Today, International Women's Day, State Street Global Advisors has called on more than 3,500 firms to add more women to boards of directors, as well as unveiling a statue of a lone girl, facing down the "iconic Wall Street bull." When asked how the statue came to find itself on Wall Street, Ronald O'Hanley, the chief executive officer of State Street Global Advisors, explained that the investment management firm's corporate governance has been focusing on a lack of diversity of gender on corporate boards in the companies in which they invest. The 2017 International Women's Day also happened to coincide with the one-year anniversary of the launch of a SSGA gender diversity exchange-traded fund, the SPDR SSGA Gender Diversity ETF (NYSE: SHE).
When asked if State Street was willing to actually "do something" about gender diversity, such as enter "proxy fights," or otherwise use shareholder voting power to influence the decisions of boards, Mr. O'Hanley stated that, for many index-based funds, proxy voting is one of the only tools available for managers to influence the decisions of publicly traded companies they invest in. The CEO stated a preference for change to "not be adversarial," but stated that "if it needs to be" State Street is happy to vote along with its conscience.
Gender diversity 'improves outcomes'
O'Hanley described the research-based "fact" that "gender diversity improves outcomes," which has caused State Street to eschew a focus on "quotas." He stated that questions get raised when he is presented with a corporate board that has no female members, some of which, presumably, led to the decision to erect the statue of the girl facing down the Wall Street Bull.
"That's a very good question," the CEO answered when asked about how gender diversity improving outcomes is quantified. O'Hanley explained that among the metrics used to evaluate gender diversity was a company's long-term return on equity. He stated a preference for long-term data, because of "noise" associated with short-term numbers.
One quarter of Russell 3,000 boards lack a single female
When asked about what areas of the marketplace have seen the most improvement, and which need more work, in terms of gender diversity, the SSGA CEO said that, overall, "large companies" have made considerable progress, and that an "improving mix" is being observed. However, Mr.
O'Hanley underlined the fact that, among Russell 3,000 firms, close to one quarter have boards comprised entirely of men, and that about 60 percent of firms have boards comprised of less than 15 percent female members. He suggested that, as an industry, "maybe we need to dig a little bit deeper" to understand why diversity numbers sit where they currently do.
