Thomas, Richard or Harold.
Brown, too, said that while Brown-Forman is proud of its accomplishments and recognition, it cannot and will not rest on its laurels.
“The work’s not finished, and we’ve got more to do,” Brown said. “And we will do more.”