BOSTON – Senator Michael O. Moore (D-Millbury) was pleased to announce that the Legislature unanimously adopted a resolution to encourage equitable and diverse gender representation on boards of companies in the Commonwealth. The resolution, which passed the Senate in July of this year with support from Sen. Moore, was recently passed by the House of Representatives this week.
“This resolution calls attention to an issue that is far too prevalent, especially in the twenty-first century,” said Sen. Moore “I am hopeful that companies will actively pursue diversifying their leadership teams to ensure that women are provided opportunities to advance professionally. This issue, however, extends beyond gender diversity and encompasses racial, ethnic and religious diversity within top tiers of private companies.”
The legislation encourages privately held and publicly traded companies in Massachusetts to:
1. Adopt policies and practices designed to increase the gender diversity in their boards of directors and senior management groups and set goals by which to measure their progress;
2. Publicly disclose the number of women and total number of individuals on their boards of directors; and
3. Have a minimum of three women directors on boards of nine or more and a minimum of two women directors on boards with fewer than nine directors by December 31, 2018 AND measure their progress toward a goal of equal representation of men and women in leadership positions on an annual basis.
The Boston Club’s 2014 Census of Women Directors and Executive Officers of Massachusetts Public Companies reports that women hold 14.9% of the board seats and 11.8% of executive officer positions in the 100 largest public companies in Massachusetts. Twenty-four of these companies have no women on their boards of directors, 46 have no women executive officers and 19 have no women on their boards of directors or in their executive suites.
A 2014 Credit Suisse report that analyzed over 3,000 companies across the world found that greater gender diversity on boards of directors and in management “are empirically associated with higher returns on equity, higher price/book valuations and superior stock price performance.” In addition, the authors “find no evidence that female led companies reflect greater financial conservatism where leverage is concerned [and] dividend payout ratios have been shown to be higher.”
Additional reports issued by Thomson Reuters (2013), Credit Suisse (2012) and McKinsey (2007, 2010, 2013), reinforce the correlation between greater gender diversity in top management and enhanced corporate performance.
California and Illinois have both adopted “Women on Boards” resolutions and several countries require companies to report on their gender diversity policies. These disclosure requirements have led to progress toward gender and diversity goals in executive positions and on boards.